House Passes Retirement Component Of Tax Reform 2.0

Posted by Jon Vogler, Senior Analyst, Retirement Research on Oct. 18, 2018, in Retirement

House passes retirement component of Tax Reform 2.0

On Sept. 27, the House of Representatives approved retirement reform legislation (the Family Savings Act) as part of the “Tax Reform 2.0” package of bills.

The House also passed the American Innovation Act of 2018, which is the small business innovation portion of the Tax Reform 2.0 package. On Sept. 28, it also passed the Protecting Family and Small Business Tax Cuts Act of 2018, which is the part of the package that would make permanent various individual and small business tax provisions from the Tax Cuts and Jobs Act.

The version of the Family Savings Act which passed is very similar to the measure I described in a previous blog entry. Among other items, the bill would:

  • Relax the minimum distribution requirements for retirement savings.
  • Open up multiple employer plan (MEP) membership so that small companies without a common interest could band together to sponsor plans.
  • Create a new Universal Savings Account.
  • Improve the rules relating to election of safe harbor 401(k) status by eliminating the notice requirement for non-elective contributions.
  • Permit plan participants to roll over their lifetime income investment to another retirement savings vehicle if the plan sponsor decides to discontinue that investment option in the plan.
  • Allow employers to adopt a qualified plan up to the due date of their tax return.
  • Repeal the maximum age for traditional individual retirement account (IRA) contributions.
  • Modify nondiscrimination rules to protect older, longer-service participants.
  • Allow families to access their retirement accounts for new child expenses without payment of the 10% penalty tax for early distributions.
  • Expand 529 education savings accounts.

The latest bill includes four key amendments

The bill also reflects four changes made via amendment before the full House vote was taken. These additional provisions would: (a) create a fiduciary safe harbor with respect to the selection of an insurer for a guaranteed retirement annuity contract in a defined contribution (DC) plan, (b) allow a 529 account to designate an unborn child as a beneficiary of the account, (c) eliminate a provision in the Family Savings Act that would have required a study of the Pension Benefit Guaranty Corporation’s single employer insurance program, and (d) exempt the bill from certain “pay-go” rules that otherwise could apply in the absence of revenue offsets.

According to the Joint Committee on Taxation, the Family Savings Act would reduce tax revenues by $21 billion over 10 years. The three most costly provisions are the new Universal Savings Account, the exemption from the required minimum distribution rules for individuals with an aggregate account balance (among IRAs and DC plans) of $50,000 or less and the open MEP changes.

As noted in my earlier blog, many of the provisions in the Family Savings Act were drawn from the Retirement Enhancement and Savings Act (RESA), a bipartisan Senate bill. It is unlikely that the Senate will take up the entire Tax Reform 2.0 package, or even the Family Savings Act, before the mid-term elections. It is possible, though, that the House and Senate could agree on a retirement package that reflects portions of the Family Savings Act and RESA in the lame duck session. It’s our understanding that preliminary talks between House and Senate staffers are already underway about a potential combination of the Family Savings Act and RESA.

We’ll keep you posted.


Ignites, “House passes retirement reform,” Joe Morris, Sept. 28, 2018

NAPA Net, “Retirement component of Tax Reform 2.0 moves to Senate,” Ted Godbout, Sept. 28, 2018

SPARK Institute, “House passes Family Savings Act, which contains SPARK-supported provisions,” Michael L. Hadley, Sept. 27, 2018

PlanSponsor, “Annuity selection safe harbor tacked onto retirement bill,” Rebecca Moore, Sept. 28, 2018

Important information

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This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.


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House passes retirement component of Tax Reform 2.0 by Invesco US

Weighing The Week Ahead: Major Market Misperceptions

We have a light economic calendar with a focus on housing. Earnings season would normally be the most important market theme. For now, observers are seeing what they want to see in earnings reports. That makes it easier for pundits to take up a favorite topic: What is about to go wrong?

There are so many candidates that picking one as a theme would be a pure guess – even more than usual. Sticking with my promise to focus on the most important questions, regardless of pundit preferences, I am going to summarize the most important current market misperceptions.

Last Week Recap

In my last edition of WTWA I asked whether earnings season would spark a rebound in stocks. That was indeed a frequently discussed topic. For part of the week, it looked like the answer would be “yes.” At week’s end, that issue is still in doubt.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring the futures chart from The image posted here shows a static view. If you go to the site, you can check out the news at various points during the week and adjust the view in many other ways. Since futures trade when the stock market is closed, you can also see that trading.

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The market was virtually unchanged on the week. That seems amazing to those who were watching it play out. The weekly trading range was 2.7 % — less than last week, but larger than we have experienced over the last few years. The VIX implied volatility measure remained higher than the actual results which are only slightly higher than the long-term average. I summarize actual and implied volatility each week in our Indicator Snapshot section below.


I trust that the astute WTWA readership has strong and varying passwords. If you have many accounts, you need a password manager. I use Dashlane and monitor their blog, where I ran across the 2018 NFL Password Power Rankings. Noting that her Packers were only #10, Mrs. OldProf said the results should be population-adjusted. (I think the model requires an intelligence variable as well!)

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The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

New Deal Democrat’s high frequency indicators are an important part of our regular research. They remain positive overall but have weakened somewhat in all time frames. The long-term indicators have drifted back to the neutral range.

When relevant, I include expectations (E) and the prior reading (P).

The Good

  • Earnings news – good so far. FactSet reports that 80% of companies have a positive earnings surprise and 64% a positive sales surprise. These are both better than the average result. The year-over-year growth has been 19.5%. The size of the beats is a bit less than average. Guidance has also been better than expected. The earnings news has been strong, but without much market reaction.

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  • Builder Confidence increased in October. Calculated Risk provides the analysis of the small beat over last month and consensus forecasts, concluding it to be “a solid reading.”

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  • The JOLTs report was again very strong, up over 18% year-over-year. David Templeton (HORAN) writes, “This is not the type of data output that occurs in a recessionary environment.”

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  • Some labor slack remains demonstrates Matthew C. Klein (Barron’s). He looks at the “super prime age” employment population and the increase in part-time workers resuming full-time jobs. The lack of wage pressure is the result.

The Bad

  • Housing starts registered only 1201K (SAAR). P 1268K E 1230K. Calculated Risk notes that starts are up 6.4% year-to-date compared to 2017. The comparisons will now be getting tougher. Bill’s continuing view is that there will be further growth in housing starts.

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  • Building permits for September were 1241K (SAAR). P 1249K E 1273K.
  • Existing home sales for September were 5.15M (SAAR). P 5.33 M E 5.30M. Calculated Risk notes that this is a “reasonable level” and less important than new home sales. While the YoY decline is small, it may reflect rising mortgage rates and the limitations on property tax deductions.
  • FOMC minutes should not really have been a surprise, but the market was troubled by the apparent willingness of the committee to raise rates beyond neutral.
  • Retail sales for September increased only 0.1% P 0.1% E 0.6%.Jill Mislinski tracks the data, noting that growth has been rising less than the post-recession trend for the last three years.

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The Ugly

Flood insurance in a World with Rising Seasis a study by Queens College, City University of New York researchers. The research notes the perverse incentives provided by government flood insurance, “$23 billion in the red as of 2016”. Coastal development and property values increase despite the higher risks of flooding.

The Week Ahead

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.

The Calendar

The calendar is a light one, with a focus on housing data. There will be plenty of earnings news, which would normally be the biggest story of the week. has a good U.S. economic calendar for the week (which is why I am a subscriber). Here are the main U.S. releases.

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Next Week’s Theme

Earnings news is episodic. It is often challenging to find a theme in the stories. While the earnings reports will get attention, I expect pundit focus on a favorite theme: What is about to go wrong?

These stories will get plenty of attention. Some are valid concerns, but many reflect common misperceptions. I will balance the scales a by looking at the facts behind the assertions. To help follow the arguments, I am breaking with my customary procedure of offering opinions only in the Final Thought. My comments are italicized and in brackets.


The Corbin Advisors Industrial Sentiment Survey captures the concerns of the buy-side. Here is the word cloud.

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Some of these are certainly valid concerns. Let’s consider some misconceptions.

  • The economic cycle has lasted so long, it is about to end (and with it, the bull market). [I have seen several studies about the imminence of a cycle peak as a function of the length of the cycle. None show any support. Since this makes intuitive sense, and fits the purpose of the writer, it is simply asserted without evidence].
  • The VIX is a good predictor of market declines. [The VIX, calculated from the cost of equity options, is a concurrent or even trailing indicator, not a predictor. It also does not indicate complacency when the value is low. As I show each week, the cost of insurance always exceeds the actual volatility].
  • Things are so good, they must be about to turn. Jesse Colombo, cited in a MarketWatch report, explains why wealth is bad. Here is the key chart:

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[I hardly know where to start with this chart. It compares a combination of government, business, and individuals on the income side with individuals alone on the wealth side. Why? The Dot-com circle does not prove the point, so there is exactly one prior case. The vertical index is almost left to your imagination, and of course, no long scale to make the time periods similar. Why 1951, other than that is when the data started? Why is the stock market the cause of wealth? What about savings? But mostly, the problem is the “good is bad” concept. If you begin with a trough and go backward, you will find a peak. That does not help you identify a peak in real time. In the “housing bubble” circle, for example, you could have called the peak at any time after 2004. It is only in retrospect that the claim seems persuasive].

  • Indicator X (insert one of several) shows that there will be a recession soon. Last week it was a JP Morgan report of a 60% chance within the next two years. The chance for next year is 28%. [Little is known about JP Morgan’s model, but I am not impressed with the reports I have seen. There are not that many relevant past cases. Overfitting a model with a lot of variables is the biggest danger. You need to know how it was developed. That said, I don’t object to the odds for the next year. I don’t think they (or anyone else) can forecast more than a year ahead with any accuracy].
  • A crash is coming! Last week John Hussman pegged the possible loss at $20 Trillion. The report also listed other bearish forecasts with somewhat lower declines. [The forecasts suggest varying causes, but the numbers are all attention-getting. Large market declines have almost all been linked to recessions and/or financial stress, highlighting the importance of our weekly indicators].
  • The yield curve is inverting. [When there is an inversion we have a signal. That precedes a cycle peak by a year or so. There is no need to “forecast the forecast” as business cycle expert Bob Dieli puts it. Here is an example from his latest report.

