SEC’s focus on U.S. corporate bosses pays off with Musk settlement

NEW YORK/WASHINGTON (Reuters) – A high-profile settlement with Tesla Inc Chief Executive Elon Musk exemplifies a recent push by the U.S. Securities and Exchange Commission to go after executives and not just their companies, securities law experts said.

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, U.S., June 24, 2011. REUTERS/Jonathan Ernst/File Photo

In the last week, the SEC announced charges or penalties against eight corporate officials at six companies, including Tesla. The SEC pursued each on different grounds, but securities lawyers said they highlight a shift to an emphasis on personal wrongdoing that has accelerated under Jay Clayton, an appointee of U.S. President Donald Trump who has served as SEC chairman since May 2017.

“Clayton is focused on holding individuals liable and not just corporate entities,” said Mary Hansen, co-chair of the white collar defense and corporate investigations practice at Drinker Biddle, who worked in the SEC’s enforcement division for eight years.

“The public wants to see our law enforcement, whether it be civil or criminal, hold those individuals responsible. That’s what is driving this focus on individual liability.”

The SEC brought action last week against the former president and chief financial officer of LendingClub Asset Management, Renaud Laplanche and Carrie Dolan, and the former CEO and CFO of Walgreens Boots Alliance, Gregory Wasson and Wade Miquelon.

In Tesla’s case, the SEC fined Musk $20 million and forced him to step down as chairman to settle charges he committed securities fraud in tweets saying he was considering taking the electric carmaker private. Tesla itself was also fined $20 million.

“Holding individuals accountable is important and an effective means of deterrence,” Clayton, a former corporate lawyer at law firm Sullivan & Cromwell LLP, said in statement on Saturday. Some Democratic lawmakers had expressed concerns during Clayton’s confirmation process that his ties to Wall Street would create conflicts and weaken oversight.

In 2016, 73 percent of the SEC’s standalone actions involved charges against one or more individuals, according to its own data. That rose to 80 percent in the six months after Clayton took over.


The SEC’s focus on personal culpability has roots in the aftermath of the 2007-2009 financial crisis. Few Wall Street executives were criminally prosecuted for their involvement, triggering calls by lawmakers and the media to hold more individuals accountable for corporate wrongdoing.

Proving individual wrongdoing and malicious intent is more difficult and resource-intensive than identifying compliance lapses at companies, legal experts said, explaining the SEC’s previous reluctance to pursue such cases.

“There is a terrible deterrent effect if you lose because it lets people know you can just fight off the regulators. That’s a bad message to the markets,” said Minor Myers, a professor at Brooklyn Law School and expert on corporate governance.

But political support from both Republicans and Democrats to go after individuals has emboldened the SEC.

FILE PHOTO: Tesla Motors CEO Elon Musk reveals the Tesla Energy Powerwall Home Battery during an event in Hawthorne, California, U.S., April 30, 2015. REUTERS/Patrick T. Fallon/File Photo

Despite their traditional allegiance to the corporate world, Republicans have supported charges against executives, looking to uphold individual accountability and protect big employers and public company shareholders.

And Democrats have been hungry for prosecutions of those who they consider to be the corrupt fat cats of corporate America.

To be sure, pursuing individuals remains a risky legal strategy for the SEC. With more to lose, including large disgorgements, fines and lifetime bans, executives are more likely to fight back in court, sucking up SEC resources.

The SEC suffered a high-profile defeat in the insider trading case of flamboyant billionaire Mark Cuban in 2013 when he was cleared by a Texas jury of using a private tip to avoid a big loss on his 2004 sale of internet company shares.

One of the lawyers Musk tapped to defend himself against the SEC, Latham & Watkins LLP’s Christopher Clark, also advised Cuban on his defense.

But as the SEC scores more legal wins and settlements such as one the with Musk, its enforcement officers feel emboldened to pursue even more cases against individuals, legal experts said.

“There is a huge appetite for going after people at the top of the pyramid. Those are the people you want to deter. Also, going after CEOs who have engaged in wrongdoing is a way for the SEC to generate a lot of political capital,” said Myers.

Reporting by Liana B. Baker in New York and Michelle Price in Washington, D.C.; Editing by Greg Roumeliotis and Meredith Mazzilli

Cyber Saturday—Facebook Hack, Spotify Data Prying, China Election Meddling

Facebook revealed Friday that it had been subject to a breach it discovered three days prior. An unknown hacker compromised 50 million accounts by stringing together a chain of software bugs that ultimately enabled the culprit to steal people’s so-called app access tokens. These tokens allow users to remain logged in, skipping the hassle of repeated password re-entry. Anyone in possession of another person’s token gains the ability to hijack that person’s profile.

In other words, Facebook faced, by its own estimation, 50 million potential account takeovers. What makes the situation worse is that these tokens can provide access to other linked services: Instagram, news sites, games, etc. Anything to which people have connected via a Facebook login could have been vulnerable. Contagion, networked.

The exploit was ironic. Facebook’s “view as” feature, a tool ostensibly designed for privacy purposes—that is, to let users check how their profile appears to other people—accidentally acted as a data sieve. While viewing one’s profile “as someone else,” an attacker could trigger a buggy video uploader through a mechanism intended to let people wish one another “happy birthday.” Accessed this way, the video uploader—containing flawed code since July 2017—served up a log-in token for that “someone else,” rather than for the true viewer. By impersonating targets through “view as,” an attacker could reap tokens galore.

