JetStream DR cloud replication aims to make backup redundant

JetStream software has announced general availability for its JetStream DR product, which allows continuous replication – as opposed to periodic snapshots – of VMware virtual machines (VMs) and data to public cloud locations.

The product, aimed at service providers and enterprises, allows customers to failover to operations from the cloud in the case of an outage with an RPO (recovery point objective) of near zero.

JetStream DR also works with S3-based object storage and can continuously replicate that data from on-premise locations to public clouds.

JetSteam originated as FlashSoft and went through a number of acquisitions, with a formative period being one in which it developed technology used by VMware in its APIs for I/O filtering (VAIO).

At its core, this allows for any I/O stream to be intercepted between the VM and virtual disk in real time, with intelligence then being applicable to that flow of data.

So, for example, JetStream has a product called Accelerate, in which IO Filter can select whether data should be served/stored on cache or underlying storage, with claimed application performance of 3x to 5x.

Meanwhile, JetStream Migrate allows for data to be migrated in near real time from on-premise VMware deployments to the public cloud.

This can be carried out without shutdown during transfer because IO Filter can move the bulk of the VM and disk and then keep track of data written concurrently to build the VM and disk as soon as possible afterwards.

JetStream DR aims to allow for “data protection as a true cloud service”, said company president Rich Petersen.

“Data protection need to be elastic and dynamically consumable. So, for example, if you have Nutanix on-premise, you need to replicate to Nutanix in the cloud. It’s the same for other HCI providers and for [VMware] VSAN.”

Instead, JetStream DR allows users to replicate VMware VMs and data to any cloud service and to failover to it in case of a disaster recovery scenario.

Petersen contrasts his company’s product with backup in general and in particular with offerings from Veeam and Druva. Unlike those products, JetStream is continuous and not dependent on periodic snapshots or backups.

A similar service can be applied to on-premise S3 object storage data, although re-hydration of stored data will take longer than for VMs.

There are no plans to expand the product to support Hyper-V and KVM. That will be “years away”, said Petersen.

PC industry suffers as Microsoft severs link between Windows and hardware refreshes

The global PC market is set to decline by almost 1.9% over the next two years, according to Ranjit Atwal, research director at Gartner. “PC shipments will total 258 million units in 2019, a 0.6% decline from 2018,” he said. “Traditional PCs are set to decline by 3% in 2019 to total 189 million units.”

However, Gartner’s latest forecast suggests that between 2018 and 2012, sales of ultramobiles will increase by almost 20%.

Atwal said it has taken a while for the PC industry to offer compelling features such as instant on and all-day battery life on these types of device, which often have a far higher selling price than standard laptops.

He said the PC market is effectively saturated, but businesses will continue to buy mobile PCs even though the smartphone tends to be users’ primary mobile device. “A laptop is the device you use to create content,” he said.

Given that businesses will continue to provide end-users with laptop PCs, Windows 10 remains the dominant platform on which content creation-type work will run. Gartner predicted that Windows 10 will represent 75% of the professional PC market by 2021.

Windows 7 support is scheduled to end in January 2020, and for businesses, the Windows 10 migration will continue to drive a PC refresh. According to Gartner, while the US is now in the final phase of moving off Windows 7, China is still a few years away.

“By moving the Windows 10 migration to 2020, organisations increase the risk of remaining on an unsupported operating system.,” said Atwal.

“We are seeing businesses across the word migrating to Windows 10. It is a modern operating system and allows organisations to run cloud applications and provide security much more effectively.”

End of support for Windows 7

Support for Windows 7 will end in January 2020, after which organisations will have to buy a custom support contract if they want their Windows 7 systems supported. This situation mirrors the Windows XP end-of-support deadline, which occured in 2014.

“When XP support was pulled, a lot of government organisations were left on XP,” said Atwal. “They had to pay extra for support. Businesses do not want to be in this situation again, where they have to pay for one-off support of Windows 7.”

He pointed out that there is no option for organisations to skip a version because there will not be a Windows 11. “From now on, organisations will get consistent upgrades to the Windows operating system,” he said.

So, the migration from Windows 7 to Windows 10 is the last time IT departments will have to take a forklift approach to upgrading their desktop operating system, said Atwal. Organisations need to move to Windows 10, or they will fall behind, he said. For instance, Microsoft has aligned the upgrades of its cloud productivity suite, Office 365, to Windows 10.

But the main benefit of Windows 10 to IT is its improved back-end management, said Atwal. “You can operate and manage Windows more effectively once you are on Windows 10,” he added.

One example is that Microsoft now manages upgrades, said Atwal. Many organisations do not have a team that is permanently set up to upgrade the Windows operating system, so embarking on a new Windows operating system upgrade is a major IT project.

Such Windows upgrade projects should become a thing of the past if organisations entrust Microsoft to update their PC estates automatically, he said.

PC refresh 

From a PC market perspective, Windows 10 disconnects the link between PC hardware and Windows operating system upgrades. Windows 10 is upgraded twice a year, which means business users will receive new operating system features every six months.

Atwal said he expected businesses to continue to upgrade PCs, but with more enterprise applications consumed as software as a service (SaaS), hardware upgrades are likely to be driven by wear and tear rather than the availability of a new PC operating system from Microsoft. “Given that the laptop is an important business tool, it will be upgraded,” he said.

The Math of How Crickets, Starlings and Neurons Sync Up

When the incoherent claps of a crowd suddenly become a pulse, as everyone starts clapping in unison, who decided? Not you; not anyone. Crickets sing in synchrony; metronomes placed side by side sway into lockstep; some fireflies blink together in the dark. All across the United States, the power grid operates at 60 hertz, its innumerable tributaries of alternating current synchronizing of their own accord. Indeed, we live because of synchronization. Neurons in our brains fire in synchronous patterns to operate our bodies and minds, and pacemaker cells in our hearts sync up to generate the beat.

Quanta Magazine

author photo


Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation, whose mission is to enhance public understanding of science by covering research develop­ments and trends in mathe­matics and the physical and life sciences.

Objects with rhythms naturally synchronize. Yet the phenomenon went entirely undocumented until 1665, when the Dutch physicist and inventor Christiaan Huygens spent a few days sick in bed. A pair of new pendulum clocks—a kind of timekeeping device that Huygens invented—hung side by side on the wall. Huygens noticed that the pendulums swung exactly in unison, always lurching toward each other and then away. Perhaps pressure from the air was synchronizing their swings? He conducted various experiments. Standing a table upright between the clocks had no effect on their synchronization, for instance. But when he rehung the clocks far apart or at right angles to each other, they soon fell out of phase. Huygens eventually inferred that the clocks’ “sympathy,” as he called it, resulted from the kicks that their swings gave each other through the wall.

When the left pendulum swings left, it kicks the wall and the other pendulum rightward, and vice versa. The clocks kick each other around until they and the wall attain their most stable, relaxed state. For the pendulums, the most stable behavior is to move in opposite directions, so that each pushes the other in the direction it’s already going, the way you push a child on a swing. And this is also easiest for the wall; it no longer moves at all, because the pendulums are giving it equal and opposite kicks. Once in this self-reinforcing, synchronous state, there’s no reason for the system to deviate. Many systems synchronize for similar reasons, with kicks replaced by other forms of influence.

Christiaan Huygens’ sketch of an experiment with a pair of pendulum clocks (top), and his attempt to understand why they synchronize (bottom). “B has gone again through the position BD when A is at AG, whereby the suspension A is drawn to the right, and therefore the vibration of pendulum A is being accelerated,” he wrote. “B is again in BK when A has been returned to position AF, whereby the suspension of B is drawn to the left, and therefore the vibration of pendulum B slows down. And so, when the vibration of pendulum B is steadily slowing down, and A is being accelerated, it is necessary that … they should move together in opposite beats….”

Reproduced from Oeuvres complètes de Christiaan Huygens (1888); Huygens’ passage from Synchronization: A Universal Concept in Nonlinear Sciences (2002)

Another Dutchman, Engelbert Kaempfer, traveled to Thailand in 1690 and observed the local fireflies flashing simultaneously “with the utmost regularity and exactness.” Two centuries later, the English physicist John William Strutt (better known as Lord Rayleigh) noticed that standing two organ pipes side by side can “cause the pipes to speak in absolute unison, in spite of inevitable small differences.” Radio engineers in the 1920s discovered that wiring together electrical generators with different frequencies forced them to vibrate with a common frequency—the principle behind radio communication systems.

It wasn’t until 1967 that the pulsating chirps of crickets inspired the American theoretical biologist Art Winfree to propose a mathematical model of synchronization. Winfree’s equation was too difficult to solve, but in 1974, a Japanese physicist named Yoshiki Kuramoto saw how to simplify the math. Kuramoto’s model described a population of oscillators (things with rhythms, like metronomes and heartbeats) and showed why coupled oscillators spontaneously synchronize.

Kuramoto, then 34, had little prior experience in nonlinear dynamics, the study of the feedback loops that tangle together variables in the world. When he showed his model to experts in the discipline, they failed to grasp its significance. Discouraged, he set the work aside.

Five years later, Winfree came across a précis of a talk Kuramoto had given about his model and realized that it offered a revolutionary new understanding of a subtle phenomenon that pervades the world. Kuramoto’s math has proved versatile and extendable enough to account for synchronization in clusters of neurons, fireflies, pacemaker cells, starlings in flight, reacting chemicals, alternating currents and myriad other real-world populations of coupled “oscillators.”