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  • Well maybe it is not inverting, but rates are going higher. [This is typical commentary. As the long end rates moved higher, the inversion complaint shifted to an overall concern about rates. That type of analysis is a good indicator of an analyst on a mission. His/her glass will never get close to half-full].
  • Geopolitical issues are a threat to current stock prices. This is usually just presented as a laundry list, often with the claim that the current stock prices do not reflect these fundamental concerns. [There are some valid geopolitical concerns – those that affect global growth or inflation. Impact on oil prices, trade effects on prices, and reduced US exports are all good examples. Our challenge is to separate those concerns from a generalized list of “headwinds”].
  • Debt is growing and will undermine the entire financial system. [Debt is certainly growing, but so are assets and income. Looking only at the size of debt – with no log scale of course – makes things look totally out of control. I am not concerned about individual debt given the improvement in repayment ability. I am not very concerned about corporate debt, which may well be a rational choice given low interest rates. Government debt is another matter. It is a real problem. It needs to be addressed. Like many problems, there are no immediate consequences of neglect].
  • Indicators are “rolling over.” This is often cited as “growth is decelerating.” [A very high rate of growth cannot keep increasing forever. Settling back to a normal rate of growth is just fine. If, for example, the rate of GDP growth dropped to 2.7% or so, that would still be a healthy rate – good for employment, earnings, etc. A slowing of the rate of growth always happens before a decline, but it does not always indicate a decline. Think of it as a necessary but not a sufficient condition. Expect to see many indicators like this in the next few months].
  • The Fed is raising rates. [Interest rate increases in the current range are not very important for stock prices, according to all the historic data we have. This is not just a matter of a slogan. Check out any of the recent WTWA posts for more on this topic].

There are many other candidates for the list of pundits’ favorites. Please add your own ideas in the comments. In today’s Final Thought, I’ll add a few more observations.

Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

I have a rule for my investment clients. Think first about your risk. Only then should you consider possible rewards. I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot

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Short-term trading conditions have taken a turn for the worse. The identification as “bearish” is a reaction to volatility, not a prediciton of a short-term decline. When conditions are technically challenged, we watch trading positions even more closely. It is possible for our trading models to exit completely if there is further deterioration.

Long-term trading has also dropped a point on a technical basis. This differs from the fundamental analysis which remains very strong.

The Featured Sources:

Bob Dieli: Business cycle analysis via the “C Score.

Brian Gilmartin: All things earnings, for the overall market as well as many individual companies.

RecessionAlert: Strong quantitative indicators for both economic and market analysis.

Georg Vrba: Business cycle indicator and market timing tools. None of Georg’s indicators signal recession. Here is the latest chart on the Business Cycle Index.

Doug Short and Jill Mislinski: Regular updating of an array of indicators. Great charts and analysis. To emphasize the difference between sentiment and reality, it is time for another update of the Big Four indicators – the key elements in recession dating.

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The Big Four shows consistent and broad growth.

Guest Commentary

Liberty Street Economics takes a close look at the effect of increased regulation on bank arbitrage activity. The authors conclude that additional costs have decreased activity both by banks and hedge funds. You can readily see the flattening and recent decline of the notional value of derivatives. [Jeff – And of course, these positions are largely offsetting. We don’t really know the net exposures].

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James Picerno’s (The Capital Spectator) business cycle risk report provides a watchful positive.

For now, the risk of recession remains virtually nil and it’s unlikely that a downturn will start in the immediate future, according to broad set of indicators. But projections for next year, which remain highly speculative at this point, suggest that recession risk will rise – a forecast that deserves close attention as new data arrives in the weeks ahead.

Insight for Traders

Check out our weekly Stock Exchange post. We combine links to important posts about trading, themes of current interest, and ideas from our trading models. This week we asked whether traders would rather be “right” or be successful. This important concept is something you should decide and then live with. We also shared advice by top trading experts and discussed some recent picks from our trading models. Our ringleader and editor, Blue Harbinger, provided fundamental counterpoint for the models, all of which are technically-based.

Insight for Investors

Investors should have a long-term horizon. They can often exploit trading volatility.

Best of the Week

If I had to pick a single most important source for investors to read this week it would be this analysis of a trade by “Davidson” (via Todd Sullivan). He explains that market psychology and business returns often diverge, and he provides a helpful example of Kansas City Southern (KSU).

Market psychology often diverges from business returns. Identifying these situations is what produces investment opportunity, but the investment return is dependent on market psychology turning in the direction which benefits the investment decision. History tells us that investors eventually respond to the underlying returns. The issue for investors is that one may have to wait through a frustrating period of watching business returns evolve as anticipated without markets responding. KSU provides an excellent example of the investment process.

Check out the entire post to appreciate the example.

Stock Ideas

Chuck Carnevale applies his powerful analytical methods in a look at a popular candidate, IBM. As usual, he combines a lesson in analysis with good ideas about a specific stock. Watch the video! (See also Nicholas Ward’s analysis below in the “watch out” section.

Emerging markets? The Barron’s Roundtable highlights some beaten-down choices including Alibaba (BABA), Tencent (OTCPK:TCEHY), and Baidu (BIDU). “Alibaba was the consensus favorite of the roundtable.”

Morningstar identifies economic moats and strong balance sheets as the keys to maintaining dividends. Using that as an initial screen, they then look for the cheapest candidates, creating an interesting list of possibilities.

Personal Finance

Seeking Alpha Senior Editor Gil Weinreich’s Asset Allocation Daily is consistently both interesting and informative. Each week he highlights stories of interest for both advisors and investors. He also provides insightful commentary on important topics. Be prepared for something that cuts against the grain!

This week I especially enjoyed his discussion of annuities. I have joined others with annuity warnings – high commission products that substantially trail alternative methods. Gil thinks objectively about the concept, identifying why this approach might fit some investors.

[Jeff – BTW, I have occasionally had a client where an annuity was the correct solution. I take pride in helping people find a suitable solution at a discounted price.]

Abnormal Returns is an important daily source for all of us following investment news. His Wednesday Personal Finance Post is especially helpful for individual investors. I especially liked the Morningstar article by Christine Benz, Guess What? It May Actually Be Different This Time. She looks back at 2008 and her family’s wisdom in holding on. But then, are things different now? Not necessarily for the market, but for you? Tadas also pointed to the “watch out” piece below about ambulance chasing advisers. And also the Ben Carlson post on market corrections.

Watch out for…

Market advisers who play on your fears. Quentin Fottrell (MarketWatch) urges you to “proceed with caution when you sense that someone is trying to sell fear.”

IBM. Nicholas Ward speaks, no doubt, for many investors who have given up on the stock. He notes the difficulty in analyzing a company with a high yield, slowing revenue growth, but plenty of stock buybacks. [Jeff –In general, I agree that the stock is not exciting as a standalone purchase. We occasionally use it as a platform for selling near-term calls, allowing it to be called away. This has worked well, and we’ll probably invest in the buy/write on Monday.]

Final Thought

The progress in behavioral economics has made many people aware of anchoring – a perception that lingers in your mind, interfering with rational thought and analysis. David McRaney has a nice discussion. He reviews several interesting (and fun) examples of how providing a random number alters the perceptions in a group of subjects. How many African countries are in the UN? What is the population of Venezuela?

This effect is now widely accepted by nearly all market analysts. And then it is forgotten. The constant repetition of an idea has an effect. The factual basis does not matter. The aging bull market, the role of the Fed, and assorted correlation/causation errors are all examples. I have tried to illustrate a few of these, helped by readers who inquired about some of the posts mentioned.

Why are the anchoring stories so negative? Because the stories almost write themselves and attract the attention of a wide audience. Dr. Hussman thinks we might lose $20 Trillion (assuming we have done no profit-taking along the way). Mr. Colombo warns us that the apparent good news about improved wealth is actually a bad omen. The Hussman commentary often leads the list of popular articles. Mr. Colombo reports that he has 10 million followers across several different platforms. They are both major, successful forces in the world of market influence.

It would be interesting to calculate the market gains since Dr. Hussman first used “overbought, overbullish, and overvalued” and even before he added “obscene.” I’ll take the “over” on $20 Trillion.

We would all like to identify bubbles and get out of the way. An expert on bubbles must not see them everywhere. Compare this 2014 Forbes Colombo article with the one mentioned above: These 23 Charts Prove That Stocks Are Heading For A Devastating Crash. It had 170K page views, and every chart is a Silver Bullet candidate. [I raised questions at the time but got no response].

Predicting disaster is exciting and profitable!

Check out Ben Carlson’s list of those who benefit from a correction. There is no way to inoculate yourself against the anchoring bias, but you can follow a fact-driven process.

I’m more worried about:

  • Brexit. Necessary changes between the UK and the EU have not been negotiated (Barron’s). Contracts, derivative clearing, data protection, and key UK financial employees who are EU citizens. Will there be a delay?
  • The psychological effect of worries. Business and consumer confidence are important for a strong economy.

I’m less worried about:

  • Earnings growth. Can it be a catalyst again this month? The reaction to conference calls will give us a sense of the market mood.
  • The Saudi issues. The death of a US journalist is an important story. Like many other news items, it is not a financial story.

Disclosure: I am/we are long BABA.

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

Additional disclosure: About to buy IBM versus short calls

This 9-Year-Old Girl Scout Just Displayed Warren Buffett's Best Advice to Entrepreneurs. (It Worked Perfectly)

Keep that start in mind as we share the story of a 9-year-old Canadian Girl Scout (actually, they call them Girl Guides in Canada). Because she managed to sell an entire stock of Girl Scout cookies in 45 minutes recently, in a way that displays Buffett’s key advice to entrepreneurs.