Here’s a rule I live by: Never—or mostly never—use a social media login to access other online services. (I make a few exceptions for news aggregators connected to Twitter.) At the time of writing this column, only one service had access to my Facebook profile. I have since revoked its permission. (Sorry, Scribd.)

To review which services are connected to your Facebook account, take the following steps. Visit “Settings,” then click “Apps and Websites.” You can manage permissions here. If you’re worried about having to remember myriad passwords, use password management software.

Remember: every linkage is a potential point of vulnerability. Cybersecurity professionals call this concept network segmentation, and it is one of their fundamental principles.


A number of readers alerted me that a link I included in my last essay about credit freezes was broken. I regret the error. Here are the correct links: Equifax (phone number: 1-800-685-1111), Experian (1-888-397-3742), TransUnion (1-888-909-8872). Happy freezing.

Have a great weekend.

Robert Hackett


[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my, PGP encrypted email (see public key on my, Wickr, Signal, or however you (securely) prefer. Feedback welcome.

Spotify Ends Controversial GPS Validation for Family Plan

After asking some Premium for Family customers in the United States and Germany to verify their address via GPS, Spotify has reportedly stopped using the verification method.

Spotify’s Premium for Family plan allows up six people living at the same address to use a single premium plan for $14.99, as opposed to its single person premium plan for $9.99. The method was criticized by some Spotify users, especially for its language as a “family” plan, despite not requiring any familial relation, as long as all users live at the same address and even though not all family members live together.

The GPS validation also raised privacy and data concerns and received pushback after users were told their service could be discontinued if they did not prove their location matched with other users.

Spotify told Quartz the test ended Friday, a day after reports on it first surfaced.

The new requirement was likely an effort to boost average revenue per user, which dropped 12% for the company this quarter compared to the same point last year.

Gadget Lab Podcast: Oculus Quest, Elon Musk and the SEC, and More

If it seems like all of the news has been centered around this week’s Senate Judiciary Committee hearing and you’re wondering what tech news you might have missed, then this is the podcast episode for you. On this week’s Gadget Lab we discuss the abrupt departure of Instagram’s co-founders from Facebook; Twitter’s ban on dehumanizing language; and the SEC’s suit against Elon Musk.

Also, WIRED editor and author Peter Rubin joins us for an interview about the Oculus Quest VR headset, which he demoed first-hand at this week’s Oculus Connect conference. Is this the thing that will bring VR to the mainstream, or is it just more of the same face computers?

Show notes: You can read about the Oculus Quest here, along with stories on the departure of the Instagram co-founders; the suit against Elon Musk; and Twitter’s attempt to curb dehumanizing language.

Recommendations this week: Arielle recommends the WeCroak podcast. Lauren recommends the interactive story app Florence. Mike recommends watching “Won’t You Be My Neighbor”.

Send the Gadget Lab hosts feedback on their personal Twitter feeds. Arielle Pardes is @pardesoteric. Lauren Goode is @laurengoode. Michael Calore can be found at @snackfight. Bling the main hotline at @GadgetLab. Our theme song is by Solar Keys.

How to Listen

You can always listen to this week’s podcast through the audio player on this page, but if you want to subscribe for free to get every episode, here’s how:

If you’re on an iPhone or iPad, open the app called Podcasts, or just tap this link. You can also download an app like Overcast or Pocket Casts, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

If you use Android, you can find us in the Google Play Music app just by tapping here. You can also download an app like Pocket Casts or Radio Public, and search for Gadget Lab. And in case you really need it, here’s the RSS feed.

We’re also on Soundcloud, and every episode gets posted to as soon as it’s released. If you still can’t figure it out, or there’s another platform you use that we’re not on, let us know.

UK regulator to enquire if Facebook data breach has affected UK citizens

(Reuters) – The UK’s Information Commissioner’s Office said on Friday it will make enquiries with Facebook Inc (FB.O) and other overseas regulators to find out if British citizens were affected by a security breach announced by the company earlier in the day.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

Facebook said it discovered a security breach affecting about 50 million user accounts after attackers stole Facebook access tokens through its “view as” feature which they used to take over people’s accounts.

“It’s always the company’s responsibility to identify when UK citizens have been affected as part of a data breach and take steps to reduce any harm to consumers,” ICO Deputy Commissioner of operations, James Dipple-Johnstone said

Reporting by Philip George in Bengaluru; Emelia Sithole-Matarise

Intel Corporation: Why I'd Rather Bet On Goliath Than David

The recent euphoria over AMD (NASDAQ:AMD) has been interesting to watch. For long-time bulls, it represents a very profitable victory over the naysayers. I’m always happy to see increased market competition, as consumers stand to benefit from these developments. However, on the stock side of things, I think the love for AMD has gone too far and that Intel (NASDAQ:INTC) represents a much better investment both now and in the future.

Image from

Image from

From the charts above, you’d think that Intel was going out of business or that AMD was being acquired! The P/E for Intel is 11, and 69 for AMD. Yikes. Instead of buying at the top of this 300% gain, consider the following:

AMD’s Q2 revenue of 1.76B is rather embarrassing compared to Intel’s 17B Q2 revenue. They chose to only state their gross margins of 37% on their earnings slides presentation because I’m guessing that they didn’t want investors to see that operating margin was only 8.7% (author calculated) for the quarter. Intel, on the other hand, sports a gross margin of 61.4% and an operating margin of 32.5%.