“I didn’t imagine at all that my model would have a wide applicability,” said Kuramoto, now 78, by email.

But, as ubiquitous as Kuramoto’s model became, any illusions physicists had of understanding synchronization shattered in 2001. Once again, Kuramoto was at the center of the action.

Different Strokes

In Kuramoto’s original model, an oscillator can be pictured as an arrow that rotates in a circle at some natural frequency. (If it’s a firefly, it might flash every time the arrow points up.) When a pair of arrows are coupled, the strength of their mutual influence depends on the sine of the angle between their pointing directions. The bigger this angle, the bigger the sine, and therefore the stronger their mutual influence. Only when the arrows point in parallel directions, and rotate together, do they stop pulling on each other. Thus, the arrows will drift until they find this state of synchrony. Even oscillators that have different natural frequencies, when coupled, reach a compromise and oscillate in tandem.

But that basic picture only explains the onset of global synchronization, where a population of oscillators all do the same thing. As well as being the simplest kind of sync, “there are plenty of examples of global synchronization; that’s why people paid so much attention to that,” said Adilson Motter, a physicist at Northwestern University in Chicago, and a leading sync scientist. “But in 2001, Kuramoto discovered something very different. And that’s where the story of different states starts.”

Yoshiki Kuramoto, a professor of physics at Kyoto University, developed the famous Kuramoto model of synchronization in the 1970s and co-discovered the chimera state in 2001, again revolutionizing the understanding of sync.

Tomoaki Sukezane

It was Kuramoto’s Mongolian post-doc, Dorjsuren Battogtokh, who first noticed a new kind of synchronous behavior in a computer-simulated population of coupled oscillators. The identical oscillators, which were all identically coupled to their neighbors, had somehow split into two factions: Some oscillated in sync, while the rest drifted incoherently.

Kuramoto presented his and Battogtokh’s discovery at a 2001 meeting in Bristol, but the result didn’t register in the community until Steven Strogatz, a mathematician at Cornell University, came across it in the conference proceedings two years later. “When I came to understand what I was seeing in the graphics, I didn’t really believe it,” Strogatz said.

“What was so weird,” he explained, “was that the universe looks the same from every place” in the system. And yet the oscillators responded differently to identical conditions, some ganging together while the rest went their own way, as if not coupled to anything at all. The symmetry of the system “was broken,” Strogatz said, in a way that “had never been seen before.”

Strogatz and his graduate student Daniel Abrams, who now studies synchronization as a professor at Northwestern, reproduced the peculiar mix of synchrony and asynchrony in computer simulations of their own and explored the conditions under which it arises. Strogatz dubbed it the “chimera” state after a mythological fire-breathing monster made of incongruous parts. (Months earlier, Strogatz had written a popular book called Sync, about the pervasiveness of global synchronization.)

Two independent teams realized this chimera state in the lab in 2012, working in different physical systems, and more experiments have seen it since. Many researchers suspect chimeras arise naturally. The brain itself seems to be a complicated kind of chimera, in that it simultaneously sustains both synchronous and asynchronous firing of neurons. Last year, researchers found qualitative similarities between the destabilization of chimera states and epileptic seizures. “We believe that further detailed studies may open new therapeutic methods for promoting seizure prediction and termination,” said co-author Iryna Omelchenko of the University of Berlin.

But the chimera state is still not fully understood. Kuramoto worked out the math verifying that the state is self-consistent, and therefore possible, but that doesn’t explain why it arises. Strogatz and Abrams further developed the math, but other researchers want “a more seat-of-the-pants, physical explanation,” Strogatz said, adding, “I think it’s fair to say that we haven’t really hit the nail on the head yet” about why the chimera state occurs.

Good Vibrations

The discovery of chimeras ushered in a new era in sync science, revealing the conceivably countless exotic forms that synchronization can take. Now, theorists are working to pin down the rules for when and why the different patterns occur. These researchers have bold hopes of learning how to predict and control synchronization in many real-world contexts.

Motter and his team are finding rules about how to stabilize the synchronization of power grids and more stably integrate the U.S. grid with intermittent energy sources like solar and wind. Other researchers are looking for ways of nudging systems between different synchronous states, which could be useful for correcting irregular heartbeats. Novel forms of sync could have applications in encryption. Scientists speculate that brain function and even consciousness can be understood as a complicated and delicate balance of synchrony and asynchrony.

“There’s a lot of new vibrancy to thinking about sync,” said Raissa D’Souza, a professor of computer science and mechanical engineering at University of California, Davis. “We’re gaining the tools to look at these exotic, intricate patterns beyond just simple, full synchronization or regions of synchronization and regions of randomness.”

Many of the new synchronization patterns arise in networks of oscillators, which have specific sets of connections, rather than all being coupled to one another, as assumed in the original Kuramoto model. Networks are better models of many real-world systems, like brains and the internet.

In a seminal paper in 2014, Louis Pecora of the United States Naval Research Laboratory and his co-authors put the pieces together about how to understand synchronization in networks. Building on previous work, they showed that networks break up into “clusters” of oscillators that synchronize. A special case of cluster sync is “remote synchronization,” in which oscillators that are not directly linked nonetheless sync up, forming a cluster, while the oscillators in between them behave differently, typically syncing up with another cluster. Remote synchronization jibes with findings about real-world networks, such as social networks. “Anecdotally it’s not your friend who influences your behavior so much as your friend’s friend,” D’Souza said.

In 2017, Motter’s group discovered that oscillators can remotely synchronize even when the oscillators between them are drifting incoherently. This scenario “breeds remote synchronization with chimera states,” he said. He and his colleagues hypothesize that this state could be relevant to neuronal information processing, since synchronous firing sometimes spans large distances in the brain. The state might also suggest new forms of secure communication and encryption.

Then there’s chaotic synchronization, where oscillators that are individually unpredictable nonetheless sync up and evolve together.

As theorists explore the math underpinning these exotic states, experimentalists have been devising new and better platforms for studying them. “Everyone prefers their own system,” said Matthew Matheny of the California Institute of Technology. In a paper in Science last month, Matheny, D’Souza, Michael Roukes and 12 co-authors reported a menagerie of new synchronous states in a network of “nanoelectromechanical oscillators,” or NEMs — essentially miniature electric drumheads, in this case. The researchers studied a ring of eight NEMs, where each one’s vibrations send electrical impulses to its nearest neighbors in the ring. Despite the simplicity of this eight-oscillator system, “we started seeing a lot of crazy things,” Matheny said.

The researchers documented 16 synchronous states that the system fell into under different initial settings, though many more, rare states might be possible. In many cases, NEMs decoupled from their nearest neighbors and remotely synchronized, vibrating in phase with tiny drumheads elsewhere in the ring. For example, in one pattern, two nearest neighbors oscillated together, but the next pair adopted a different phase; the third pair synced up with the first and the fourth pair with the second. They also found chimeralike states (though it’s hard to prove that such a small system is a true chimera).

NEMs are more complicated than simple Kuramoto oscillators in that the frequency at which they oscillate affects their amplitude (roughly, their loudness). This inherent, self-referential “nonlinearity” of each NEM gives rise to complex mathematical relationships between them. For instance, the phase of one can affect the amplitude of its neighbor, which affects the phase of its next-nearest neighbor. The ring of NEMs serves as “a proxy for other things that are out in the wild,” said Strogatz. When you include a second variable, like amplitude variations, “that opens up a new zoo of phenomena.”

Roukes, who is a professor of physics, applied physics and biological engineering at Caltech, is most interested in what the ring of NEMs suggests about huge networks like the brain. “This is very, very primordial compared to the complexity of the brain,” he said. “If we already see this explosion in complexity, then it seems feasible to me that a network of 200 billion nodes and 2,000 trillion [connections] would have enough complexity to sustain consciousness.”

Broken Symmetries

In the quest to understand and control the way things sync up, scientists are searching for the mathematical rules dictating when different synchronization patterns occur. That major research effort is unfinished, but it’s already clear that synchronization is a direct manifestation of symmetry — and the way it breaks.

The link between synchronization and symmetry was first solidified by Pecora and co-authors in their 2014 paper on cluster synchronization. The scientists mapped the different synchronized clusters that can form in a network of oscillators to that network’s symmetries. In this context, symmetries refer to the ways a network’s oscillators can be swapped without changing the network, just as a square can be rotated 90 degrees or reflected horizontally, vertically or diagonally without changing its appearance.

D’Souza, Matheny and their colleagues applied the same potent formalism in their recent studies with NEMs. Roughly speaking, the ring of eight NEMs has the symmetries of an octagon. But as the eight tiny drums vibrate and the system evolves, some of these symmetries spontaneously break; the NEMs divide into synchronous clusters that correspond to subgroups of the “symmetry group” called D8, which specifies all the ways you can rotate and reflect an octagon that leave it unchanged. When the NEMs sync up with their next-nearest neighbors, for example, alternating their pattern around the ring, D8 reduces to the subgroup D4. This means the network of NEMs can be rotated by two positions or reflected across two axes without changing the pattern.

Even chimeras can be described in the language of clusters and symmetry subgroups. “The synchronized part is one big synchronized cluster, and the desynchronized part is a bunch of single clusters,” said Joe Hart, an experimentalist at the Naval Research Lab who collaborates with Pecora and Motter.