Reporter Emily Fitzpatrick from the CBC found the girl, named Elina Childs, as she towed her wagon full of cookies down a line of people waiting to buy newly legal Canadian marijuana, at a store called Nova Cannabis.

The nine-year-old Girl Guide and her father … sold all 30 boxes in less than 45 minutes, earning $120 for Girl Guides.

“It amazed me how quickly they went,” said her dad, Seann Childs. “Even people in cars driving on the avenue there would stop and roll down their window and ask for cookies.” 

Which brings us back to Buffett. His best advice for entrepreneurs? (It differs from his top advice from investors, of course.)

“If there’s one thing to remember: Delight your customer,” Buffett told interviewer Dina Habib Powell at a Goldman Sachs event in 2016.

Regardless of whether Elina Childs actually knows about Buffett, his advice describes exactly what she did here. She found an audience that would be delighted by her product, rather than trying to force it onto other people.

Consider the more traditional methods lots of parents encourage their daughters to use to sell Girl Scout cookies, and how this compares.

  • Sell them door to door? Super inefficient. Who knows who’s even home? 
  • Stand outside a shopping center? Maybe, if you’re allowed to. But you’re probably trying to sell cookies to people on their way to or from a big store with a much bigger selection. Plus you’re competing with other girl scouts.
  • Bug your parents’ coworkers? This is a common strategy. I’m not sure how much it’s about delighting customers though, as opposed to pressuring them.

Instead, the 9-year-old Childs and her dad took the cookies to an audience that they could be sure would be delighted by the idea of buying cookies. 

(One thing that I haven’t understood, not having a lot of experience with this myself: Don’t you get the munchies after using marijuana, not before?)

Regardless, even if it’s been done before, it’s a smart way to find people who love your product: and a brilliant execution of Warren Buffett’s best advice.

5 Ways to Spot Bad Customers That Also Identify Great Employees

There is a cliche saying in marketing that it takes eight or 11 or 17 impressions — it gets longer every time marketers say it — before a customer is ready to buy from you. While some version of that is undoubtedly true, it’s easy to confuse those passive marketing impressions with your more intentional sales follow ups

So, how hard should you try to convince someone else to buy from you? In my opinion, not hard at all. The hardest customers for you to close will be the hardest customers for you to satisfy. 

I’ve seen this over and over again. When a prospective customer is skeptical of your product or service, it’s tempting to want to spin your conversation in a dozen ways so that they finally see the value that you provide. 

And, when you’ve persisted long enough for them to convert, they look for every opportunity to prove you wrong — to convince you that they weren’t actually a fit after all. Cue the cancellations, refunds, and over-and-beyond support to try to make things right.

While you shouldn’t waste time trying to close those picky customers, you should definitely invest time recruiting picky employees. The same traits that make for the worst customers are often found in the best employees. 

Here’s how to spot them.

They have options, and they are the prize.

The worst customers come to you with 10 other companies that are vying for their business. One of my consulting clients, a printing brokerage, was bombarded with estimate requests from companies that seldom intended to buy; they just needed at least three bids to appease management.

Rather than connecting with your messaging or seeing something unique in your product or service, the customer has put you on a long list of possible providers. Red flag. 

But, when a prospective hire has multiple companies pursuing them, it gives you confidence about their value in the marketplace. And, it moves the process along faster, because if you don’t get them, someone else will. 

They’re price shopping.

When a customer shops solely on price instead of value, that’s a recipe for disaster. Unless you’re selling a commodity or reselling a product against an identical supplier, a great customer would weigh the pros and cons of the full relationship and not just select the lowest price.

The best applicants, however, know their value and are willing to ask for it. Likely, they have multiple opportunities, and the price that you’re willing to pay is a key part of the equation. 

They come in with obscure questions.

If a customer is asking extremely specific questions during the sales process, rest assured that they will have extremely specific customer support tickets as well. When I demo our software at Trainual, a customer with a few clarifying questions about the product is good. A customer that asks about modifying the printing margins on a PDF export makes me raise an eyebrow.

But, the best employees ask a lot of questions during the hiring process. They want to know about your products and services, your team, your benefits, your mission — everything that will help them determine if your company is the right fit for them.

They want to make it a group process.

When a customer requests a demo, and then another demo with a different set of people, and then starts an email thread with a larger group, it shows that they aren’t the decision maker, and the sale is going to take a while. 

When an employee is interviewing, however, they should want to meet as many people as possible to make sure they’re a good fit with your team. They should ask questions about your teammates outside of town, introduce themselves to others when touring the office, and give everyone a chance to weigh in on the hiring process.

They don’t make quick decisions.

Some customers are decisive. They recognize the value of your solution and they pull the trigger. Other customers don’t make quick decisions, and can take weeks, months, or even years to convert, taking up a lot of your resources in the process. 

When you’re hiring, a quick decision or quick start date can show a lack of options, so a slightly longer decision process is actually a good thing. It can be frustrating when a transaction with a customer takes a long time to cultivate, and there are several red flags along the way. But, learn to recognize these same characteristics as positive with potential hires.

The customers that are hardest to sell are the hardest to please. The applicants that are hardest to sell are the hardest to live without.

Holiday Shopping 2018 to Hit $134 Billion; Amazon's Conversion Rates 3-5X Higher Than Walmart, Macy's, Target, eBay

Last year Amazon achieved holiday shopping conversion rates of 5.6% on mobile and 17.8% on desktop, massively outperforming rivals such as Walmart, Target, eBay, and others.

This year, the company appears poised to do it again.

The holiday Thanksgiving weekend is one of the biggest shopping events of the year, and Amazon leads all retailers in both mobile and desktop shopping, according to a new report from Lotame and Jumpshot. Retail searches jumped 182% after Halloween, according to the companies, and that led to a 75% increase in traffic to deal sites and other retail outlets.

But conversion is where it’s at, and there Amazon excels, peaking two weeks before Christmas, with these conversion rates on mobile:

  • Black Friday: 5.2%
  • Cyber Monday: 5.6%
  • December 11 week: 6.4%

On desktop, as you’d expect, the rates are significantly higher:

  • Black Friday: 16.1%
  • Cyber Monday: 17.8%
  • December 11 week: 20%

Those rates compare to an average of 1.3% mobile conversion at other e-commerce sites, including Walmart, Target, Macy’s, and eBay, and 7.3% on desktop.

“Shopping is a mobile-first industry,” says Ryan Rolf, VP of Data Solutions at Lotame. “With more and more mobile devices pushing e-commerce visits, retailers that neglect to take a mobile-first approach will lose out in 2018.”

That’s not necessarily entirely true. The conversion rates on desktop, for instance, are multiples of the conversion rates on mobile … so desktop does matter. Where mobile is key is in the discovery phase and the price check phase. Mobile is the “three-foot” device: never more than three feet from your body.

That means it’s usually the first device you turn to. 

Consumers often then turn to a desktop to complete the purchase with a bigger screen and keyboard, something I call “taps, clicks, bricks.” The upshot is then that retailers’ in-store experience, mobile experience, and desktop experience all matter.

Of course, that’s U.S. data.

Chinese or Indian data would show something quite different, since mobile is not just the default but the only computing platform available to the vast majority of people. And that may happen in the North American and European markets over time as well, as mobile continues to grow.

All is not lost for other retailers, however.

“Though consumer data shows Amazon dominates e-commerce, they’re not the only place people buy online, especially during the holiday shopping season,” said Deren Baker, CEO of Jumpshot. “It’s vital that marketers understand how consumer habits shift depending on how and where they discover and buy products.”

Walmart in particular has taken on Amazon’s challenge and invested heavily in e-commerce while also taking advantage of its large physical-store footprint … and working with Google to make all its products shoppable by voice via Google Home and Google Assistant.

It remains to be seen who the long-term winner will be.

The Noma Guide to Fermentation: A Cure for Kitchen Boredom

Occasionally, when shredding cabbage to make sauerkraut, I wonder, of all vegetables, why this one? Don’t get me wrong—little makes me happier than a late-night snack of beer, cheddar, crackers, and kraut, but the popularity of the lowly cabbage for fermenting always felt weirdly limiting.

It wasn’t for lack of great teachers. For the last few years, I’ve enjoyed working with the genius cheerleader Sandor Katz’s Wild Fermentation in one hand and the bulletproof straight shooting of America’s Test Kitchen’s Foolproof Preserving in the other. Somehow, though, the two left me tradition bound, and I never ventured beyond sauerkraut and kimchi. I needed some uncharted territory.

Flipping through The Noma Guide to Fermentation, which hits shelves this week, I came across a photo of corn on the cob being painted with a paste of fermented blueberries. It sounded like a crazy combination but Copenhagen’s Noma is often ranked as the top restaurant in the world and I felt confident that it would be good.

Once residing mostly in the domain of hippies and health-food stores, fermentation is quietly becoming the obsession of many high-end chefs. The Noma Guide is a deep dive that makes that infatuation official, describing what fermentation is, why it tastes good, and how we can learn from some incredibly capable pros about how to make our home kitchens hospitable for the good bacteria and fungi that transform our food, lending it more complex flavors.

In 2014, chef René Redzepi and his team at Noma went all in and built a fermentation lab out of shipping containers, later hiring the Guide‘s co-author David Zilber to run it. Now, Redzepi says, “Fermentation isn’t responsible for one specific taste at Noma—it’s responsible for improving everything.”

He’s not kidding. When Noma opened in a new location in Copenhagen earlier this year, symbolically integrating the fermentation lab, every dish on the menu featured a fermented element.

Following an informative and deftly written primer to start the book—the authors got editing and recipe testing help from food pros Chris Ying and Martha Holmberg—the Guide then divides and conquers, splitting Noma-style fermentation into several sections: lacto fermentation (salting fruits and vegetables to make the magic happen), kombucha, vinegar, koji (rice or barley inoculated with Aspergillus oryzae fungi), misos, new kinds of shoyu (soy sauce), various garums (fish sauce and friends), and non-fermented black fruits and vegetables like black garlic. Each of those sections gets its own detailed description and a raft of recipes.