I know that companies are not required to post certain data on earnings slides, and that the information can be fairly easily calculated from the SEC-filed 10-Q, but I always like to look at what companies choose to highlight. I find companies that choose to report weird, non-standard, financial metrics tend to do so because they want to paint a rosier picture than what is really going on with the business.

Image from AMD earnings slides presentation 7/25/18

Intel has always enjoyed an advantage over AMD due to its size and financial strength. That advantage is not going away overnight like some analysts would have you believe. AMD may be putting out some good products right now, but it still doesn’t materially shake up the market share landscape. In fact, the market share advantage that Intel enjoys has actually appeared to get bigger in the past 6 years, not smaller.

Image from

AMD launched the popular Ryzen line of processors beginning in the summer of 2017. AMD enjoyed a market share gain of ~4% with the product, but has since lost most of that gain in the quarters following, despite new iterations being released.

Intel’s quarterly R&D spending is $3.4B, which is twice AMD’s quarterly revenues. With this type of discrepancy in funding, AMD can’t afford to stumble on developing competing products.

We will see what effect other products like Epyc will have on market share of data centers, but I’d rather invest my money with the much more successful incumbent in this area.

Dividends And Buybacks

While it’s always painful to see companies buy back shares and then have the share price decline further, at least management is implementing a source of capital return to shareholders. Share reduction of 117M shares YTD will help reduce dividend payout and improve earnings growth.

Image from INTC earnings slides presentation 7/25/18

While INTC’s 2.64% dividend is not burning a hole in your pocket, it does help fight inflation and offers you some solace in share price slumps such as these. INTC has also shown a consistent history of dividend growth, and we are due for another increase soon. Payout ratio sits at just 29%, so there is plenty of room on the balance sheet for such a move.

Image from Seeking Alpha dividends tab for INTC

Will AMD’s Gain Cause INTC Pain?

Image from INTC earnings slides presentation 7/25/18

Nope. Intel has actually RAISED its guidance for FY18 despite AMD product launches, global trade war, 10 nm product delays (always expected to be 2019, but still widely touted) and a CEO departure. I’m having a hard time coming up with ways that Intel will see decreased financial performance short of a prolonged recession or physical disaster. Even Qualcomm (NASDAQ:QCOM) fighting with Apple (NASDAQ:AAPL) for the millionth time over stealing trade secrets shouldn’t actually affect Intel, as it is not a direct defendant in the litigation.

I’m also not scared for Intel’s future prospects when its main competitor has to resort to saying that FCF will be “positive” in guidance statements.

Image from AMD earnings slides presentation 7/25/18


When you can’t come up with a convincing bear case for your hypothetical investment in a stock, that usually signals you that it’s time to buy. We don’t know what the future will bring for Intel and AMD and their ongoing battle, but we can see that Intel appears undervalued and AMD appears overvalued at this time. I’m not trying to say that money cannot be made with AMD, just that it seems like more of a sure bet to invest in the market leader.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in INTC over the next 72 hours.

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

Tilray's Flash Crash Is An Ominous Sign For The Cannabis Sector

Image result for tilray logo

Tilray’s (TLRY) share price just gave out its biggest warning sign to investors last week when its share price surged after the CEO, Brendan Kennedy appeared on Cramer’s Mad Money and touted the potential for medical marijuana. Speculators loved it and piled in on Wednesday, driving its share price up more than 100% at one point. The stock was halted five times due to triggers of too much gain and ended the day up “only” 38%. Despite being a great cannabis company, we are certain that Tilray’s current share price is unsustainable, irrational and doomed to fall. More importantly, the volatility exhibited on Wednesday is an ominous sign for the entire cannabis sector. We still vividly remember that in the weeks before the bitcoin bubble burst, people on the subway and in coffee shops started talking about it. As a result, we also fear that Tilray has done the cannabis market more bad than good.

(Source: CNBC)

Irrational Exuberance

Being one of the longest-standing contributors on SA entirely dedicated to providing the best cannabis coverage, we strongly believe in the potential of cannabis in both recreational, medical and other potential fields. However, the development of an industry takes time and anything that rises too fast and too much will only lead to a crash that might take a long time to recover.

Below is the share price chart for Tilray on Wednesday. The stock closed around $155 the day before and at some point, it reached $300 during the day, almost doubling in just one day. However, after one of the halts was lifted, the stock crashed down to below $155, essentially wiping out the entire gain in a matter of minutes. The trading of this stock is so volatile that every share price tick on the screen between seconds is a movement of 3-5%.

When is the last time that we saw this type of trading in the public markets? We cannot help but think back to the crypto bubble that has been slowly bursting during 2018. We don’t believe cannabis is bitcoin because the market is real and tangible, and there is a clear path to reach that market through legalization. However, we believe the Tilray stock has become a tool for speculators and manipulators which is ultimately harmful to the sector as a whole. If a stock could move 200% (up and down 100%) in a single trading day, you know there is absolutely nothing normal about this stock.