Synchronization seems to spring from symmetry, and yet scientists have also discovered that asymmetry helps stabilize synchronous states. “It is a little bit paradoxical,” Hart admitted. In February, Motter, Hart, Raj Roy of the University of Maryland and Yuanzhao Zhang of Northwestern reported in Physical Review Letters that introducing an asymmetry into a cluster actually strengthens its synchrony. For example, making the coupling between two oscillators in the cluster unidirectional instead of mutual not only doesn’t disturb the cluster’s synchrony, it actually makes its state more robust to noise and perturbations from elsewhere in the network.

These findings about asymmetry hold in experiments with artificial power grids. At the American Physical Society meeting in Boston last month, Motter presented unpublished results suggesting that “generators can more easily oscillate at the exact same frequency, as desired, if their parameters are suitably different,” as he put it. He thinks nature’s penchant for asymmetry will make it easier to stably sync up diverse energy supplies.

“A variety of tasks can be achieved by a suitable combination of synchrony and asynchrony,” Kuramoto observed in an email. “Without a doubt, the processes of biological evolution must have developed this highly useful mechanism. I expect man-made systems will also become much more functionally flexible by introducing similar mechanisms.”

Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation, whose mission is to enhance public understanding of science by covering research developments and trends in mathematics and the physical and life sciences.

More Great WIRED Stories

Omega Healthcare: The Dividend Is At Risk

Co-produced with Rida Morwa of High Dividend Opportunities

It has been over a year and a half since I first wrote about Omega Healthcare Investors (OHI), determining that it was a value trap. In that article, I predicted that the company would slow or stop its dividend raises, but had confidence that it would not be reduced. Two quarters later, OHI froze its dividend increases.

Since then, its AFFO has dropped. The company missed its guidance of $3.42 in 2017, which came in at only $3.30/share. Then, in 2018, AFFO dropped to $3.04. For 2019, guidance is for AFFO of $3.00-3.12; if met, that would make the REIT’s AFFO/share equivalent to its 2015 results.

Despite the drop in AFFO, OHI common shares have rebounded strongly.


Data by YCharts

Despite AFFO dropping almost 10%, the share price has increased by over 20%. It did take a dive initially when Orianna filed bankruptcy, but the bulls have been in control and are pushing the pedal to the metal. OHI is trading at 12x projected 2019 AFFO.

(Source: Company Filings, Chart Authors)

Looking at P/Guided AFFO on March 31st, we can see that OHI has consistently traded from 9x to 12x at this time of year. The current price is towards the upper end of that range.

This tells me that the market is confident that OHI’s troubles are behind it, and that the company will beat guidance or, at the minimum, provide better growth next year. Neither one is a safe bet.

Ignoring The Fundamentals

One of my consistent warnings about OHI has been that the tenants are suffering from declining fundamentals. The REIT has had problems with several of its top ten tenants.


In addition to Orianna (formerly known as Ark) filing bankruptcy, OHI has reduced Signature’s rent by over $10 million, plus gave it a $10 million loan to pay for operating expenses. It has extended over $71 million in loans to Genesis Healthcare (GEN), with a substantial portion of the interest being paid-in-kind (PIK), which means that OHI is receiving warrants for GEN common shares.

Additionally, according to the 10-K, Signature and Daybreak combined are $18.3 million behind in rent, which has been deferred by agreement, while another unnamed operator has $5.4 million outstanding with no current deferral agreement. Per the 10-K:

Additionally, $5.4 million of the $33.8 million of contractual receivables outstanding – net of allowances as of December 31, 2018, relates to one operator that continues to pay, although at times less than the monthly contractual rent due. We continue to monitor this operator, including their contractual payments and their operational performance to determine if it will impact our revenue recognition in future periods.

These cracks are being completely ignored by the market.

Other REITs

The bullishness in OHI is especially surprising when other similar REITs have been rocked by tenant defaults. Sabra Health Care REIT (SBRA) dropped in November when Senior Care Centers defaulted.

Senior Housing Properties Trust (SNH) plummeted when it had to restructure its arrangement with Five Star Senior Living (FVE). SNH is taking much greater control of the properties and becoming a majority shareholder of the tenant. Blurring the line between landlord and tenant, SNH is now much more exposed to market fluctuations.

MedEquities Realty Trust (MRT) dropped when OnPointe Health, one of its major tenants, went bankrupt, and the new tenant pays substantially lower rent. OHI is in the process of acquiring MRT now, which will add struggling operator Fundamental Healthcare to its roster.

OHI bulls seem convinced that it won’t happen to the company (again).


Perhaps the single biggest warning sign for OHI investors ought to be GEN.


Data by YCharts

The market sees the risk of GEN as a company with shares trading at penny stock levels. GEN accounts for 7.5% of OHI’s revenues, making it even larger than Orianna was. The market is flashing a big red warning sign about GEN – a sign that is completely being ignored.

More critical for OHI is that GEN’s coverage ratio has continued to decline.

(Source: Company SEC Filings, Chart Author’s)

The decline since 2016 was steady, interrupted by substantial rent reductions, only to resume declining through 2018.

Lenders have been paying attention: GEN’s asset-based lending revolving facility is at LIBOR +600 bps, additionally the agreement comes with several protective features such as a “springing maturity” that makes it due 90 days prior if its Term Loan Agreements, Welltower Real Estate Loans or Midcap Real Estate Loans fail to be extended or refinanced. In other words, the ABL has to be paid first (before OHI gets its own).

The ABL also has a “swinging lockbox clause” which ensures cash goes through the lender:

The revolving credit facility includes a swinging lockbox arrangement whereby we transfer all funds deposited within designated lockboxes to MidCap on a daily basis and then draw from the revolving credit facility as needed.

These types of arrangements come from lenders who believe there is a strong possibility that GEN is going to default. As of December 31st, GEN only had a borrowing base of $436.9 million and $430.6 million in borrowings under the credit facility, leaving it with only $6.3 million in borrowing capacity and only $20.8 million in unrestricted cash. The bulk of GEN’s cash ($121 million) has been put in restricted accounts. Some of that cash is limited to paying insurance claims through its self-insurance program. Per the 10-K, the company’s total liquidity is only $93.8 million.

Any interruption of its operations, revenues or an increase in expenses could be catastrophic for GEN.


There is a big change headed towards senior healthcare known as the “Patient Driven Payment Model,” or PDPM. This changes the model for Medicare reimbursements. The motivation for the government is to move away from a system which incentivizes volume to a system which is (theoretically) more centered on the needs of the patient.

There is a raging debate over what it means for skilled nursing facility (NYSE:SNF) operators. It is not really known what the impact is going to be when it is put into practice, and the impacts will likely vary from operator to operator depending on the particular mix of patients.

What is clear is that PDPM is going to force a shift in how SNFs do business. On its Q4 2018 conference call, GEN has quantified one expected impact:

We currently estimate that PDPM will reduce the top line of our rehab segment between 10% to 12%. This revenue contraction is related to the expected use of more cost-effective methods of delivery such as group and concurrent therapy. And will come with a corresponding reduction in operating costs that will substantially mitigate the impact of lower revenues.

The company’s rehab segment accounted for $889 million in revenue in 2018 and has one of the best EBITDA margins at 11.4%. The reduction might be offset by decreasing expenses slightly improving the margin, but the rehab segment was already trending down with a 9.2% decrease from 2017.

Additionally, the government has implemented the SNF-Value Based Purchasing program, which withholds 2% of Medicare payments and distributes it based on an SNF’s score (based on hospital “potentially preventable readmissions” within 30 days) relative to its peers. In its 10-K, GEN is predicting that it is a net loser in this program.

The FY 2019 SNF PPS Rules reiterate the SNF-VBP program instructions and affirm that effective October 1, 2018, skilled nursing facilities now experience a 2.0% withholding to fund the incentive payment pool. Simultaneously, based upon performance, skilled nursing facilities have an opportunity to have their reimbursement rates adjusted for incentive payments based on their performance under the SNF-VBP Program. Of the 2.0% withheld under the SNF-VBP Program, we expect to retain 1.3% based on performance.

This provides an opportunity for improvement, but it also introduces a risk of greater losses.

(Source: GEN Investor Presentation)

GEN’s average daily census has increased slightly and was up YoY from November 2018 through February 2019. This only tells part of the story – to really understand the issue, we also need to consider the “skill mix,” which is how many patients are being paid for with Medicare versus the much lower-paying Medicaid.

(Source: 10-K)

Along with the decline in admissions, the percentage of Medicaid days has increased. Medicaid only reimburses less than half of what Medicare reimburses. Management has been very vocal about the increase in occupancy in Q4, but it turns out that the increase in occupancy is driven by Medicaid patients. Per GEN’s CFO and Senior Vice President Tom DiVittortio on the conference call:

On the census, with respect to patient mix and occupancy, skilled days mix in 4Q, 2018 of 18.1% decline 60 basis points from the prior year quarter.

As a result, a 2% increase in occupancy would only result in approximately a 1% increase in gross revenues. By the time you factor in the much lower (sometimes negative) margins of Medicaid, an increase in occupancy could actually drive lower EBITDA.


OHI bulls have been in control of the share price. They have driven it up to historically high levels in terms of price/AFFO. This is occurring despite management guiding for lower AFFO in 2019, and despite OHI already making concessions for several of its top 10 tenants and three significant tenants that are behind in rent.