Redzepi and Zilber’s interest in fermentation may sound simply like a good excuse for a new book, yet stretching the possible is a near necessity at Noma. Finding interesting ingredients in Denmark’s winter is challenging, but transform something that’s abundant in the summer into a wholly different food in the winter and you’ve got enough excitement to get you through the cold months.

Funk House

In their guide, Redzepi and Zilber encourage readers to build a fermentation chamber out of a speed rack (translation: make a temperature-controlled tent from a restaurant’s rolling sheet-pan rack, a little heater and humidifier, and a PID temperature controller), or make one out of a styrofoam cooler. I did none of this in my test kitchen and still made several ferments equipped with little more than a bunch of large Ball jars, and some inexpensive specialized equipment. I even did some book-sanctioned cheating, buying some rice koji, then riffing on the book’s roasted koji mole recipe, which has nothing to do with a traditional mole, but it has an intense range of deep flavors similar to its namesake. It also makes a swell glaze for roasted potatoes or a lovely stand-in for hot chocolate.

My partner in crime was Brian “I belong to several fermentation groups on Facebook” Gojdics. He’s a buddy, a world-class pizza chef, and—full disclosure—I’ve done a bit of consulting in the past for the restaurant where he is the executive chef.

Together, we plowed through the prep for multiple ferments: vats of lacto-fermented blueberries, pluots, mushrooms and honey; vinegar made with pluots—the recipe called for plums, but the pluots looked better; and coffee and mango kombuchas.

“This book’s rad, it gives the why,” Brian said.

Initially, I lost Brian to the book since he was seeing it for the first time. But once he set it down, all went quickly. We had our first few jars filled in half an hour, largely because it was easy. Fermenting with salt, aka lacto fermentation, where the salt lets the good, flavor-making microorganisms do their work while inhibiting any that might be harmful, simply requires the ingredient itself, plus about two percent of its weight in salt. A kilogram of cabbage, for example, gets 20 grams of salt. Or, as Brian put it, “You’re just adding salt to a thing and putting it into a jar.”

Eaten raw, elderberries can irritate the stomach. By adding them to elderflower wine, they become fermented and are rendered deliciously edible.

Evan Sung/Artisan Books

Here, apple kombucha has been combined with pine needles, giving the drink a bright green hue.

Evan Sung/Artisan Books

We started a pair of kombuchas, and this was where I was particularly happy to have a fermentation buddy—I’d never before deployed the Symbiotic Culture of Bacteria and Yeast known more commonly as a scoby. This is the rubbery disk you set floating atop a jar of sweetened black or green tea, so the microbes housed within can transform the sugars in the brew into alcohol and acetic acid. Scobys can live for months or years, and are often handed down or shared amongst kombucheers. Brian even keeps a collection of them in a big jar known as a scoby hotel, a term that makes me chuckle every time I read it.

That pluot vinegar required nothing more than the fruits themselves, a little bit of liquid yeast, and some already-made unpasteurized vinegar that’s added late in the game, a process dignified by another great term: backslopping.

What’s particularly nice about the book is that it takes the time to go into in-depth explanations. Many of its recipes have photos that illustrate what your ferment should look like over days, weeks, and even months, which is really helpful if you’re worried that what you’re making is going sideways. It also gives Redzepi and Zilber room to talk about their more unique creations. When they make vinegar out of celery, or miso out of peas (usually it’s soybeans), they understand that we’re going to need some suggestions on what to do with them. Celery vinegar, it turns out, makes an intriguing topping for fresh cheese when combined with herbs and olive oil. Miso made with with peas, or “peaso,” as they call it, can be folded into butter to adorn mashed potatoes, or it can be combined with garlic oil and used as a beef marinade. One particularly helpful pairing note is to simply use the fermented product with the same foods you’d pair their unfermented versions with.

The ferments we made became a bit of a running project (they all are, really), and they fared better when I gave them a quick, daily once-over. Brian stopped by after about a week and made sure everything was looking good, and discovered that the lacto pluots had developed a thin layer of harmless kahm yeast.

“It won’t hurt you, but the yeast itself might taste like vomit,” he said before walking it back a little. “OK, how about ‘it can have unpleasurable flavor profiles?'”

He skimmed off the offending yeast and it was good as new.

Deep Mushroom

Over the course of a week or two, the flavors of each ferment developed in interesting ways. The blueberry brine went from intense sweet-salty, to a bit tart, to very pleasingly sour while their flesh became intriguingly meaty. The Noma Guide calls the brine created by lacto-fermented mushrooms a “Swiss Army knife” that they use to season “everything from fennel tea to monkfish liver.” Lacking either of those, I dribbled a spoonful on a sandwich with cheddar and fresh tomatoes, which gave the whole thing a lovely, deep mushroom-y flavor. Swiss Army knife, indeed, I thought, getting similarly pleasing results when I drizzled some over a slice of reheated pizza with pesto and goat cheese.

We did have one significant flop. That pluot vinegar bubbled up a storm for a couple of days, eventually giving off a pleasant banana smell with boozy notes and bubbly fruit—early-stage booze!—but after about 10 days, it developed a layer of what looked like near-black fruit leather on top. I tried scraping it off, then stirring it up, but that didn’t work so well, and a new layer of darkness appeared on the top in mere moments. I checked in with Brian and decided to dump it.

Ya know what, though? I’d never made vinegar before, and everything else worked out pretty well. The Noma Guide preps you for the idea that not every experiment will work out every time. Besides, my wife Elisabeth, who jokingly referred to herself as a “kombucha professional” as she really enjoys the drink, gave my mango kombucha two thumbs up. Suddenly, taking another stab at vinegar sounded like fun!

One of the things that I like most about the book is the combination of getting nerdy in the lab and handing that work off to Redzepi and his chefs who, with expert technique and refined palates, tell you what to do with what you’ve made. Sparkling citric koji amazake practically has “amazing” in its name, but I’d have no idea what to do with it. Made from rice koji, rice, and water, amazake is a sweet Japanese drink. The Noma Guide‘s riff on the recipe uses barley in place of the rice, and fermenting with A. luchuensis fungi. Redzepi and Zilber suggest combining it with olive oil, garlic and shallots, then steaming clams in that mixture, reducing the liquid, and pouring it over the finished clams.

Sounds good, doesn’t it? Prepare to be amazed.

It's Imperative You Stop This One Bad Habit We All Do All The Time Because It's Ruining Us All

Here’s a recent moment I’m not proud of: I’m driving down a two-lane highway, listening to an audiobook, while checking a text and Google Maps using the split-screen feature on my Android phone. I look up to see a construction worker in the road signaling that I slow down and I’m suddenly ashamed of my irresponsible multi-tasking and distracted driving.

Oh, and by the way, I didn’t retain any of the last few minutes of my audiobook and the text definitely could have waited. 

I started to think back to a number of irritating moments and social interactions from the past few days and wondered how many could be attributed to similar bad habits. The receptionist at the dentist who tried to schedule me on the wrong day multiple times while clearly distracted; the harsh critique from a reader who had obviously not read more than a paragraph of my story; the numerous distracted drivers (even more so than me) who don’t quite stay in their lanes at all times. 

The fact that there is an epidemic of distractions, vanishingly small attention spans and an almost involuntary impulse towards multitasking is not a new revelation, but it occurs to me that the problem may be even more insidious, pervasive and dangerous than we’re acknowledging. 

But what’s become more apparent to me recently is that widespread multitasking – often out of what we perceive as a need to keep with the utter barrage of media and communication coming at us with unprecedented speed and frequency – may rise to the level of a public health issue.

I’m worried that the very workings of society itself, the social contract we have made to each other, is in danger of unraveling at the hands of our own incompetence, which is driven in part by a culture of distraction and a false sense that focus must be the sacrificial lamb offered up in order to keep up. 

We are so distracted that our distractions are distracting those around us and making us all dumber for it. 

It’s all common sense really. If you’re not paying attention, you’re going to miss things and get stuff wrong as a result. 

It’s ironic, I think, because part of the reason that we multitask is that we want to be our best selves. We convince ourselves that part of achieving this betterment is keeping up with everything happening in the world, the news, our social circles, or whatever.

But the truth is that none of us are keeping up with it all. And besides, true understanding and improvement comes from deep focus rather than shallow dithering. 

We’re not going to stop staring at screens any time soon, but hopefully we can start focusing on just one at a time and only when we’re not doing anything else. 

Recently I started leaving my earbuds at home for long runs. No music, no audiobooks, just the sound of the breeze and my repeated footfalls on the trail below me. I know what some of you are thinking, but no, I wasn’t bored. What’s more, I was actually able to focus better the rest of the day and felt less stress and anxiety.

U.S. making serious efforts to comply with EU data rules: EU officials

BRUSSELS (Reuters) – The United States is making serious efforts to comply with a landmark data transfer pact agreed two years ago, EU officials said on Thursday amidst criticism by some civil liberties groups and EU lawmakers that the U.S. is not living up to the accord.

European Justice, Consumers and Gender Equality Commissioner Vera Jourova holds a news conference in Brussels, Belgium September 28, 2017. REUTERS/Francois Lenoir

The comments came as the European Commission launched its second review of the EU-U.S Privacy Shield which aims to better protect Europeans’ personal data transferred across the Atlantic for commercial use.

The pact replaced a previous framework known as Safe Harbour, which Europe’s highest court quashed in 2015 because it gave U.S. spies excessive access to personal data. About 3,800 companies have signed up to the pact.

European Justice Commissioner Vera Jourova met U.S. Commerce Secretary Wilbur Ross in Brussels earlier on Thursday to discuss the review.

Officials from the Federal Trade Commission, the Office of the Director of National Intelligence (ODNI), the Department of Justice and the State Department, the EU executive and EU data protection agencies will also debate the topic over the next two days.