Tilray is Good, But Not $300 Good

We liked Tilray very much when we first covered the stock after its IPO in “Tilray: The IPO That Checks All The Boxes“. Back then, we thought the stock was likely overbought given the share structure and enthusiasm around the first-ever cannabis stock to IPO on the Nasdaq. However, the stock has since risen to over 10x the IPO price of $17.00 which is totally beyond our comprehension. We think there are a couple of things we should look at to see that Tilray is trading on hype rather than any fundamental factors.

Share Structure

After the IPO there are 16.6 million class 1 shares and 75.1 million class 2 shares outstanding. Besides the 9 million shares that were sold as part of the IPO, all other shares are locked up as they are held by the insiders and affiliates. Privateer owns 82% of the economic interest and 93% of the voting rights in Tilray after the IPO. On Wednesday, the stock traded 32 million shares! That means the entire float of Tilray was traded more than 3 times in a matter of 24 hours. Imagine the entire block of Tilray shares that are available for public trading was exchanged hands three times. One could only imagine who the buyers or sellers are and whether there was anyone looking for anything but a quick profit. The tight share structure won’t change until the company does equity offering or insiders start selling shares.

Tilray Financials

We have long been preaching the concept that valuation is inherently useless and inaccurate for cannabis companies given that the market is not yet open for business. However, it does not mean that we should not check the numbers to get a sense of how much growth has been priced into the current share price. At Tilray’s closing share price on Wednesday of $214 and 91.7 million shares, Tiraly’s market capitalization reached $19.6 billion. For the year of 2017, the company generated revenue of $20 million and incurred a net loss of $7.8 million. We know better than anyone else the potential for cannabis market and we have been an advocate for the sector, however, a $20 billion market capitalization means that a very large chunk of the future growth has been priced into it. There is not that many $20 billion companies out there and it takes most of them years and years of work to get there. Put it another way, Tilray needs to generate billions of revenue just to maintain its share price, not to mention any upside at the current market cap.

(S-1 filing)

Implications for the Cannabis Sector

The biggest concern for us as an observer of the cannabis sector is that when Tilray finally comes crashing down, it will drag down the entire sector. Wednesday is a good example (chart below) as most cannabis stocks traded up significantly during the day only to end up losing most of the gains after Tilray faltered in the final hour of trading. Canopy (CGC), Aurora (OTCQX:ACBFF), and Aphria (OTCQB:APHQF) all ended Wednesday in the red. Cronos (CRON), benefiting from its Nasdaq listing similar to Tilray, saw its share price up more than 30% at one point during Wednesday before settling to a 10% gain.

There is so much media exposure on Tilray that the average investors are starting to piling in, which is an incredibly useful sign for predicting when the peak might be near. We are not calling an exact date for the correction to happen, but when the TV programs are talking about Tilray every 5 minutes and your friends and families started asking whether they should buy this stock, you know the end is near. We have seen a similar pattern play for the cryptocurrencies during the last few months of 2017 when bitcoin became the anchor topics for most business websites and TV programs and everyone had a friend or family that invested in bitcoin. At the time people thought the digital coins could only go up and $100,000 is the price target for bitcoin. Now that bitcoin is gone and no one talks about it anymore, the speculators had found their new toy and cannabis is the hottest sector on the main street now.

For companies that have less pronounced public profiles, they have not benefited as much from the Tilray’s meteoric rise. However, when the Tilray bubble bursts, investors will likely punish all stocks and more importantly, capital flow into the sector could be temporarily impacted. Companies like Hexo (OTCPK:HYYDF) and CannTrust (OTC:CNTTF) could be seriously damaged if the sector becomes tainted with words like “bubble” and “hype”. We think the Tilray saga needs to end and the sooner the better. A healthy appreciation of share prices is more helpful to the long-term growth of the cannabis sector rather than the speculative movements we are seeing out of Tilray right now. The wild swings is an ominous sign that the sector has reached the level of mania that was last seen in crypto and a correction is long overdue at this point. For more details about our views of the cannabis market and a potential correction, see our recent article “Are We Heading Into Another Meltdown For Pot Stocks?


Author’s Note: “Follow us” to receive our latest publications in the sector. We also publish a widely read Weekly Cannabis Report, which is your best way to stay informed on the cannabis sector.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Ashford Hospitality Trust: Why I Bought More On The Big Pullback

Who knew that furniture could be so profitable? I’m not talking about selling furniture, I’m talking about being able to use furniture for free. The recent deal between Ashford Inc. (NYSEMKT:AINC) and Ashford Hospitality Trust (AHT) allows AHT to do just that. It is so compelling I almost feel like driving around the night before bulk trash pick-up and hoarding as much furniture as I can. Obviously, I’m exaggerating, but the recently signed Enhanced Return Funding Program Agreement between the two companies makes you wonder if there are other ‘out of the box’ ways to juice returns.

The stock price for Ashford Hospitality dropped 18% after the company reported 2Q results.

I poured over the earnings release and couldn’t figure out why the stock declined so dramatically. Yes, the revenue numbers were lower than the same period last year but to drop 18% in one day? Something didn’t make sense. I thought it might be this new agreement and that it was probably to the benefit of Ashford Inc. at the expense of Ashford Hospitality. Nope. The deal is a good one for both parties.