The fundamentals of the SNF industry are terrible. Operators are being pressured by long-term occupancy declines and a substantial shift from Medicare to the lower-paying Managed Medicare and Medicaid.

These pressures have caused several operators to go into bankruptcy, which rocked several of OHI’s competitors. There are several potential weaknesses in OHI’s portfolio, including Signature, Daybreak and, when it closes the MRT transaction, Fundamental Healthcare.

Perhaps one of the biggest potential hits would be GEN. With its ABL lender having a lockbox, a GEN default would mean an immediate loss of cash flow from its $71 million in outstanding loans. It would also risk the $59 million in annual rent – which, if history is any guide, could be expected to be reduced 30-40% upon transitioning to a new operator.

With OHI projecting to pay out nearly 100% of FAD in 2019, any disruption of cash flows puts the dividend at risk. A default from GEN would almost certainly necessitate a dividend cut. GEN accounts for more rent than Orianna did in 2016.

Looking at GEN’s finances, investors cannot be comfortable with the health of the company. There is a lot of risk, and PDPM or any other disruption might be the last straw. GEN is in a position where its liquidity is limited, and its revolver has tightened the leash. A continued decline of SNF fundamentals in an industry that has been declining since 2014 will render the company insolvent. GEN needs improvement now – it cannot afford to wait for the “Silver Tsunami.”

OHI is a very high-risk investment right now. What investors can see of GEN’s finances should terrify them, and it is likely that the financials of private companies like Signature and Daybreak are similar. It is impossible to say exactly when, but it is only a matter of time before OHI announces the restructuring of another major tenant.

OHI stock should be avoided, and at current prices, it is a great time to take profits.

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Disclosure: I am/we are short OHI. 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.

Additional disclosure: Beyond Saving is short OHI via January 2020 Put Options. HDO does not have a position.

Three 7% To 10% Yielders Beating The Market In 2019, But Still Selling At Discounts – No K-1s

Want to “have your cake and eat it too”?

With the market on a roll in 2019, is it possible to find outperforming income vehicles which are still selling at a discount?

As a matter of fact, it is. You just have to look in the nooks and crannies of the market. In this case, we visited the world of closed-end funds – CEFs, which can sell for a premium or a discount to their net asset values, or NAV.

Our journey took a few twists and turns – we began by looking for utilities which might be undervalued, being inspired by the resurgence of this sector in 2019, thanks to the Fed becoming increasingly dovish in its rate hike stance.

But rather than stake a claim on just three individual utility stocks, we checked out CEFs to see if we could find some undervalued proxies for that sector.

The three we came up with are: Duff & Phelps Global Utility Income Fund (DPG), the not very succinctly named Macquarie/First Trust Global Infrastructure Utilities Dividend & Income Fund (MFD), and the Macquarie Global Infrastructure Total Return Fund (MGU).

DPG is the largest of the three funds, with ~$900M in net assets. It also has the highest concentration of US equities, at 55.5%, but the lowest concentration of utilities, at 38.8%. Like the other funds, DPG’s second highest sector concentration is energy-related.

DPG also uses leverage, of 30.92%, to goose its returns, and its expense percent is at 2.97%, very close to MFD’s 3.04% ratio.

MFD is the smallest of the group, with $137M in net assets, but it has the highest concentration of utilities, at 44.09%, with oil and gas being its second highest sector, at 29.14%.

MGU has $465M in net assets, with a 40% concentration in utilities, followed by a ~29% Pipelines concentration. It has a 52% concentration in US equities, and the lowest expense ratio, 2.6% of the group:

Portfolio Holdings:

DPG’s top holdings are spread out into four sectors – utilities, oil and gas storage/transportation, telecoms, and infrastructure. Utility heavyweight NextEra Energy (NEE) is in the top spot, followed by Spanish multi-national Iberdrola Canadian stock Emera (OTCPK:EMRAF) and US-based AEP (AEP) and Evergy (EVRG).

Canada makes up 17% of DPG’s non-US country allocation, followed by Europe, at ~15%, and Australia, at 7%:


MFD has more UK stocks in its mix, 17.72%, with Australia, 16.13%, and Canada, 13.67%, all comprising the bulk of its non-US holdings.


MFD’s top 10 includes UK water utilities Severn Trent (OTCPK:SVTRF) and United Utilities Group (UUGRY) and National Grid (NGG), which also owns US assets. There are also Australian infrastructure companies in the mix, such as Spark, Sidney Airport, and Transurban Group (OTCPK:TRAUF), as well as US midstream giant Enterprise Products Partners LP (EPD):

(Source: MFD site)

MGU has a sizable chunk of infrastructure assets in its mix, with toll roads, 15.4%, and airports, 11.1%, comprising 25.5%. Like DPG, MGU has significant to exposure to Europe, at 17.9% of its country mix:


MGU’s top 10 holdings include some of the same UK and Australian companies as MFD, such as Transurban, National Grid, Sydney Airport, and Severn Trent, but in different percent allocations – Transurban heads the list, followed by US stocks, Cheniere Energy (CQP) and Sempra Energy (SRE):

(Source: MGU site)


MFD has the highest yield of the group, at 10.88%, followed by DPG, at 9.26%, and MGU, at 7.49%. These certainly aren’t big dividend growth plays – five-year dividend growth ranges from -2.86% for MFD, to just 3.86% for MGU. All three funds pay quarterly.

MFD has the next upcoming ex-dividend date, on ~5/22/19, with DPG and MGU both going ex-dividend on ~6/14/19:


MFD had the highest percent of tax deferral in its 2018 payouts, with 21.53% return of capital, followed by MGU, at 12.91%, while DPG had no return of capital. All three funds issue 1099s to investors at tax time.


We’ve often seen CEF’s selling at a discount to NAV in the past, but they’ve also had negative returns on NAV since their inception. This isn’t the case with these three funds, which have returned 6.09% to 7.41% on NAV since their inceptions.

DPC has the highest return on NAV over the past year, at 21.49%, vs. 12.42% for MGU, and 7.63% for MFD.

However, all three funds are currently selling at a discount to NAV – from -3.75% for MFD, to -10.74% for DPG, to a -14.45% discount for MGU, whose current discount to NAV is a bit higher than its one-year average discount of -14.10%:


All three funds have outperformed the S&P 500 in 2019 by a wide margin and also outperformed in the past six months, which includes the Q4 2018 pullback, with MGU and DPG up the most during the half year. Over the past month, DPG and MGU have performed the best, while MFD has lagged the market.


We rate MGU as a buy, based upon its higher percent of US equities, much larger discount to NAV, (MGU’s discount is slightly higher than its one-year average). MGU also has a positive $.1404 undistributed net investment income – UNII – of $.1404, the highest in the group, vs. a -$1.09 UNII for DPG, and the lowest expense ratio, 2.60%.

But, as you can see from the table below, it’s not a clear case for picking MGU over MFD and DPG – they all have some positive attributes. MFD has a much higher yield, at 10.88%, and positive UNII, but a smaller NAV -3.75% discount. DPG also has a higher yield, the best return on NAV, and the best YTF performance, but negative UNII.

Disclosure: I am/we are long MGU. 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.

Additional disclosure: CLARIFICATION: Our investing site, has been increasing subscribers’ yields via selling options on high dividend stocks for over 10 years.

Retail Properties Of America: A High Quality 5% Dividend With Potential 20% Return

The retail industry has always experienced disruption in one way or the other, but now the industry is facing a permanent disruption in the way consumers are shopping. The change in consumer preferences and the evolution of eCommerce has impacted the retail industry and has stimulated major retail REITs to rethink their strategies for survival. As the competition from e-Commerce increases, only the agile and skillful retail REITs are in a position to survive in a market where store closures and retail bankruptcies are routine. It has now become critical for all the retail REITs to adapt to the changing environment and thrive in an on-demand world where online ordering is linked to in-store pick-ups and returns.

With a focus on thriving in the new retail environment, major retail REITs are refurbishing their portfolios by improving the quality of assets and selling away low-quality assets. They are also positioning their assets as mixed-use properties and community gathering centers.

Retail Properties of America, Inc. (RPAI) acquires and redevelops properties to position them as mixed-use assets. RPAI’s strategy is to create long-term shareholder value by acquiring and redeveloping Class A assets. Over the past five years, the REIT has been able to keep pace with consumer preferences and adapt to the rapid changes in the retail sector.

Real Estate First Approach

RPAI has always adopted a “real estate first” approach for improving the quality of its assets and for attracting a diverse mix of tenants. Since 2013, RPAI has reduced the number of shopping centers in its portfolio by half with a view to own fewer but higher-quality assets.

Instead of establishing its presence throughout the USA, RPAI preferred to focus on the Seattle-Texas corridor in the West Coast and the New York-Atlanta corridor on the East Coast. Besides localizing its business, RPAI also focused on achieving retail densification: the practice of incorporating food, fitness, healthcare and entertainment facilities within the existing shopping center environment.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

The key idea behind this transformation was to provide a high-quality consumer experience. As of now, RPAI is acutely focused on developing its retail properties into mixed-use locations where consumers can live, work and play.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

Besides looking out for growth opportunities within its existing portfolio, RPAI has identified potential development, redevelopment, expansion and pad development opportunities for adding standalone buildings and developing additional commercial gross leasable area (GLA) at existing properties.