“All this pressure that we have created throughout the year seems to be working,” an EU official said, pointing to various measures that the United States has recently taken to adhere to the pact.

“Their level of preparedness for the review is a good sign of the seriousness of their approach,” he said, pointing to the 50-person U.S. delegation in the room during the exercise.

Lawmakers at the European Parliament have urged the Commission to suspend the accord until the United States observes the pact and its obligations in full, such as by appointing a permanent ombudsman. The Commission will publish its conclusions next month.

Reporting by Foo Yun Chee; Editing by Alexandra Hudson

5 Strategies Mentally Strong People Use to Keep Their Feelings in Check

A father came into my therapy office with his son and said, “He’s so strong. He hasn’t even cried once since his grandmother passed away.”

Being mentally strong isn’t about stifling your emotions and ignoring your pain. After all, it takes strength to allow yourself to feel sad, anxious, and scared.

You don’t want to stay stuck in a place of pain, however. It’s important to be able to shift your emotions when they aren’t serving you well. Here are five ways mentally strong people manage their emotions:

1. They schedule time to worry.

Whether you’re a natural worrier who worries about everything or there’s something specific that you can’t seem to get off your mind, all of those “what if…” questions can consume your mental energy. What if something goes wrong? What if I end up broke?

Set aside 20 minutes a day to worry and put it in your schedule. Then, when your worrying time rolls around, worry up a storm. When your time is over, go back to doing something else.

When you find yourself worrying outside your scheduled worrying time, remind yourself that it’s not time to worry and you’ll have plenty of time to do that later.

The goal is to contain your worrying to a specific portion of the day so it isn’t all-consuming. With practice, you’ll be able to spend your day focusing on the task right in front of you, rather than ruminate about what happened yesterday or worry about what might happen tomorrow.

2. They label their emotions.

Your emotions affect how you perceive events and how you decide to take action. When you’re anxious about something–even something completely unrelated to your current task–you’ll likely avoid risks.

When you’re sad, you’re more likely to agree to a bad deal (never negotiate when you’re sad). When you’re excited, you’ll overlook the challenges you’re likely to face.

Despite the major influence of emotions, most people spend very little time thinking about their feelings. In fact, most adults struggle to name their feelings.

But labeling your feelings is key to making the best decisions. When you understand how you’re feeling and how those feelings might cloud your judgment, you can make better choices.

Labeling your emotions can also take the sting out of uncomfortable feelings like sadness, embarrassment, and disappointment. So check in with yourself a few times each day and identify how you’re feeling.

3. They determine whether their feelings are a friend or an enemy.

Emotions aren’t either positive or negative. All emotions can be helpful sometimes and harmful at others.

Sadness is helpful when it reminds you to honor something or someone you lost. But it can be harmful if it tries to keep you from getting out of bed and tackling your day.

Anger is helpful when it gives you energy to take a stand for a cause you believe in. It can be harmful if it encourages you to do or say things that hurt people.

Anxiety is helpful when it talks you out of doing something dangerous. But it’s not helpful when it keeps you from stepping outside your comfort zone in a positive manner.

So after you label your feelings, take a minute to identify whether that emotion is a friend or an enemy to you right now. If it’s helpful, allow yourself to embrace that feeling fully. If it’s not helpful, change how you feel by either changing the way you think (or what you’re thinking about) or how you’re behaving.

4. They engage in mood boosters.

Behaving contrary to the way you feel can shift your emotional state. For example, smiling can evoke feelings of happiness when you’re feeling down. Or taking a few slow deep breaths can calm you when you’re feeling anxious.

It’s important to have a few activities in mind for boosting your mood on a bad day. The easiest way to do that is by creating a list of things you enjoy doing when you’re in a good mood, like going for a walk, listening to upbeat music, or having coffee with a friend.

Then, when you’re in a bad mood (and your emotions aren’t your friend), engage in a mood booster. Changing your behavior can shift your internal state and help you to feel happier.

5. They embrace discomfort.

Ask yourself, “What emotion is most uncomfortable?” For one person, it might be embarrassment. For another, it might be anxiety.

You likely go to great lengths to avoid the emotion you find least tolerable. Perhaps you don’t try for a promotion because you think you can’t handle rejection. Or maybe you pass up an invitation to give a toast at a wedding because you fear public speaking.

Many people go through life working really hard to avoid discomfort. Ironically, however, they end up feeling uncomfortable almost all the time because they’re wasting all their energy running away from things that may cause discomfort.

Embrace a little bit of discomfort. The more you expose yourself to uncomfortable feelings (as long as you do it in a healthy way), you can gain confidence in your ability to tolerate distress.

Build Your Mental Muscle

The stronger you become, the better equipped you’ll be to face the challenges that will help you reach your greatest potential.

In addition to creating healthy habits that will build mental muscle, however, it’s important to give up the bad habits that are robbing you of the mental strength you need to be your best. When you give up the things that are holding you back, you can become the strongest and best version of yourself.

In IPO, Uber Would Be Worth More Than GM, Ford, and Fiat Chrysler Combined

The ride-hailing giant recently received proposals from Goldman Sachs and Morgan Stanley valuing the company at nearly double its most recent valuation only two months ago, the Wall Street Journal reports. The staggering figure would make Uber worth more than General Motors, Ford, and Fiat Chrysler combined, or eight times Lyft’s current $15 billion valuation. Khosrowshahi, who took over the CEO role in August 2017, has said Uber is on track to go public next year. The company declined to comment for this story.

Since former CEO Travis Kalanick founded the company in 2009, Uber has raised over $22 billion in venture capital. Nearly half of that money–a little bit over $9 billion–was poured into the company after Kalanick’s departure last year. That money comes primarily from SoplaceholderftBank, which is now the majority stakeholder, according to data from Recode. The terms of their investment state that Uber must go public by the end of 2019 or let certain investors sell their shares on the secondary market, the WSJ reports. Co-founder Kalanick still owns a seven percent stake in his former company, which would be worth $8.4 billion if the company went public at the $120 valuation. Uber’s last funding round raised about $500 million from Toyota at a $72 billion valuation.

According to financial information released by the company, Uber is on track to close this year with more than $10 billion in revenue, but it is still losing money. Last year, the company’s losses surged to $4.5 billion, up from $2.8 billion in 2016, according to CNBC. So far this year, the company reported $659 million in net losses in the second quarter, up from $577 million in the first quarter of 2018.

Published on: Oct 16, 2018

Why California May Be the Role Model for Addressing Gender Inclusion

Governor Jerry Brown of California recently signed Senate Bill Number 826, which requires all male corporate boards to have at least one women, in an effort to address the issue of gender equality within 165 public companies statewide.

The legislation has received criticism and praise from both sides of the isle, as such a drastic measure has finally brought awareness to an issue that has limited the professional ascension of women in the C-Suite.

Regardless of which side of the debate you may lean toward, no where in California has been more impacted by the lack of women on corporate boards than Silicon Valley. There is an assumption that Senate Bill Number 826 is aimed directly at the tech industry, which has notably been criticized for a lack of diverse perspectives

More importantly, I dared to ask the question: Should gender inclusion be on any legislative agenda or is it just a private company issue? Did California get it right? To gain more perspective on the issue, I spoke with Tiffany Apczynski, VP of Public Policy and Social Impact at Zendesk, which is headquartered in San Francisco, to discuss how women in Silicon Valley are responding the legislation. 

Here are the five key takeaways from our conversation. 

The world is changing.

Tiffany stated the SB 826 is “one small step in dissolving the cycles of [bias] in the all male business world. In addition, it helps to change the landscape and bring more voices to the table, which brings equity across all aspects of the business model.” Although the bill is a corrective measure that provides strict timelines for public companies in the state, the bill provides extensive data and research to support the value that women bring to corporate boards and the outlook for the future of the country.

Opens up internal policy discussions. 

Two of the largest debates by far are parental leave and child care, which have placed women in high-level careers with limited options. Considering women are primary child care providers, and with no federal protection policies on maternity leave, it is difficult to present such a debate to an all male-corporate board. Apczynski added, “fewer people leave the workforce if you have better parental leave policies and child care subsidies. At the corporate level, we can have these discussions and implement policies that are best for the team.” 

Broadens perspectives.

There are diversity and inclusion experts, who believe that implicit biases are based on access within peer groups. Board members depend on the recommendation and advice of other board members to assist with filling vacancies. 

Tiffany says that tech cannot be innovative or disruptive if the decision makers are not exposed to different experiences and people. She believes the legislation will open up the world view for the members of corporate boards to begin taking another look at diversity from the members that have a seat at the table. 

Improves Corporate Culture.

Apczynski shared that “Zendesk does not have a problem with corporate culture.” It is probably due to their commitment to gender equity, which has a board comprised of 50 percent women, exceeding the requirements of SB 826. Tiffany also stated, “we are not afraid of going against the status quo.”

In addition, Zendesk has witnessed an improvement in corporate morale due to their social impact policies, which creates opportunities for their team to volunteer as an organization and gain first hand knowledge of how diverse perspectives impact the social landscape of the community. 


Perhaps, California is taking a page out of Britain’s push toward equal pay through regulating transparency. Britain’s stance on publicly shaming companies for their unfair pay policies through an annual report, which must disclose their gender wage gap, is a push toward pay equality, and the first major corrective measure toward gender equity. “The submissions have made for uncomfortable reading for company executives,” in a recent commentary in the New York Times

California’s legislation may create the same level of shame. According to the legislation, “one-fourth of California’s public companies in the Russell 3000 index have no women on their boards of directors.” In addition, companies with more women on their board are more likely “[to have] strong governance structures, demonstrate a high level of transparency, and avoid large-scale controversy,” as mentioned in Women Create a Sustainable Future by UC Berkeley Haas School of Business 2012.

Tiffany added that transparency provides hope for women that there are advancement opportunities within an organization, which improves retention and provides women with the advocacy and support to advance professionally. 