The ERFP Agreement

The agreement is a commitment from Ashford Inc. to invest $50M and up to $100M for properties acquired by AHT. The investments will equal 10% of the property acquisition price and will be made, either at the time of the acquisition or at any time in the following two years. Here’s the interesting part: in exchange for furniture, fixtures, and equipment (FF&E) for use at the acquired property or any other property owned by the partnership, Ashford Inc. basically gives AHT the right to use the FF&E at any hotel leased by the REIT.

The way it helps AHT is by enabling it to put up less equity when making acquisitions and in some cases, make better offers that are more likely to win the bid. There is the danger that this could lead to overpaying of properties but management made a point on the press release that the agreement is to help make ‘good deals great,’ not overpaying for the sake of it.

The $50M 2-year commitment enables AHT to acquire up to $500M of “furnished’ hotels and is expected to add anywhere from 700 to 1200 basis points to potential returns. Here is how that works:

Using the full potential $50M potential investment, Ashford is able to acquire $500M of properties with just $100M of its own capital. The balance of $400M will be sourced with mortgage debt and corporate preferreds as well as the $50M from Ashford. That’s a 33% reduction in the amount of equity required and certainly a competitive advantage in the bidding process.

Hilton Alexandria

The Hilton acquisition is a great example of how the program will work. Out of an acquisition price of $111M, Ashford is providing $11.1M from the ERFP funding agreement. The effect on the NOI cap rate for the acquisition is compelling, with an increase from 7.5% to 8.3%, resulting in a 62% increase in the 5-year IRR, from 18.2% to 29.5%. There are certain assumptions built into these figures such as the timing of the Ashford investment. The sooner the investment is made the higher the impact on ROI and IRR. The NOI increase assumes funding at the close of the transaction. The IRR calculation assumes funding one year later.

Either way, the agreement is compelling enough to give the stock considerable upside – if invested correctly. There are benefits to Ashford Inc. too, of course – namely, an increase in fees as a result of incremental hotel acquisitions.


So even though the stock was cheap before, it is really cheap now. I think analysts have been slow to add any growth in revenues from what potentially could be a ramp-up in acquisitions. At a current P/AFFO multiple of just 7.1, AHT is arguably the best value play in the Lodging REIT sub-sector.

It also has the second-highest dividend yield among peers, which when combined with a payout ratio of just 51%, is likely to persist. Maybe, just maybe, we might even get a dividend boost too.

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Disclaimer: Please note, this article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It is intended only to provide information to interested parties. Readers should carefully consider their own investment objectives, risk tolerance, time horizon, tax situation, liquidity needs, and concentration levels, or contact their advisor to determine if any ideas presented here are appropriate for their unique circumstances.

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Disclosure: I am/we are long AHT.

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

5G will bring cloud computing to everyone

I gave a cloud computing talk in a rural Midwest town a few years ago. I went on and on about the benefits of using the cloud. During my talk, I noticed a lot of folded arms and concerned faces. The reason? They did not have high-speed internet available to their businesses, so using a public cloud was not an option for them.

I learned that day that you can’t assume everyone has high-speed internet access. Most rural areas don’t, unless they pay for high-latency and high-cost satellite.

5G is the fifth generation of cellular mobile communications, preceded by 4G (LTE/WiMax), 3G (UMTS), and 2G (GSM) systems. 5G advantages include high data-throughput rates, reduced latency, energy savings, cost reduction, greater system capacity, and massive simultaneous device connectivity, at a practical cost.

It’ll be a while before 5G comes to a tower near you, but it promises low-cost, low-latency high-speed internet for all, no matter where you live or have a business. This is the missing link for many people and businesses, when it comes to using cloud computing.

What’s different about 5G is that its purpose-built for homes and businesses. It is not the use of a cellular network that can only support a few devices tethered via a Wi-Fi hotspot. Instead you can run a good-sized business over a 5G network, and do so with no T1, DSL, cable, or other wired broadband connection on premises.

5G is the functional equivalent to businesses getting electricity for the first time. Access to cellular broadband means that they can use cloud-based systems to begin to automate things that should have been automated years ago, but that they had to defer due to availability and affordability. This means connectivity for IoT devices (whether outside or on factory floors), the ability for staff to use analytics to understand where their business stands, and the ability to train employees online on the latest processes and technologies wherever they happen to be.

Those of us who log onto our 200Mbps networks at home or at work often take connectivity for granted. However, those who don’t have broadband will discover the whole new world of cloud computing with 5G that can take their businesses to the next level. It’s about time.

U.S. Justice Department meeting with state officials focused on data privacy

WASHINGTON (Reuters) – A U.S. Justice Department “listening session” with state attorneys general on Tuesday focused on how tech companies handle user data and whether privacy issues can be addressed using antitrust law, California Attorney General Xavier Becerra said.

FILE PHOTO: The Department of Justice (DOJ) logo is pictured on a wall after a news conference in New York December 5, 2013. REUTERS/Carlo Allegri/File Photo

The group made no immediate plans to file any case or open any investigation, Becerra said after the meeting, which lasted about an hour.

“The conversation really zeroed in on privacy,” he said. “We talked about having some more conversation… The principle conversation revolved around privacy and antitrust.”

Reporting by Jan Wolfe and Sarah Lynch; Writing by Diane Bartz; Editing by Bill Rigby

The Great, Glorious, and Profound Key to All Leadership and Management

Being in management for 30 years has taught me one golden rule. It has formed the basis for everything I believe works and is the ultimate key to success in a company.