While pursuing its development projects, RPAI is poised to benefit from the country’s macroeconomic environment and demographics. Within the US, commercial real-estate fundamentals are strong due to a strong economy, 90 consecutive months of job growth, and 18 year low unemployment.

In addition to a robust economy, 2 demographic trends are benefitting RPAI. First, the affluent and the rapidly retiring baby boomer generation prefers to retire to high-end mixed-use centers. Second, the millennial generation’s collective spending power is growing and it will be reaching 1.4 trillion by 2020. These demographic trends will be the primary drivers that will usher the growth of “live-work-play” real estate environments in the perceivable future.

Growth opportunities within the portfolio

As of now, RPAI’s portfolio is comprised of 105 assets and approximately 80% of these assets are neighborhood community and lifestyle mixed-use centers. RPAI has over 425,000 square feet of GLA and almost 1,200 multi-family rental units contained in its announced redevelopments and expansions.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

All of these projects are located within the REIT’s top five MSA (metropolitan statistical areas) markets, namely Dallas, Washington D.C. – Baltimore, New York, Chicago, and Seattle. These markets represent approximately 65% of the REIT’s average retail annualized base rent (ABR).

Source: RPAI, Fourth Quarter 2018 Investor Presentation

While executing its business strategy, RPAI has exited multi-tenant retail operations in Alabama, Colorado, Louisiana, New Mexico, and Ohio. The company believes that a geographically focused portfolio allows it to optimize its operating platform and enhance its operating performance. The markets identified by RPAI possess five main characteristics, namely strong barriers to entry, a strong demographic profile, well-diversified local economy, conducive regulatory environment, and operational efficiency. Through its lifestyle centers, RPAI aims to target and reach a broader audience and not just retail shoppers.

Along with transforming its portfolio, RPAI has also strived to improve its tenant mix by curating the right types of tenants. In 2013, the REIT’s top 20 retailers made up 38 percent of its asset portfolio. As of today, the top 20 retailers make up 29 percent of the portfolio and no single tenant is greater than 3 percent of the company’s annual base rent. The company is also parting ways with commodity-based retailers that do not have an online presence. on Instead, RPAI has opted to lease spaces to omni-channel retailers that have both physical and digital presence. Additionally, RPAI prefers to have tenants with differentiated assortments and a capability to deliver a compelling customer experience.

Recently, RPAI launched RPAI 2.0, a new strategic initiative that has helped it to reposition its portfolio and adapt to the megatrends affecting the retail industry. The REIT is uniquely positioned to take advantage of the changes in the retail landscape and numerous densification opportunities within its predominantly mixed use and community center portfolio. The densification opportunities within RPAI’s portfolio will pave way for long-term growth as the opportunities will help the REIT achieve accelerated expansion and redevelopment pace over the next few years. Until now, RPAI’s business strategy has paid off as its acquisition activities and its leasing volumes are in line with its guidance.

Acquisitions and Dispositions

RPAI is right on track with regard to its acquisition and disposition strategy. In 2018, RPAI disposed of 9 assets from its portfolio which represented 1,831,000 square feet of GLA. In the fourth quarter, RPAI exited the state of Connecticut with the disposition of Orange Plaza for $8.5 million. In all of 2018, RPAI disposed of assets worth $201 million and it acquired assets worth $100 million.

The acquired properties include the $25 million worth One Loudoun Uptown in Loudoun County, Virginia. The property comprises of approximately 58 acres and is currently entitled for 2.3 million square feet of commercial GLA. In Loudoun County, RPAI is extremely focused on building a dynamic community anchor that offers an ultimate live, work, play experience in rapidly growing market. The acquisition of One Loudoun Uptown was closed in the fourth quarter and the property is located adjacent to One Loudoun Downtown, a property that is already owned by RPAI. The two properties are located in a region that has a high population density of 187,273 within a 5-mile radius. Besides integrating these 2 properties, RPAI will also focus on the expansion of pads G & H of One Loudoun Downtown. The expansion includes the construction of 378 residential units and up to 80,000 square feet of commercial space. RPAI will be executing the expansion project along with Cutler, its multi-family partner. One Loudon is an extraordinary mixed-use community that is located in the heart of D.C.-Baltimore MSA. On further development, the property will bring a diverse collection of shops, restaurants, corporate offices, homes and entertainment options to the consumers.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

Expansion and redevelopment projects

Most of RPAI’s expansion and redevelopment projects are in the D.C.- Baltimore area and the REIT is uniquely positioned to take advantage of continued infrastructure growth and migration to this region. Due to its balance sheet and sound liquidity position, RPAI does not need to depend on external sources of capital to fund its development projects. In the fourth quarter, RPAI completed the redevelopment of Reisterstown’s Road Plaza located in Baltimore MSA. The redevelopment included reconfiguration of the existing space and the renovation of façade. The property has now been brought back into RPAI’s operating portfolio and it is 100% leased. Just like RPAI’s other assets, the Reisterstown’s Road Plaza is located in an area with high population density. The property houses major tenants like Home Depot, Marshalls, Burlington Coat Factory, Giant Foods and Shoppers World. The redevelopment project was completed on-time and on-budget and RPAI expects that it will generate a return of 10.5% to 11%.

In fourth quarter, RPAI has also started the development of Plaza del Lago, a multi-family rental unit in Chicago that was bought by the REIT at the beginning of 2018. The acquisition was a part of RPAI’s broader strategy to buy properties located in a stronger metro area. The high-quality property is located in the heart of a wealthy neighborhood as the average household income within a two-mile radius of the property is $213,000. As a part of the redevelopment, the interior of the apartments was demolished to expand from 15 to 18 units. The estimated project commercial GLA for the Plaza del Lago is 20,600 square feet and the property is expected to create value by delivering multi-family returns at about 8% to 11%.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

Further, RPAI continues to progress with the redevelopment of Circle East property that is located in Baltimore MSA. The asset will be redeveloped as a mixed-used lifestyle property that will include double-sided street level retail with about 370 third party owned multi-family rental units. The development of the street-level retail continues to be on track and the project will be completed by early 2020.

Carillon, a mixed-use property located in D.C. – Baltimore MSA, is being redeveloped by REIT to enhance the experience for all types of uses – residential, office, medical, retail, restaurants, and entertainment. RPAI has planned to construct a regional medical center adjacent to the Phase I of Carillon and the project is on track for 2021 opening. The redevelopment of the Carillon is an example of the type of experience that RPAI plans to deliver to the consumer.

Strong Leasing Activity

RPAI continues to focus on achieving long-term stability and revenue growth by increasing its annual contractual rents and by building an increasingly diverse rent roll. Since the last three quarters, RPAI has achieved sequential increases in both the total number of leases and GLA signed in. For the entire 2018, the REIT has leased 17% of its total portfolio GLA and the leasing is reported to be the highest since its IPO in 2012. In 2018, RPAI has achieved 186 base points of contractual annual rent growth on new leases. The 3.4 million square feet of total leasing in 2018 demonstrated the pricing power of RPAI’s portfolio.

In the fourth quarter, RPAI completed about 1.1 million square feet of new and renewal leases. This area represents 5% of the REIT’s GLA. The new leases executed in the fourth quarter represent a significant spread of 34.9%. RPAI ended the fourth quarter with 94.8% lease which has increases by 80 basis points in comparison to the third quarter. In the fourth quarter, small shop percent lease decrease normal 20 points and the decrease was due to the impact of the Mattress Firm bankruptcy.

Previously, Mattress Firm had leased 24 locations within RPAI’s portfolio and now the retailer has 17 stores remaining in the portfolio. The lease for one of the locations expired while the lease for the remaining 6 locations was rejected due to bankruptcy proceedings.

The beginning of 2019 has seen many small store bankruptcies including that of ShopKo, Gymboree, Beauty Brands, Things Remembered and Charlotte Russe. Even though RPAI remains relatively unaffected by these bankruptcies, the REIT assumes that a small number of tenants on its watchlist will not renew certain locations in 2019. Despite the challenges faced by certain tenants, RPAI is confident about addressing future tenant distressed scenarios due to the strength of its portfolio. From a tenant risk perspective, RPAI has zero exposure to tenant bankruptcies as it has witnessed a rapid resolution of matters from the bankruptcies. The resolution has resulted in unanticipated termination fee income that will contribute to the REIT’s increased 2019 outlook for earnings.

Financials and Guidance

For RPAI, 2018 was a pivotal year strategically and operationally as its position was strengthened due to the improved footprint and also due to strong leasing activity. The operating FFO per diluted share was $0.26 for the fourth quarter and $1.03 for the full year 2018.

For the fourth quarter, the same-store NOI increased 2.5% over the same period in 2017. The growth was primarily driven by the base rent growth of 160 basis points. The base rent growth was due to contractual rent increase and releasing spreads. The growth in same-store NOI was also caused by a decrease in property operating expenses that largely stemmed from the company’s property-level management expense reduction efforts. For full-year 2018, RPAI’s same-store NOI increased by 2.2% driven primarily by base rent growth of 140 points and a decrease in property operating expenses net recoveries of 90 basis points.