So, did California get it right? The law requires all companies within the state to have female representation by the close of the 2019 calendar year. For now, it is a major head-start in this ongoing debate.

Google Pixel 3 and Pixel 3 XL Review: Software Is Eating Your Phone

I’ve been using the Google Pixel 3 over the past week, and the number one question people have asked me about it is whether they should ditch their iPhone for one. Running a close second is the question that’s come from existing Pixel users—a much smaller but still enthusiastic group of people. They want to know whether to upgrade.

I’ll start by answering the second question: Yes. If you’re currently using a first-generation Pixel phone or a Pixel 2, you’ll want to upgrade. The $799 Pixel 3 is a joy to use. It has an improved camera, a better processor, and a new mobile security chip, the effects of which can’t really be felt in any discernible way except as added peace of mind. Google’s Assistant is scarily good. The new phone also supports wireless charging, which improves the whole experience in a significant way despite removing such a small barrier. The act of simply digging out and plugging in a cable, it turns out, is a drag.

The answer to the first question—whether it’s worth switching from an iPhone to a Pixel 3—is more complicated. For a many, that answer is no. The Pixel 3 is not an iPhone killer. I wish I could say it was, because stronger competition in the phone market is an excellent thing. (That’s not to say Android as an operating system needs any help; the number of devices in the world running Android far surpasses the number of those running iOS. However, Google-made Pixel phones are loaded with the most optimized version of Android out there.)

But current iPhone users still might not feel Google’s extensive software smarts can outweigh the benefits and conveniences that come with iOS. Maybe all of their friends and family are using iMessage on iPhones, and they’re wary of losing cross-device message syncing, missing out on iMessage’s embedded apps, or becoming the “green bubble” contact. Maybe they have an extensive collection of iCloud Photo Sharing albums. Maybe they have an Apple Watch, which only works with the iPhone’s software. Or maybe they just appreciate Apple’s commitment to keeping its users’ data private, which is a very legitimate thing to care about.

It turns out, as we spend each autumn examining and comparing specs on these new rectangular pieces of hardware, the thing that matters most is the software running on them. And that’s likely to be the case for the foreseeable future.

Modern Home

Sure, there are hardware components that matter. The Pixel 3 now has a glass back. The larger portion of the back is now a matte glass, while the top remains glossy. Its dual-tone construction is what makes it undeniably a Pixel phone. This glass back is also what enables wireless charging.

The Pixel 3’s display, an OLED panel that’s noticeably brighter than the one on last year’s Pixel 2, is improved. The 6.5-inch display on the larger Pixel, the Pixel 3 XL, now has a “notch.” This is a cutout at the top of the display where the front-facing camera sensors are housed. It also has a “chin” at the bottom. Some people make a big deal about these aesthetic attributes; personally, they don’t bother me.

The phone’s colors make a statement. Are you a Just Black kind of phone person? Clearly White? Or are you into Not Pink, my personal favorite, which is neutral-toned with just the slightest hint of a flush, like the white Pixel just walked up a flight of stairs? Color tones matter. I’ve been using the Clearly White phone for the past five days, and it smudges easily without a case.

The phone’s internals matter, too. Things like battery: The Pixel 3’s battery life has been excellent, lasting me more than a day, and my editor Michael Calore, who has been using the Pixel 3 XL, says battery life is on par with the previous Pixel XL phones he’s used. The bump up in processing power from last year’s Pixel 2 phones makes the new handset feel a little faster. It also ran without a hitch—except when the camera app froze a couple times as I tried to switch apps. On the downside, things like a lack of 5G modem and no front-facing depth sensors mean the Pixel 3 isn’t truly future-proof.

Snap Judgement

Finally, camera hardware matters—somewhat. The Pixel 3 now has two front-facing camera lenses, which means you can take an extra-wide-angle selfie by opening up the field of view with a sliding tool. This is one of my new favorite camera features on the Pixel 3. Samsung’s newer flagship phones also have a “Wide Selfie” mode. But the Pixel 3’s selfies came out better than the ones I shot on a Galaxy S9, with less distortion and none of the image bleeding that was present on the Samsung’s shots. Selfies taken on the Pixel 3 appear smoothed, or, as one Twitter user described it after I shared a selfie of my WIRED colleagues, make our faces look as though we’ve never frowned a day in our lives.

Some of the Pixel 3’s other camera features rely on hardware elements, namely the more advanced image-processing chip Google put into this phone. But to consider the Pixel 3 is to consider its software above anything else. A feature like Photobooth, borrowed from the Google Clips camera, auto-captures a series of selfies for you. It recognizes when you’ve made some sort of facial expression and then starts taking pictures. I’ve found that it’s really biased towards smiles more than any other expression. But it’s nice to be able to just open the camera, select Photobooth, then raise your phone and not have to press the shutter button. The phone’s software does the work for you.

Night Sight, the feature Google recently previewed that improves Pixel 3 photos captured in dark settings, won’t show up on Pixel phones until later this year, so I wasn’t able to test that. Top Shot is another another AI-powered tool, one that more than one Google worker told me was the most significant feature of the new camera. But it hasn’t yet worked as advertised on any of the dozen motion photos I’ve snapped so far with the Pixel 3. Top Shot is supposed to select the best shot of all of the frames captured in a motion photo—the shot where everyone is smiling and looking at the camera with their eyes are open, and where nobody has walked into the frame. But every time I took a motion photo, I went to the “film strip” of stills below the photo and there were no Top Shot suggestions in sight.

With Super Res Zoom on the new Pixel 3, you can zoom in on objects far away and expect a crisper image.

Lauren Goode

Pixel 2 doesn’t have “Super Res Zoom,” but here’s a similar photo captured with the Pixel 2.

Lauren Goode

Other aspects of the new camera showed notable improvements. Even without the Night Sight feature onboard, low-light photos looked better in general than those captured on the Pixel 2. In some cases, the Pixel 3’s night shots looked better than those captured on the iPhone XS. Super Res Zoom is baked directly into the camera, so it’s hard to do a comparison with or without it on the Pixel 3 itself. But I compared shots taken of a faraway street sign on the Pixel 3 versus last year’s Pixel 2, and the zoomed-in photo captured on the Pixel 3 was more crisp.

You can now adjust the background depth on Portrait photos captured on Pixel 3, despite the fact that the phone’s rear camera still uses a single lens. This is something you can do on iPhone XS and newer Samsung Galaxy phones, too. Google says the segmentation of Portrait photos, that mapping of the blurred background and in-focus subject, is better, too—although in my testing, the background blur still wiped out my colleague Kayla’s earrings. (You can see this in the included photos.)

The AR effects on the new Pixel have been upgraded as well. Just a few years ago, Google’s AR experience required a hefty hardware module to be attached to the back of its phones. Now the company is doing pretty remarkable AR tricks on standard phone hardware, something Apple has also achieved. The Pixel’s AR app is now called Playground, and it includes AR characters that actually react to your expressions as you’re placing them in the app. Google Lens, the company’s visual search tool, is also baked directly into the Pixel 3’s camera.

Talk It Over

Camera aside, Google’s predictive and helpful Assistant is what really steals the show on the Pixel 3. It’s fast, it’s responsive, and it always seems to know what information you want, and when you want it. On the Pixel 3, it exposes more information on the phone’s lock screen, like what’s next on your calendar, or notifications about news and TV shows it knows you like.

The Assistant feature that most clearly points toward our ambient smartphone future is Google’s new Call Screen mechanism. This dispatches a version of the Google Assistant to answer incoming phone calls in your place. A friendly robotic voice asks the caller to describe what they’re calling about, which the Assistant then transcribes for you and displays on your screen. Then it keeps them on hold to give you time to make a decision about whether to answer the call. I had initially thought this feature was just there for unrecognized numbers, but while I was testing the Pixel 3, the Assistant screened even my known contacts when they called.

Some people are rightfully concerned that dispatching robots to answer phone calls for us is the next step toward a cold, unfeeling future. However, I also found it vastly satisfying when an unknown number called my Pixel 3 and, after the Google Assistant asked the caller to state their business, the caller promptly hung up. Good riddance to spam callers! I, for one, welcome this particular robot overlord.

Call Screen will eventually come to Pixel 2. So will the AR app Playground and Google’s Digital Wellness dashboard (the app that tracks your app usage which, like Screen Time on iOS, I quickly grew bored of, because I am a smartphone-addicted monster.) Most of the camera features I’ve described above are specific to Pixel 3. And of course, the wireless charging is specific to Pixel 3, which means the Pixel 2 phone won’t turn into a nifty, mini smart display the way the Pixel 3 does if you pair it with Google’s $79 Pixel Stand charger.

The Pixel 3 phone, more than any other Google-designed phone before it, is an example of what sophisticated software can do when the hardware it runs on is incrementally improved. It’s not perfect, but that’s the thing about a phone that’s driven by its software: it will change and get better over time, even as the glass-slab-and-guts part of it stays the same.

Aurora And TGOD Break Up: Who Does This Harm?

(All prices herein are in Canadian dollars.)


TGOD data by YCharts

Executive Summary

Aurora Cannabis (OTCQX:ACBFF) made two investments in The Green Organic Dutchman (OTCQX:TGODF) (“TGOD”) for a combined $78 million. As part of these investments, Aurora received the right to purchase 20% of TGOD’s cannabis crops.

In addition, Aurora had the right to eventually take a majority stake in TGOD through a series of four “Milestone Options”, where, when TGOD achieved certain milestones, Aurora would have the option to purchase 8-12% stakes in TGOD for a 10% discount to TGOD volume-weighted price.

The first Milestone Option was set to expire in late August, but Aurora and TGOD agreed to extend that option to October 12. Today, that option expired – Aurora declined to exercise the option and TGOD declined to extend it. As a result, Aurora has forfeited their future Milestone Options – TGOD will not become majority-owned by Aurora.

In my view, this is a negative outcome to TGOD. Aurora’s investments into TGOD could have been seen as de-risking TGOD – insulating it from the fact that it won’t have cannabis until ~mid-2019 (after initial shortages may have passed) and the fact that TGOD doesn’t have any supply agreements.