There are obviously quite a few opinions on this. I’ve read books about how being a servant-leader is the key, and how you really have to give feedback.

Of course these books are absolutely essential, and they will help you in countless ways. Great leaders use all of the tools in the toolbox, and leaving one or two out–say, not leading by example or acting selfish when it comes to career advancement–can spell disaster even if you master the other tools.

Still, in my experience, there is one major differentiating key.

For anyone in leadership, you have to find out what is really motivating people. What lights their fire? What makes them get up in the morning? Once you know what is driving them–why are they even on your team, what do they hope to achieve–then leading becomes much more fluid and natural. It’s the difference between trying to pedal a car on your own (say, using extra charm or direct commands) versus letting the engine do the work. It’s the difference between a company that is run efficiently and one that is built on an underlayer of your own personal effort…and maybe how much you pay people.

The reason this is so important is that, as a leader, if you can tap into the right motivations–a process that requires time, empathy, communication, and awareness–then you unleash something utterly foundational and core to great leadership. It’s why an employee wants to do the work. It’s the true driving force, their inner passion.

Great leaders know how to tap into motivations and passions, long-term dreams and life-long aspirations. They know how to make sure employees are doing the work they are most passionate about and where they have the most talent.

Moving people out of drudgery into a dream role–that’s our job as leaders.

I experienced this recently. I know someone who is driven to make a difference with the written word. I’ve worked with this person for years, and it took me a long time to realize–for her, it is not about money, it is not about prestige or power. What’s really driving her is a desire to connect with people using the written word and impact her readership.

Once you know what drives people, once you spend the time to communicate with someone and discover true motivations, once you do the hard work of uncovering motivations, it unleashes a wildfire. All management tasks become easier. Every meeting is painless.

What about the alternative? Look out. We tend to think a “toxic” person is an employee who has a crabby attitude or lacks intelligence. Not always. The most toxic person might be stuck in a job that doesn’t match up with his or her motivations in life. And that creates all kinds of management problems–long meetings, constant conflict, and a dark cloud.

What you can take away from this concept of finding inner motivation is simple. You have to take the time to find out. It has to become a core value of all leadership. Is that graphic designer on your team motivated to make an artistic impact? Is your accountant motivated to show she has brilliant math and analytical skills? Often, people are not actually motivated by power or money–that’s a ruse. Life is so much bigger than a paycheck or power. They want fulfillment, recognition, achievement, and respect.

Your job as the boss is to unleash that.

The best leaders in the world–the ones that change the world and start companies and stand the test of time–are the ones who know how to motivate. Think of the best Steve Jobs keynotes, or the interviews you’ve seen with Elon Musk, or the remarkable company that Mark Zuckerberg built, starting in his dorm room. The thread that ties them all together?

They all know how to motivate. They know that is the ultimate key to success.

Bumble Steels Itself to Fight Match—and for an IPO

Bumble is taking the gloves off. The dating and social connection app is moving forward with its $400 million lawsuit against Match, filed as a countersuit against the online dating giant in March, as Bumble gets ready to pursue an IPO.

Bumble had considered settling the suit but is now abandoning that path, founder and CEO Whitney Wolfe Herd tells Fortune.

“We had considered a private opportunity to settle privately, and that’s something we’re no longer open to,” Wolfe Herd says. “Now we are ready to take it to court.”

Match first sued Bumble for infringement on intellectual property in March 2018, alleging that Bumble stole the dating-app swipe from Match-owned Tinder. Wolfe Herd was a co-founder of Tinder, before leaving that startup to found Bumble, which was the first dating app to give women control of matches and messaging with men.

Austin, Texas-based Bumble fired back later that month with a countersuit alleging that that lawsuit was frivolous, brought by Match after Match lowballed Bumble with an investment offer and then requested Bumble’s most sensitive records and business strategies to come back with another offer. Instead of making that offer, Bumble claims, Match used that information and then filed its lawsuit.

Bumble sued Match for tortious interference with Bumble’s prospective business relations, by preventing other companies from investing in or partnering with Bumble through its alleged bad faith investment attempts and lawsuit; promissory estoppel, promising an investment that never materialized; disparagement in Match’s lawsuit and in the press; and unfair competition, violation of the Texas Uniform Trade Secrets Act, and fraud all stemming from Match’s extraction of Bumble company information.

Bumble filed that countersuit in March, estimating damages of $400 million at the time, and today is serving that lawsuit. Wolfe Herd declined to comment on whether any of Bumble’s claims against Match have changed since March.

But Bumble is prepared to fight this until the end—even if it takes years. The startup, which has verticals for dating, networking, and friendship and recently announced plans to move into beauty, has an annual run rate of $200 million and says it has the resources to keep growing while battling this out.

“We feel very prepared, we feel very ready, we feel that we have all the bandwidth and all the resources we need. We have the intellectual capital and both the financial capital and we are ready to defend ourselves,” Wolfe Herd says.

As Bumble prepares for a lengthy, public legal battle with its top competitor—and one with a fraught history at that—the company is also saying for the first time that it plans to pursue an IPO. Wolfe Herd declined to comment on a potential timeline, but the company is doing its due diligence on going public now.

If Bumble wins this case, it plans to donate its proceeds to causes supporting women, which includes investing in its own venture capital arm, the Bumble Fund.