In the fourth quarter, RPAI remained active in its share repurchase program as the REIT repurchased nearly 3.8 million shares at a weighted average price of $11.57 per share for $43.8 million. For the full year 2018, RPAI repurchased more than 6.3 million shares at an average price of $11.80 per share for a total of $75 million. Also during the fourth quarter, RPAI amended its $200 million term loan to reduce its credit spread by 50 basis points. The interest rate savings due to the 50 basis point credit reduction was offset by the impact of two interest rate swaps that the REIT had locked in September 2018. The purpose of the interest rate swaps was to fix the REIT’s interest expense through the November 2023 term loan maturity.

At the end of the fourth quarter, RPAI’s weighted average interest rate was reported to be 3.98% which is an increase of 16 basis points from the third quarter. The increment is due to change in interest rate on the term loan and a 28 basis point increase in the cost of the REIT’s LIBOR-based revolver. RPAI’s balance sheet has been bolstered by several factors. Firstly, RPAI’s net debt to adjusted EBITDA stands at 5.5 times. Secondly, availability under its revolver measures $577 million. And thirdly, RPAI holds no debt maturities in either 2019 or 2020.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

RPAI expects its 2019 operating FFO per diluted share to fall in the range of $1.03 to $1.07. The $0.02 increase in full year guidance can be attributed to the REIT’s Q3 and Q4 share repurchase activity. The increase can also be attributed to the increase in expected termination fees that has resulted from the Mattress Firm bankruptcy. RPAI expects its 2019 same-store NOI growth percentage to fall in the range between 1.75% and 2.75%. The expected same-store NOI growth in 2019 will be primarily driven by base rent increase.

Source: RPAI, Fourth Quarter 2018 Investor Presentation

For achieving its redevelopment and expansion goals, RPAI will be taking advantage of attractive interest rate environment by issuing $200 million to $300 million of unsecured debt. The proceeds from this issuance will be used to reduce borrowings on the REIT’s $850 million revolver which will enhance access to liquidity. Moreover, RPAI expects to maintain leverage levels in the 5.5 times to 6 times area. In 2019, RPAI expects to achieve additional milestones with regard to expansion and redevelopment projects.

Our Take

We haven’t mentioned it quite yet but it’s been deduced from the information provided: RPAI has as high if not higher quality properties than Federal Realty Trust (FRT) and Regency Centers (REG). By some measures, it indeed has the highest quality portfolio. In the State of White America, 1960-2010, Charles White refers to those zip codes with the highest income per capita as SuperZips – zip codes with median household income of $120,000 and where 7 out of 10 adults have college degrees.

By those metrics, RPAI has the highest quality portfolio of any of the Shopping Center REITs, with 37% of the portfolio located within Superzips.

On a valuation basis, we don’t necessarily think the stock is cheap right now. However, analysts are estimated AFFO growth of 13% in 2019 plus the stock pays a 5%+ dividend yield. That results in a potential return of 18% and upside potential.

There are some concerns about a high payout ratio and the sustainability of the dividend. However, there are quite a few shopping center REITs with payout ratios above 85%.

Source: Author calculations, Company SEC Filings

We realize that the payout ratio for RPAI recently reached 108%, but with AFFO growth in 2019 and 2020, we expect it to drop back down to the mid 90% range initially, and continue to decline thereafter. We should see a slight increase in the dividend in 2020 with more aggressive increases in 2021 and beyond.

Source: Author calculations, Company SEC Filings

We hold RPAI in our Low Vol REIT portfolio.

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Disclosure: I am/we are long RPAI. 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.

Additional disclosure: This article is meant to identify an idea for further research and analysis and should not be taken as a recommendation to invest. It does not provide individualized advice or recommendations for any specific reader. Also note that we may not cover all relevant risks related to the ideas presented in this article. Readers should conduct their own due diligence and 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.

Verizon Just Launched Its 5G Wireless Service a Week Earlier Than Expected

Verizon has flipped the switch on wireless 5G in Chicago and Minnesota, launching the service a week earlier than it had previously announced it would.

The move, which caught many by surprise, will give the customers who have 5G equipped phones access to wireless service with speeds of up to 1 Gps, roughly 10 times the peak speed of 4G.

“Verizon customers will be the first in the world to have the power of 5G in their hands,” said Hans Vestberg, Verizon’s chairman and chief executive officer in a statement.

The number of people who can actually take advantage of that service will be limited at first. Only one phone on the market—the Motorola Z3—supports 5G. Later this year, Samsung’s Galaxy S10 5G model, which will be exclusive to Verizon customers for a short period, will join that club.

The 5G service launched today will be limited to certain areas of the cities, Verizon warned.

In Chicago, 5G coverage is concentrated in areas of the West Loop and the South Loop, around landmarks like Union Station, Willis Tower, The Art Institute of Chicago, Millennium Park and The Chicago Theatre. Customers also have 5G Ultra Wideband service in the Verizon store on The Magnificent Mile and throughout The Gold Coast, Old Town and River North.

In Minneapolis, service is concentrated in the Downtown area, including Downtown West and Downtown East, as well as inside and around U.S. Bank Stadium, the site of this weekend’s NCAA men’s basketball Final Four. Verizon 5G Ultra Wideband service is also available around landmarks like the Minneapolis Convention Center, the Minneapolis Central Library, the Mill City Museum, Target Center and First Avenue venues, The Commons, areas of Elliot Park and in the Verizon store in The Mall of America.

Verizon’s launch comes as the carrier feuds with AT&T, which has launched a service it calls “5G E” that is not actually connected to a 5G network. The company ultimately plans to roll out 5G mobile service to 30 U.S. cities. AT&T did launch a mobile 5G device to customers in December, though it came with some caveats, such as the required use of a mobile Wi-Fi hotspot.

Late last year, Verizon launched 5G home service in four cities, testing the technology in smaller environments.

Customers who want the 5G service will pay a $10 per month premium on their unlimited data plans, the company announced last month.

LinkedIn Just Announced the 50 Top Companies for 2019 (Is Your Company on the List?)

LinkedIn looks at billions of actions taken by its members around the world to uncover the companies that are attracting the most attention from jobseekers and then hanging onto that talent. According to LinkedIn, “this approach looks at what members are doing — not just saying — in their search for fulfilling careers.” 

  • Companies emphasize values over perks: Companies are emphasizing company values over office perks, even as their values evolve with the times. Disney (No. 17) is paying full tuition even for its part-time workers; Slack (No. 23) is running a coding skills program within prisons; Lyft (No. 19) is offering free therapy to employees and their dependents; WeWork (No. 13) has all-vegetarian cafeterias; Goldman Sachs (No. 21) has relaxed their once-strict dress code, and WPP (No. 39) has banned drinking in their ad agency offices.
  • Tech companies, old and new, dominate rankings: Tech continues to be the fastest growing industry in the U.S., and more than half of this year’s top companies are from the tech industry. Traditional tech stalwarts such as Oracle (No. 9), Dell (No. 10), Cisco (No. 12), and Intel (No. 37) are competitively ranked alongside more recently founded companies including Airbnb (No. 8), Netflix (No. 11), Splunk (No. 39), and Snowflake Computing (No. 49).
  • Nearly 40 percent of companies are new to the list: Of the 50 companies on the list, 19 are new to the rankings. Newly recognized Top Companies to work for include Bank of America (No. 18), Citi (No. 22), Slack (No. 23), Wells Fargo (No. 25), Pinterest (No. 29), Coinbase (No. 35), and others. 

Published on: Apr 3, 2019

4 Strategies to Identify and Recognize Invisible Wins

At the core of Entrepreneurs’ Organization (EO)‘s mission is an unrelenting commitment to helping entrepreneurs learn and grow in every stage of business. Adopting an attitude of gratitude in recognizing employee wins is a critical component of success. We asked Tom Turner, CEO of BitSight, about the importance of uncovering and recognizing invisible wins. Here’s what he shared:

Building a strong company culture is fundamental to success. When employees are happy, engaged and enjoy coming to work every day, they work harder and care more about your company. A key element in creating that environment is celebrating your employees’ successes.

I’ve always believed that building a company is a team sport, and just like in any game, you should celebrate the wins. It’s easy to cheer for what you see, like leading a new product development initiative or converting a new customer. What is equally important, however, are the things you don’t see: the team member who fixed a laptop glitch moments before a pivotal demo, or the one who went the extra mile to onboard a new employee.

In every company, people are working hard behind the scenes, creating a collection of little victories that shape a company and drive it forward; and they should enjoy equal credit for their wins as those who visibly score. These small, “invisible wins” drive big results.

What is an invisible win?

Recently, our company moved its headquarters from Cambridge, Massachusetts, to Boston’s Back Bay neighborhood. The move entailed an incredible amount of work, much of which was never seen by employees. In celebrating the move, the most obvious (and admittedly highly warranted) person to thank was our facilities coordinator, who developed the layout, thoughtfully designed the space and purchased state-of-the-art furniture. This is a visible win.

But what could be overlooked was the work done by our VP of Finance, who coordinated the early-build stages of the office, ensured permitting was correct, accepted furniture deliveries and corralled the crew into action. This is an invisible win.

Our company made sure we celebrated both. Neither of the two possesses the skills of the other or owned the same responsibilities throughout the process, but without both of them, we would not have the beautiful new office we sit in today.

Four ways to identify and recognize invisible wins

It’s often not easy to identify invisible wins and the team members behind them. Doing so involves a combination of listening, engagement and setting up processes specifically designed to find and celebrate the range of wins in your company.