With Aurora backing out of this deal, TGOD has been re-risked.

Initial Investment – $55 million

January 16, 2018: Aurora Cannabis invests $55 million into The Green Organic Dutchman.

“The Company is pleased to announce the closing of Aurora Cannabis Inc.’s strategic investment into TGOD. The investment consists of 33,333,334 Units, priced at $1.65 per Unit, for gross proceeds of $55 million.”

Each unit in this context is one share of TGOD plus one-half warrant (C$3.00 price, expiring ~January 2021). As part of this investment, Aurora also gained the right to four “milestone options” in TGOD:

(TGOD Investor Presentation, September 2018)

IPO Triggers First Milestone; Aurora Invests $23 Million More

May 2, 2018: Aurora invested further in TGOD at TGOD’s initial public offering in Spring 2018:

“Aurora Cannabis Inc., today announced the Company is participating in the IPO of The Green Organic Dutchman, purchasing 17.5% of the IPO issue, or 6.3 million units, priced at $3.65 per unit, for a total investment of $23.1 million. Each unit consists of one common share and one half of one common share purchase warrant exercisable at $7.00 per common share.

The investment follows an earlier strategic investment completed in January 2018, and upon completion, Aurora will hold a total of 39.7 million common shares. The Company furthermore owns 16.7 million share purchase warrants exercisable at $3.00, and will add a further 3.2 million share purchase warrants exercisable at $7.00 per share. This reflects an ownership interest of 17.6% on an undiluted basis. Aurora has an option to increase its ownership to over 50% in relation to TGOD achieving certain operational and financial milestones.”

Aurora Cannabis Press Release, May 2018

As quoted above, Aurora received a further 6.3 million shares for $23.1 million. Aurora also received 3.2 million warrants exercisable at $7.00/share.

In sum, Aurora invested $78 million in TGOD and received 39.7 million shares, 16.7 million warrants at $3 and 3.2 million warrants at $7.

Note that this investment was not using the milestone option – this was Aurora investing other money into TGOD’s IPO. However, the IPO also triggered the first milestone option above. Under the deal, after 90 days, Aurora had 30 days (so, 120 days total) to exercise its option to purchase 8% of TGOD:

“Further to the Investor Rights Agreement between TGOD and Aurora, dated January 12, 2018, the first Milestone Option was triggered on August 2, 2018, 90 days after TGOD’s initial public offering which closed on May 2, 2018. Under the Investor Rights Agreement, Aurora had 30 days to exercise the Milestone Option.”

TGOD Press release, September 2018

Valleyfield Cultivation License – Second Milestone Option Triggers

June 11, 2018: TGOD announces that its Valleyfield, Quebec facility has been granted a cultivation license from Health Canada:

“The Green Organic Dutchman Holdings Ltd. is pleased to announce that, effective June 8th, its wholly-owned subsidiary, Medican Organic Inc. has received its Cultivation License from Health Canada for the Company’s breeding facility in Salaberry-de-Valleyfield, Quebec. The commissioning of this facility will allow the Company to create proprietary, organically grown strains of cannabis and cannabis seeds.

Located on a 72-acre property, the breeding building will house the cultivation of cannabis and the production of seeds and new strains. This building marks TGOD’s first facility in Valleyfield, which will be followed by the addition of TGOD’s flagship 820,000 square foot state-of-the-art hybrid grow facility, which, when complete, will bring TGOD’s domestic production to 116,000 kgs of high-quality, premium organic cannabis annually. Construction of TGOD’s hybrid facility commenced in early 2018, and to date, site-clearing and earthworks have been completed.”

The Green Organic Dutchman Press Release, June 2018

This would, presumably, trigger the second Aurora Milestone option – giving Aurora the right to purchase an additional 8% of TGOD.

Aurora Extends First Milestone Deadline

September 4, 2018: On September 4, Aurora Cannabis and TGOD announced an agreement to extend the first deadline for the milestone option to October 12, 2018:

“Under the Investor Rights Agreement, Aurora had 30 days to exercise the Milestone Option. The parties have agreed to extend the term, such that the Milestone Option will now expire on October 12, 2018.

‘The Aurora partnership has been incredibly beneficial for both parties to date,’ said Brian Athaide, TGOD’s CEO. ‘In addition to the organic supply agreement, the value of Aurora’s initial investment has increased nearly five-fold. In turn, the assistance provided by the Aurora team has helped accelerate our progress across all divisions, and we look forward to continuing our strategic partnership as we work towards building the largest organic cannabis brand in the world,’ continued Athaide.”

TGOD Press Release, September 2018

Little commentary was given on why TGOD would agree to extend this deadline. However, I would infer that this extension was based on a belief from TGOD management that the company would be better off with Aurora on its side than without Aurora.

Aurora Declines To Exercise First Milestone Option

October 12, 2018: Friday, Aurora declined to exercise its first milestone option to purchase shares of TGOD and the deadline was not extended further. Instead, the option has expired.

“The Green Organic Dutchman Holdings Ltd. announces that the first milestone option (the ‘Milestone Option’) under the Investor Rights Agreement between TGOD and Aurora Cannabis Inc. has expired. The Milestone Option entitled Aurora to acquire an additional 8% of the common shares of the Company.

The milestone was achieved on August 2nd, 2018, three months after the Company’s shares became listed on the TSX. The Milestone Option provided Aurora with the right to purchase 8% of the Company’s shares (on a fully diluted basis) from treasury for cash at a 10% discount to the 10-day VWAP. Under the Agreement, the Milestone Option has now expired, and the Company has elected not to provide a further extension. In addition, pursuant to the terms of the Agreement, all remaining Milestone Options to acquire additional interests in the Company have expired.”

TGOD Press Release, October 2018

As described in the press release, Aurora declined to exercise their option to purchase additional shares of TGOD. Further, TGOD declined to again extend the deadline. This also means all remaining Milestone Options have expired – Aurora no long has the right to purchase a majority stake in TGOD. However, Aurora still has the right to purchase 20% of TGOD’s harvest once TGOD’s cultivation facilities are complete.

TGOD’s management’s tone in their press release was interesting:

“‘Aurora has been an incredible partner to date and both parties plan to continue the partnership. They invested $78.1 million into our Company and added tremendous value across multiple areas of collaboration, including the design and construction of our Canadian facilities,’ said Brian Athaide, CEO of TGOD. ‘Our recent $75 million bought deal financing ensures TGOD has the capital necessary to continue our international expansion at a rapid pace, extending sales and distribution to more channels throughout Europe and Latin America. While the Milestone Option has expired, many possibilities exist in the future for our two very complementary companies,’ continued Athaide.”

TGOD Press Release, October 2018


From the tone of the statement, TGOD sounds willing to continue to be friends with Aurora. However, Aurora is – apparently – not willing to invest more money into TGOD, even at a 10% discount to current prices. That is hardly a statement of great faith in TGOD from Aurora – perhaps a statement that Aurora management believes that TGOD is too expensive?

On the other hand, investing in 8% of TGOD would also be a substantial expense for Aurora – TGOD is not cheap.

By my calculations (from my October 9th coverage of TGOD on The Growth Operation), TGOD’s market cap is ~$1.9 billion and their enterprise value is ~$1.6 billion. That puts TGOD as the sixth-most-costly Canadian cannabis company, even though TGOD has no provincial supply deals and will barely produce cannabis until ~Q2 or Q3/19 (based on a 1H/19 completion of their facility).

An 8% stake in TGOD – even given a 10% discount – would still be likely to set Aurora back ~$150 million (depending on whether that 8% includes dilution). Meanwhile, Aurora only had $90 million in cash and cash equivalents, as of June 30, 2018. Aurora would still get $150 million if they wanted to, though – Aurora has a $200 million line of credit with the Bank of Montreal (BMO).

Thus, it wouldn’t be fair to suggest that Aurora couldn’t pay for 8% of TGOD – they could find the money; they just chose not to.

Going Forward

What does this mean for each company?

For Aurora, I am not sure that this deal means much. Ultimately, Aurora has 570,000 kg/year of capacity including the 20% of TGOD capacity that Aurora has the right to purchase. Aurora’s investments in TGOD has also been very profitable:

Value Cost
39,700,000 TGOD Shares $234,230,000 $78,100,000
16,666,667 TGOD $3 Warrants $78,000,000 0
3,150,000 TGOD $7 Warrants $10,000,000 0
Total $322,230,000 $78,100,000

(Author’s estimates based on Black-Scholes model for warrants using 30-day rolling volatility of TGOD shares at $5.90/share and 2.5% risk-free rate)

In sum, Aurora is up ~$245 million on its investments in TGOD. Not bad, even if they don’t want to purchase more shares.

For TGOD, I don’t think this is good news. TGOD does not have any supply agreements. TGOD will not have significant cannabis production until ~mid-2019, which is also when a lot of other producers – who do have relationships with provincial distributors – will have a lot of production.

Recently, there have been a lot of warnings that Canadian cannabis supplies will be short early in legalization – today alone, there were warnings from Aphria (OTCQB:APHQF) and Canopy Growth (CGC). As a result, production capacity today is very valuable – you can sell everything you can grow. Production capacity in ~nine months? Probably a lot less valuable.

In my view, Aurora walking away from TGOD significantly increases the risk of an investment in TGOD. Previously, TGOD could be looked at as something akin to a contract grower to Aurora – or perhaps even a contract manufacturer of greenhouses who was likely to be absorbed into the larger entity down the line. That is no longer the case: Aurora has expressed disinterest in majority ownership of TGOD, even at a 10% discount.

Aurora’s eventual purchase of a majority stake in TGOD could be interpreted as de-risking TGOD.

If that was the case, consider TGOD re-risked.

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Disclosure: I am/we are long ACBFF, CGC, APHQF.