“This is our lawsuit that we believe strongly in, we feel is extremely valid,” Wolfe Herd says. “There is real strength in the possibility of us having a successful win.”

Sad at Work? Good!

When it comes to art and creativity, sadness is one of the most fruitful emotional states (just ask any artist). So why is it so often sequestered outside the stoic walls of professional life, why do we seem to treat it as the ultimate taboo in business?

Harvard psychologist Susan David describes this status quo as the “tyranny of positivity,” an inflexible socio-emotional habit that’s limiting our potential. If discomfort is the “price of admission for a meaningful life,” as David suggests, sadness should not only be a necessary quality of any human culture, but also a creative and productive force in any company.

When we talk about agility, diversity, and inclusion–all the trademarks of the modern, innovative organization–we must begin with our emotions. “Diversity isn’t just people, it’s also what’s inside people, including diversity of emotion,” David says.

What actionable steps can leaders take to create more emotionally agile, diverse, and inclusive organizations and reap their benefits? Sadness is inevitable, but we can choose to confront it in different ways:

1. Ignore it

The first option is to disregard our negative emotions. In the professional world, this is often the default choice. Politeness and urbanity, civilization and social codes have allowed us to build up a vast and largely functional societal infrastructure.

On the organizational level, it is easier to focus on quantifiable metrics and concrete practicalities rather than the constant fluctuations of sentiment and the infinite complexities of human relationships. It’s another case of standardization-driven efficiency: instead of bothering with nuance and vulnerability at work, we’re all “fine, thanks.”

Still, valuing a narrow breadth of experience at the cost of other feelings can prove more destructive than letting our moods run their course. The field of psychology has proven that emotions that are pushed aside tend to worsen, a process referred to as amplification. 

Studies also found that suppressing negative emotions impairs our memory of information we received in the moment we felt the original emotion; moreover, it increases heart rate and stress levels.

If such a path leads only deeper into the forest of ‘bad’ and ‘worse,’ we’re forced to consider our other options.

2. Accept it

While it is necessarily uncomfortable, one of the best things we can do is learn how to sit with our sadness. This may seem trivial (and our pleasure-loving systems are all too happy to avoid it), but the benefits are profound, especially for leadership. 

For starters, sadness, like other emotions, can be seen as valuable feedback from ourselves in relation to our decisions, situation, and the world around us. As David points out, “Emotions are data. They serve as flashing lights,” and they give us meaningful insight into what we care about.

Indeed, passion itself literally means “suffering” (so with all the “passionate” LinkedIn profiles out there, you would think we’d know how to suffer a little). No single strategic decision will result in an absence of negative emotion, but as modern professionals at least we can choose what we’re genuinely willing to suffer for. We’re all involved in a certain degree of emotional labor at work, and the effects can be exhausting. 

Sadness, if it is recurring, can stem from melancholia, a constant state of ‘suffering from the world,’ of a feeling of resignation and inevitability, or, it can be a symptom of depression. Surprisingly, one of the United States’ most respected presidents was also one of its most melancholy. Much of Abraham Lincoln‘s life was characterized by what would now be seen as severe depression. While his ‘winsome’ character, isolating ambition, and occasional despondency were evident, these darker moods were not pathologized to the extent they are today, and the president was perhaps a stronger leader because of, not in spite of, the internal struggles he faced. And it’s not just Lincoln: between 25 and 50 percent of US presidents may have suffered from some sort of mental illness.

Despite suicidal thoughts, Lincoln did want to continue living, which eventually lead him to leave his transformative legacy. His power as a leader came from both his tenacious, purposeful determination, and his depth of personality, two qualities which were also the result of his depression.

3. Honor it

Ancient ballads were once composed to glorify sadness–or at least make the pain more bearable in the process. So what is the business equivalent of a heartfelt ballad?

Facebook COO Sheryl Sandberg, with her measured public despair after the death of her husband and later her reflections in her book Option B, has helped spawn a much more open conversation about grief at work, and how to handle it whether as a leader, an organization, or a colleague. As a result, some companies have begun to grant their employees more time for mourning a loss. Facebook, for example, now gives employees up to 20 days of paid leave to grieve an immediate family member and up to 10 days to grieve an extended family member.

Moreover, initiatives such as The Groundswell Project in Australia pursue the mission of nurturing cultures of grief within organizations and thereby creating a more “death-literate society.” Even one of the most cruel forms of loss, suicide, can be recognized. The Semi-colon Tattoo Project was created to honor people who have overcome suicide. A semi-colon tattooed on one’s body is a small but poignant symbol of solidarity which represents that people’s lives are not finished sentences, but that they are still works in progress.

Aside from the ultimate loss, we must also cope with smaller losses in our work lives–the end of employment, a project, or a much beloved idea; the break-down of a collegial relationship, or a major career setback–that require decompression and reflection and are too often willfully or inadvertently ignored in the maelstrom of daily work tasks. Every occurrence of sadness marks the need and provides the opportunity for personal transformation, and proper mourning allows us to say goodbye to our old selves while embracing our new ones.

Rituals can help us navigate these transitions; consider, for instance, the eulogy, which is designed to acknowledge a loss and helps people make sense of it. Any good ending should include both mourning and celebration, an approach exemplified by the trend of Divorce Parties, appreciating what once was, grieving for what is lost, and, through this process, consciously moving on.