Here are four strategies to help you uncover more invisible wins:

  1. Ask questions. Finding invisible wins involves asking the right questions and listening for anecdotes. Ask managers how their teams are performing and who is impressing them lately―challenge them to consider the small, day-to-day victories that would otherwise go unnoticed.
  2. Be engaged. You won’t see the small wins unless you’re present and paying attention. I’ve learned from our chairman to walk around the office and drop in to different meetings, which enables me to gain a sense of the various teams and what they’re working on, both big and small.
  3. Encourage recognition. Create processes that allow everyone in the company to acknowledge wins of all types. When we get a new customer, for example, we ask the sales team to write a win report to recognize those who contributed. We also encourage people to write anonymous note cards recognizing others who have recently helped them.
  4. Acknowledge publicly. Wins big and small deserve to be recognized beyond one-on-one meetings and within individual teams―whether that’s in a company-wide email or at your regular all-hands meeting. During each of our company meetings, we choose someone to read employee acknowledgment note cards and the names of the people who received them. These note cards have become a point of pride for employees, who often showcase them on their desks–transforming the invisible into the visible.

As you work to improve the ways you appreciate and motivate employees, you will no doubt continually learn new things about the people you employ and the recognition that drives them. Of course, compensation and benefits are significant and always will be. But recognizing wins–both the obvious and the more subtle–should become an essential part of any company culture.

My Aha! moment along this journey was the realization that it’s the peer-group recognition that genuinely makes employees proud, excited to work hard, and continuously motivated to make our company grow into the best it can be.

When to declare cloud application migration failure

One of the hip terms that you hear a great deal in Silicon Valley is “fail fast.” This means to find out what does not work so you can move on to what does. It’s solid advice, for the most part.

However, failing in some enterprises’ IT shops may get you put out of the organization, so many IT pros avoid failure at any cost—or at least never declare failure, even if it means spending millions of dollars in dealing with ineffective systems that are costly to run or even hurt the business.

For the cloud, you need to know when to declare a “fail,” when to hit the reset button and start from the beginning when doing migrations.

I bet if you look at your cloud migration projects now around the company, at lwast 20 percent are in big trouble. While the reasons for running into trouble that can lead to outright failure vary, these are the big three that I’m seeing:

  • Lift-and-shift is not working.
  • Data integration is an afterthought.
  • Compliance or security issues have not been addressed.

The biggest issue with migration of applications is the false belief that if it runs on premises on platform A (say, on Linux with four cores), provisioning virtual platform A on a public cloud using the same configuration means the application should work there as well. Umm, often no.

The result of such assumptions is that IT organizations run into issues around communications with systems that have not moved to the public cloud yet, or that their cloud bills are 300 percent higher than expected.

The reason: These lifted-and-shifted applications aren’t optimized for the cloud platform, either for functionality or costs. They don’t use native cloud features, so the value of moving to the cloud has gone out the window; indeed, it may cost you much more.

When that happens, there is nothing you can do other than declare failure and go back to the migration drawing board, this time refactoring to use cloud-native systems, as well as optimize it for the target cloud platform.

The other two issues—data integration, and compliance and security—are less frequent causes of outright failures, but they are still big issues.

Not considering the data integration needs before migration means that you’re not going to find the issue before you can do anything to fix it quickly. In many instances, the latency between on-premises systems and the cloud can’t be corrected. In such cases, you need to move back to the data center—after declaring failure.

Compliance and security issues often require systemic changes to the applications and databases in the cloud, and so need a lot of upfront planning. In a worst case, you end up with compliance or security failures so grave that you must start over.

It’s important to understand that failure is a part of cloud migration; after all, most organizations are still learning. So expect mistakes and build the fact of failure into the migration efforts. But do more than that: Also make sure you learn from the failures and thus continuously improve your practices, tools, and skills.

Science Says People Are Getting Smarter. Here's Why Communication Has to Get Dumber.

I hate the expression, “dumb it down,” which originated in 1933 as movie-business slang used by screenplay writers, meaning “[to] revise so as to appeal to those of little education or intelligence.” 

But I love the fact that people everywhere are getting more intelligent. As Peter R. Orszag writes in Bloomberg, “Average intelligence levels, as measured by standardized intelligence tests, have been rising since at least the early 20th century. A recent meta analysis included more than 4 million people in 31 countries found an average gain of about three IQ points per decade, or roughly 10 points per generation.”

Okay; here’s the tricky part: All those smart people need communication to be simpler than ever. And not because they can’t understand complex sentences and big words–because they’re inundated with information and need shortcuts to manage it all. This isn’t about “dumbing it down,” it’s about making everything intelligently simple.

So to communicate effectively, you need to take the advice of one of the smartest people ever: Albert Einstein, who said, “If you can’t explain it simply, you don’t understand it well enough.”

What I love about this that the responsibility is on you, the communicator: You have to be work hard to truly understand the topic, so you can convey it simply.

What else can you do to communicate so simply that even the smartest people get your message? Here are 5 ways:

  1. Never forget that you’re a real person communicating with other people. Unfortunately, people these days spend so much time feeling like a tiny cog in the wheel, lost in a high-tech maze, reduced to nothing more than a number and a password. So we crave the human touch. We love walking into the local hardware store and knowing the shopkeeper, who gives us advice not based on guiding us to the most expensive solution, but what’s best for us (“This 45-cent bolt should do the trick.”). Your communication needs to be that personal and helpful.
  2. Write for your audience, not for clients/stakeholders/senior leaders. This may seem so fundamental that you may wonder why I even mention it. But I find that this is where a lot of content goes wrong. The scientists (or engineers or IT experts or finance geeks) want to include all that technical stuff. (After all, it makes them sound important.) So you load up the piece with arcane details. That means you lost sight of the fact that audience members don’t care about the fancy stuff; they want content to be simple, understandable and relevant.
  3. Don’t lecture; converse. Lose that imperious, from-on-high tone and replace it with a friendly, conversational voice. You know what I mean: Write the way you’d speak to a colleague or even a friend. Friends don’t let friends use words like core competency, synergy and strategic imperatives.
  4. Be tangible, not conceptual. Here I quote business analyst and author Christopher Locke, who writes, “business. . . seems to assume we know what they mean when they sling around terms like value, brand and positioning and equate the resulting blur of vague ideas to something we might actually care about.” Instead of “slinging” concepts around, make them very concrete. Everyone will understand that we need to cut costs by 10%. Or because we lose two out of five customers a year, we need to increase customer retention (and keep one of those that now leave us).
  5. Reduce your reading grade level. The best defense against Corporate Speak is analyzing your writing using a test like the Flesch Reading Ease Score or the Flesch-Kindaid Grade Level Score, which are conveniently built into Microsoft platforms. Remember that the average American reads at the ninth grade level. And that most marketing content is created at the seventh grade level. So when your content is coming in at the 13thgrade, you’ve got a problem. Time to cut out the big words. Make your sentences shorter and clearer.

The more accessible you make communication, the faster you cut through the clutter. It’s just that simple.

Published on: Mar 31, 2019

*The Matrix* Is Nothing Without Its Sequels—Nothing!

You’re talking about The Matrix at a dinner party, and that’s fine. As the founding document of our present hypermodern unreality, it’ll always be, 20 years after its release or 200, fair game for chat. Over medium-rare steaks that may or may not be 1s and 0s, guests happily quote the Oracle (“Take a cookie”), defend Keanu’s acting, quote Agent Smith (“It’s the smell!”), rehash Baudrillardian basics, and convince each other that there is no soup spoon (but pass the soup).

Then the inevitable moment comes, and it is not fine. Some dweeby gasbag in attendance—picture him now; he may very well be you—gathers up the requisite oxygen to declare, with huffing sense of purpose and in sweaty anticipation of back slaps and applause: “Those sequels sure did suck, though!” Dammit, there goes the buzz. If only someone could unplug this phony soul, this over-baked noodle, this robotic amalgamation of parts—spare him the shame of looking the undignified fool.

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The fact is, the Matrix sequels do not—forgive his barbarism—suck, and to claim that they do, to side with the dweeb and the cultural majority he somehow represents, is simply to lend further credence to the Wachowskis’ vision of a world where thought is all but pre-scripted, emotion manufactured by machine. So uh, do you take your blue pills in the morning or before bed?

Fine, maybe that’s unfair. Maybe the dinner guest—the dinner guest who might also be you—isn’t entirely to blame. Now that science fiction has been, as they say, mainstreamed, there’s social pressure to prove nerd cred. Cute, I suppose, but what this looks like in practice is a bunch of fakers bashing the acceptable properties. The Star Wars prequels stink so hard! You know what embarrasses me is Big Bang Theory! The Matrix sequels suck!

Pathetic. Then there’s the idea that there might be merit to the whole anti-sequel stance. The first Matrix changed our perception of reality, so the second should have done likewise, and the third again. Inarguably, they did no such thing. Yeah, well, as Morpheus might as well have said: The mind cannot be blown the same way twice.

No, there really are no excuses, just kids who felt mind-unblown by the second and third Matrices, validated in turn by the selfsame judgments of fellow unthinkers, and content to swill blue pills until today, when one of them ends up at a dinner party and proceeds to spoil the mood. The worst part is, other people at the table will probably nod. Yep, computer gobbledygook and white ghost things with dreads and didn’t they have to replace the Oracle? Haha, so dumb. People are expert at enabling this type of weakness.