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You're About to Drown in Streaming Subscriptions

You’ve got your Netflix subscription and Amazon Prime. You’ve got HBO Now, at least when Game of Thrones is on, and maybe pay up for a more specialized service too, like Crunchyroll or the WWE Network. It’s already lot! Bad news: It’s about to get worse.

The notion that streaming services might someday totally supplant the monolithic cable package has glittered on the horizon for years now. But as that future becomes increasingly the present, an uncomfortable reality has set in: There’s too much. To Netflix, Amazon Prime, Hulu, and HBO Now, add WarnerMedia, Disney, and Apple as omnibus, general interest streaming destinations. Investors have poured a billion dollars into something called Quibi, which has an unfortunate name but exclusive Guillermo del Toro content. And the niche options continue to proliferate as well, whether it’s DC Universe or College Humor. If we’re not at the breaking point yet, we’re surely about to find it.

“Everybody wants to talk about how much money’s being spent on content. But as a consumer, don’t you already feel like you have enough content choices out there?” says Dan Rayburn, a streaming media analyst with Frost & Sullivan. “Our eyeballs and the time that we have to consume media of any kind is being challenged.”

There’s nothing wrong, of course, with choice. That’s especially true if your interests run more niche, outside the relatively anodyne confines of a cable package, or even the relatively mainstream offerings of Netflix and Amazon. “The abundance of programming and commercial viability of smaller audiences is making it possible for storytelling from a much wider range of experiences to finally be available,” says Amanda Lotz, a professor of media studies at the University of Michigan and author of Portals: A Treatise on Internet-Distributed Television.

But while tailored, a la carte services have long been the promise of streaming TV, it’s starting to look more like a series of pricey buffets. Competing megacorporations are all pumping billions into original content, much of it designed for mass appeal. (Apple has reportedly mandated no “gratuitous sex, profanity or violence” on its incoming streaming service.) And even if each also produces more experimental or idiosyncratic options, you’ll be hard pressed to access all or even most of them. The show that scratches your itch won’t necessarily be on a platform you can afford to pay for.

“Realistically you’re not going to have a consumer with more than two or three services per month,” says Rayburn. Especially when you consider that these streaming services still largely supplement, rather than replace, traditional cable packages. There’s only so much disposable income to go around, no matter how much you care for The Marvelous Mrs. Maisel.

“In a lot of ways it’s an extension of the narrowcasting that began in the 1980s, with cable,” says Jennifer Holt, a media studies professor at the University of California, Santa Barbara. But by advancing that trend, it also exacerbates the fragmentation of culture that came with it. Again, that has plenty of potential benefit, giving otherwise marginalized perspectives more opportunities for representation. But it paradoxically may also make those shows increasingly hard to find.

“There was a time, the ’70s or the ’80s, when you knew what channel your show was on,” says Holt. “That kind of got lost in a lot of ways, with certain streaming services. Now maybe the idea of branding this content will take on different dimensions. You’re going to have to know where to find it. It becomes more work.”

Meanwhile, the splintering of services also threatens to hasten the decay of a broader, shared cultural conversation. “It starts to evacuate the potential for any real communal, cultural touchstone when we’re all watching completely different services,” says Holt.

All else being equal, one might expect all of this to be a blip, a temporary flash of exuberance that will subside once good old fashioned market forces clear away the rabble. But the untimely death of net neutrality, along with a merger-friendly Justice Department, have left all else quite explicitly unequal.

“I think the bigger issue is what happens in the aftermath of net neutrality’s elimination,” says Lotz, who argues that allowing ISPs to enforce paid prioritization is “more likely to change the marketplace for the services in profound ways.”

AT&T owns WarnerMedia, for instance, and so can not only potentially offer its impending streaming service at a discount—or for free—to its mobile or cable customers, but could prioritize its performance on its network, and downgrade that of rivals. (WarnerMedia hasn’t announced pricing yet, but if any of this seems far-fetched, note that AT&T already offers DirecTV Now discounts for mobile customers, and doesn’t count DirecTV Now streaming against data caps.) Comcast, meanwhile owns NBCUniversal, which gives it a sizable stake in Hulu; it also recently acquired Sky, which operates Now TV, a popular streaming service internationally.

The cable-content hybrid companies, in fact, win no matter what. Even if you pass on their streaming service, they can always make up the difference by charging more for broadband.

And then there are the companies for whom a streaming platform is a means to a greater end. Apple isn’t an ISP, but it does want to sell iPhones and iPads and Apple TVs, and will reportedly make at least some aspects of its streaming service free for hardware customers—just as, Holt notes, the early radio programs only existed to help radio companies sell more radios. Likewise, Amazon attempting to drive Prime subscriptions. All of which is to say, the field will stay crowded for longer than you might expect.

There are some bright spots in all of this, especially when you think small. “The services that work very well are the niche services, the ones that are targeting a specific type of user with a specific type of content,” says Rayburn. Those more targeted services have also forged new business models; Rayburn points to CuriosityStream, which recently embraced sponsors to help lower prices for viewers.

And Holt notes that most popular streaming services currently have fairly liberal password-sharing policies; as long as that holds true, she says, piracy could be the tie that binds us.

As more megaservices fill the landscape, though, one wonders how long before the niche upstarts feel the squeeze. And as your streaming options continue to kaleidoscope, what’s coming next looks promising, sure, but also daunting. Especially given who it’s coming from.

“The combination of the digital distributor, whether it’s the mobile phone or the ISP, and the content delivery, to me that’s the bleak future we’re headed toward,” says Holt. “I don’t think it’s going to work out for consumers.”

More Great WIRED Stories

These Are The Skills That Your Kids Will Need For The Future (Hint: It's Not Coding)

An education is supposed to prepare you for the future. Traditionally, that meant learning certain facts and skills, like when Columbus discovered America or how to do multiplication and long division. Today, curriculums have shifted to focus on a more global and digital world, like cultural history, basic computer skills and writing code.

Yet the challenges that our kids will face will be much different than we did growing up and many of the things a typical student learns in school today will no longer be relevant by the time he or she graduates college. In fact, a study at the University of Oxford found that 47% of today’s jobs will be eliminated over the next 20 years.

In 10 or 20 years, much of what we “know” about the world will no longer be true. The computers of the future will not be digital. Software code itself is disappearing, or at least becoming far less relevant. Many of what are considered good jobs today will be either completely automated or greatly devalued. We need to rethink how we prepare our kids for the world to come.

Understanding Systems

The subjects we learned in school were mostly static. 2+2 always equaled 4 and Columbus always discovered America in 1492. Interpretations may have differed from place to place and evolved over time, but we were taught that the world was based on certain facts and we were evaluated on the basis on knowing them.

Yet as the complexity theorist Sam Arbesman has pointed out, facts have a half life and, as the accumulation of knowledge accelerates, those half lives are shrinking. For example, when we learned computer programming in school, it was usually in BASIC, a now mostly defunct language. Today, Python is the most popular language, but will likely not be a decade from now.

Computers themselves will be very different as well, based less on the digital code of ones and zeros and more on quantum laws and the human brain. We will likely store less information on silicon and more in DNA. There’s no way to teach kids how these things will work because nobody, not even experts, is quite sure yet.

So kids today need to learn less about how things are today and more about the systems future technologies will be based on, such as quantum dynamics, genetics and the logic of code. One thing economists have consistently found is that it is routine jobs that are most likely to be automated. The best way to prepare for the future is to develop the ability to learn and adapt.

Applying Empathy and Design Skills

While machines are taking over many high level tasks, such as medical analysis and legal research, there are some things they will never do. For example, a computer will never strike out in a Little League game, have its heart broken or see its child born. So it is terribly unlikely, if not impossible, that a machine will be able to relate to a human like other humans can.

That absence of empathy makes it hard for machines to design products and processes that will maximize enjoyment and utility for humans. So design skills are likely to be in high demand for decades to come as basic production and analytical processes are increasingly automated.

We’ve already seen this process take place with regard to the Internet. In the early days, it was a very technical field. You had to be a highly skilled engineer to make a website work. Today, however, building a website is something any fairly intelligent high schooler can do and much of the value has shifted to front-end tasks, like designing the user experience.

With the rise of artificial intelligence and virtual reality our experiences with technology will become far more immersive and that will increase the need for good design. For example, conversational analysts (yes, that’s a real job) are working with designers to create conversational intelligence for voice interfaces and, clearly, virtual reality will be much more design intensive than video ever was.

The Ability to Communicate Complex Ideas

Much of the recent emphasis in education has been around STEM subjects (science, technology, engineering and math) and proficiency in those areas is certainly important for today’s students to understand the world around them. However, many STEM graduates are finding it difficult to find good jobs.

On the other hand, the ability to communicate ideas effectively is becoming a highly prized skill. Consider Amazon, one of the most innovative and technically proficient organizations on the planet. However, a key factor to its success its writing culture. The company is so fanatical about the ability to communicate that developing good writing skills are a key factor to building a successful career there.

Think about Amazon’s business and it becomes clear why, Sure, the it employs highly adept engineers, but to create a truly superior product, those people need to collaborate closely with designers, marketers, business development executives and so on. To coordinate all that activity and keep everybody focused on delivering a specific experience to the customer, communication needs to be clear and coherent.

So while learning technical subjects like math and science is always a good idea, studying things like literature, history and philosophy is just as important.

Collaborating and Working in Teams

Traditionally, school work has been based on individual accomplishment. You were supposed to study at home, come in prepared and take your test without help. If you looked at your friend’s paper, it was called cheating and you got in a lot of trouble for it. We were taught to be accountable for achievements on our own merits.

Make no mistake. The high value work today is being done in teams and that will only increase as more jobs become automated. The jobs of the future will not depend as much on knowing facts or crunching numbers, but will involve humans collaborating with other humans to design work for machines. Collaboration will increasingly be a competitive advantage.

Perhaps most of all, we need to be honest with ourselves and make peace with the fact that our kids’ educational experience will not–and should not–mirror our own. The world which they will need to face will be far more complex and more difficult to navigate than anything we could imagine back in the days when Fast Times at Ridgemont High was still popular.