With constant change a more regular companion in the future workplace, the kind of emotional resilience that knows how to deal with and thrive in transitions will become an ever more critical professional trait.

Sadness is a keeper

With all that is to be gained by greater emotional flexibility and nuance, what’s holding us back?

It’s simple: fear. The fear of being perceived as soft, as not-up-for-the-task, as unreliable under pressure. Suppressing emotions, however, often results in stifled creativity and burn-out, and ultimately in work cultures that may function in the short term but collapse in more challenging times, because they lack a deeper sense of trust, belonging, and solidarity.

A truly human organization is one where you can not only fail fast, but also be sad, again and again. It’s an environment where you can lose without being considered a loser.

This Week in the Future of Cars: Electric Start

Hark, the electric car! EVs have had a blockbuster half-decade, regulation-wise, with big countries like China and US giving the nascent tech a boost in pursuit of their own climate goals. So this week wasn’t so much a departure as an exciting continuation of a trend. Audi released its E-tron SUV, complete with a glitzy, 1,500-person party in the Bay Area, and in addition to checking out the new ride, we took stock of all the new battery-charged autos on the market. Porsche continues to put out announcements about its Taycan sedan, due out around 2020: Now, it says the car will have a very fast charger. Plus, Tesla continues to make news, some of it good—its Model 3 got an impeccable review from American safety regulators—and some of it bad—it’s reportedly the target of a Department of Justice investigation. Win some, lose some.

In other news, senior writer Jack Stewart tracked down a self-driving tram experiment in Germany, I explored how cities are thinking about scooter-share data, and we took a look at the latest bicycle commuting numbers. It’s been a week; let’s get you caught up.


  • Tesla’s strange third quarter continues, with a report that the electric carmaker faces a Department of Justice criminal investigation over Elon Musk’s “funding secured” tweets. Tesla says the DOJ has only thus far requested documents of the company, which suggests, as one lawyer tells WIRED, that it’s just “nosing around” right now. But the probe is still another cloud—and a self-conjured one!—that the company must work around as it tries to ramp up Model 3 production.

  • In more positive Tesla news: The company’s Model 3 received a five-star crash rating in every category from the National Highway Traffic and Safety Administration.

  • Say hello to the all-electric Audi E-tron, the German carmaker’s first battery-based SUV. WIRED contributor Eric Adams breaks down the specs, and senior writer Jack Stewart sees how the E-tron stacks up to the other electric competition.

  • The electric vehicle market is seriously heating up, which means carmakers have to find ways to distinguish their latest offerings. Porsche, due to roll out its electric Taycan in the US around 2020, has announced at least one: an electric charging station that can top your zoomer off with 250 miles worth of charge in just 15 minutes.

  • OK, yes, electrics are cool in automaker land. But so is old-fashioned speed. Ferrari this week announced its Icona line, starting with two cars that combine vintage design with a 0 to 60 time under three seconds. But good luck actually buying one, even if you’ve got seven figures lying around—it looks like the whole line is sold out.

  • Automated trucks will happen, eventually. But where will they happen? The traffic analytics company Inrix uses its fleet data to find where self-driving trucks’ key attributes—increased safety, fast shipments—are most needed. But will regulations help facilitate the development of the new tech in the right places?

  • In Potsdam, Germany, the wily engineers at Siemens are testing a driverless tram. (As of right now, the vehicles are passenger-free, too.) The company, like Waymo, is hoping to perfect the autonomous technology in a relatively unchallenging environment—one in which the vehicle traverses the same route, day after day, on tracks.

  • Cities have gotten a lot savvier since Uber and Lyft showed up on their streets less than a decade ago. As bike- and scooter-share companies continue their wheeling across America’s urban spaces, many government officials are demanding the startups hand over their trip data, I report.

  • The latest numbers from the American Community Survey show cycle commuting is down slightly—and a dramatic cycling gap between cities (and regions) persists.

  • WIRED’s 25th anniversary issue asked 25 WIRED icons to nominate the 25 people who will shape the industry’s future. And of course our icons wanted to talk drones. 23andMe’s Anne Wojcicki nominates Keller Rinaudo, cofounder and CEO of Zipline, the company that uses autonomous planes to fly medical supplies like vaccines and blood donations to hard-to-reach places. Zipline now fulfills about a fifth of the blood needs for Rwanda’s rural population, thanks to a contract with the country’s government.

IPO of the Week

It’s never too late to go public. Aston-Martin, the 105-year-old British carmaker that has ferried 007 around since 1964’s Goldfinger, announced this week its plans for an early October initial public offering, at $23.24 to $29.88 per share. That would make the company—which has made some lovely cars of late—worth around $5.3 billion to $6.7 billion.

Stat of the Week

29.6 weeks The amount of time, on average, a late-model used Toyota Prius C spends on the the lot, making it the fastest-selling used vehicle in America, according to a survey by

Required Reading

News from elsewhere on the internet

In the Rearview

Essential stories from WIRED’s pastWIRED turns 25 this month, which means we’ve been combing through our archives to see where we’ve been—and figure out where we’re going. Check out this 1997 take on the future of fuel cell-powered vehicles, which features a tech exec goading our writer into taking a sip of bus exhaust. (Everyone survives.)