Here’s the truth: The Matrix is nothing without its sequels, and you’d know that if you watched them. Actually watched them. Not judged them because the first one made you cream yourself and then the second one had worse CGI and more fights (which it did) so boo to all that. Have you even seen them recently? They’re on Amazon now. Free your mind of expectations and boot them up. Consider the story the Wachowskis are telling, not the potential for intro-to-philosophy mindfuckery. Then you’ll see that The Matrix Reloaded and The Matrix Revolutions are inversions, complexifications, mystifications of the original—a breaking out (of the Matrix) undone by a breaking in (to Zion) that finally leads to a breaking through (to a hard-won peace).

OK, I’ll spoil some of the revelations you’ll have. Reloaded begins with a scene that should feel very familiar: Trinity running running running and then diving through the air, turning around to point a gun at a foe. Image by image, it echoes the sequence that opens the original. There’s one difference: This time, Trinity is fatally shot by the pursuing agent. The Wachowskis are savvy, obsessive filmmakers—they’re not just throwing sequel money at the big screen. Here they’re telling us: Reloaded will invert what came before it. (Even the name, Reloaded, which you might call cheeseball, plays up a sense of pullback, redoing.)

From there, they don’t let up. You spend as much time in Zion, the last human city, as the original spent in the Matrix. Your impression of the Oracle flips, from folksy black grandma to computer program who chooses to present that way (and has secret motives). You meet the Architect, her foil: an old white guy who talks like a snob. Nearer the end, Trinity indeed dies, only to have Neo resurrect her, hand literally around her heart. You’ll remember that, at the end of The Matrix, Trinity resurrected Neo with a kiss. At the end of that movie, Neo soars away, Superman in a trench, empowered by his defeat of Smith. At the end of Reloaded, Neo’s locked in a coma, enfeebled by his encounter with a machine. The opposite image.

The third and final movie, Revolutions, is synthesis. The realms blur and shade into one other. Neo is trapped in a train station, blindingly white, between realities. Eventually, he is blinded. He meets the machine-gods. He dies. So does Trinity. Neither can save the other; both accept that you get one resurrection.

Just before that, Neo stages his last fight with Smith, a final-boss battle complete with epic choral chants, crashing buildings, and gushing rain. In the first movie, Neo fights Smith one-on-one. In the second, he fights a never-ending stream of Smiths, the program having propagated itself through the Matrix. In Revolutions, he’s back to fighting a single Smith—while millions, billions, of identical Smiths watch. The main Smith has the eyes of the Oracle. Even identities have blurred. Everything comes to a point.

Why go on? There’s so much more to say, but our dinner guest doesn’t care about any of it. He has one aim: to win favor. He’s not interested in joy, in originality, in storytelling, only pooh-poohing for easy points. He’s not interested, in short, in loving something, which is and always will be the true preoccupation of the genuinely weird and wonderful. He’s a fraud, and in his insecurity he spreads his fraudulence, his deception, his blandness to weak-willed others. He is Agent Smith, the inevitability of a sick simulation.

Had our dinner guest only sat with these movies in unselfish contemplation, he—you—might’ve seen that they were a beautifully told warning. A warning against conformity, a vision of a software-eaten world of perfect, catastrophic sameness. Neo sacrificed himself to destroy the likes of that—to destroy the likes of you.

Check out all of our 20th anniversary coverage of The Matrix. If you want to revisit it, The Matrix trilogy is free on Amazon Prime.

(Note: When you buy something using the retail links in our product reviews, we may earn a small affiliate commission. Read more about how this works.)

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The Aha! Moment That Transformed My Business Model

Tim Vogel is an Entrepreneurs’ Organization (EO) member in South Florida where he serves as Chair for the chapter’s EO Accelerator program, which empowers entrepreneurs with the tools, community and accountability necessary to aggressively grow and master their businesses. Tim is founder and CEO of Scenthound, a membership-based dog grooming and wellness company. We asked Tim how his experience in a business accelerator program helped pinpoint the unique business model that is disrupting the pet care industry. Here’s what he shared:

Tell us about your entrepreneurial journey.

After we got married, my wife, Jessica, wanted a dog. Oddly, I was against the idea because of the extra responsibility. Long story short: We got a puppy, and I fell instantly in love with our new family member. Over the years, I learned a lot about the pet industry―and grooming in particular. So having a dog ultimately inspired us to start a business in the pet space.

How did you learn about the business accelerator program?

At the time, I owned a mobile pet grooming business and had just opened our first brick-and-mortar grooming salon. I knew about EO from a previous employer who was a member. While struggling to solve issues around scaling the business, I reached out to the local EO chapter and learned about the Accelerator program. I was excited to find a community of motivated entrepreneurs who understood the challenges I was facing.

What is a Learning Day, and which day provided you with the most significant benefit?

The Accelerator program has four quarterly Learning Days focused on the business fundamentals of strategy, execution, people and cash. In the morning, your coach explains the topic and offers insights, and then since everyone in the room is an entrepreneur trying to grow their company, a lively discussion ensues. In the afternoon, speakers from successful businesses share practical knowledge, and you ask questions and try to absorb as much as possible to benefit your company.

Strategy Day changed my business! I remember the moment very clearly. The lesson had to do with your biggest barrier being the path to success. If you can solve for that bottleneck, then you can solve your scaling problem. My most significant barrier by far was finding and keeping qualified groomers. My Aha! moment was realizing that we needed to get rid of groomers.

This led to an additional realization: Only two of the top ten dog breeds owned in the US need haircuts, but all dogs need preventive care―and the entire grooming industry focuses on haircuts rather than health. From there, I changed the business model to focus on making preventive care fast, easy and affordable. Especially for the 80 percent of dogs that don’t need haircuts.

That insight transformed the business model. I changed the name from Pet Groomerie to Scenthound―SCENT stands for skin, coat, ears, nails and teeth. We replaced breed-standard haircuts with a one-length overall “puppy cut.” This simplified training and execution so we could scale.

The second massive improvement came after Cash Day when I implemented Labor Efficiency Ratio to increase gross margin with the same labor dollar output, which added 15 percent to the bottom line.

What was the overall impact of your business accelerator participation?

I completely changed the company’s brand position, service offering―even the name. I also learned to measure key performance indicators better, lead more effectively and hire based on core values.

During four years in Accelerator, we achieved 185 percent growth in revenue. I spent the first two years trying to scale my former business model and grew roughly 25 percent each year. After my year three Aha! moment, I changed the business to be both wellness-focused and membership-based. We doubled the business in the last two years.

What’s next for your company?

In 2018, we built the franchise foundation and are now actively selling franchises. Because we made the service so process-oriented, it’s much more scalable. As the only wellness-focused grooming business in the country, we decided franchising was the path to rapid growth. Our goal is to sell 10 franchises this year, 30 next year and 60 the following.

As Accelerator program chair, you now help startup entrepreneurs learn to grow and scale. What’s it like being on the other side?

I love the energy of the Accelerator program. It’s done much more than just help me learn the systems and processes to create a scalable business. That was how it started, but once I graduated from the program and became an EO member and Accelerator coach, I found an amazing opportunity to become a better leader, coach and mentor. As program chair, I am learning how to be a leader of leaders. Eight years after initially joining, Accelerator is still teaching valuable skills that benefit me in more ways than I would ever have expected. Who knew?

Lyft Kicks Off Highly-Anticipated ‘Year of the IPO’

Lyft’s initial public offering on Thursday is the first of a series of highly-anticipated debuts by tech companies in public markets. And so far, Lyft is proving that it’s the right time to make the leap.

“With what we’re seeing with the excitement and feedback from the investment community, this IPO market could end up being historic,” said Barrett Daniels, national IPO services leader at Deloitte & Touche.

Lyft, which will begin trading on Nasdaq on Friday, was one of several big tech companies expected to go public this year. In the IPO, the company priced its shares at $72, at the high range of what it had initially anticipated.

“This IPO is a ‘watershed’ event for the tech sector as well as the ridesharing industry that in our opinion has become one of the most transformational growth sectors of the U.S. consumer market over the past five years,” analysts at Wedbush Securities wrote in a note following Lyft’s IPO.

Meanwhile, Pinterest, which filed its public paperwork with the Securities and Exchange Commission on March 22, is expected to begin trading on the New York Stock Exchange in April. Lyft rival Uber, also expected to go public in April on the NYSE after filing confidentially, could have a valuation of up to $120 billion and become one of the largest IPOs in history. Postmates, Zoom, Slack, and Airbnb, also are anticipating debut later this year.

Investors’ appetites are strong for these “decacorns,” or companies with valuations larger than $10 billion, Daniels said. Lyft’s IPO was oversubscribed a week before it went public, signaling the heavy demand for its shares that helped send its market value to $24.3 billion, higher than the $23 billion valuation it had initially expected. Meanwhile, Airbnb was privately valued at more than $30 billion during the last two years, while Pinterest was most recently valued at $12 billion.

“These are not your Boomer-generation IPOs,” said Duncan Davidson, general partner at venture firm Bullpen Capital. “We killed the small IPO after 2000.”

That’s because for years, the venture capital market has bet big on newer ventures, allowing companies to stay private and well-funded for longer periods of time. But generally, investors expect a return on their investment. So this year, those heavily venture-capital-backed companies are finally making the big move, in an effort to take advantage of the current strong market conditions.

The excitement for Lyft will likely spill over into Uber’s expected initial public offering, Davidson said. But that doesn’t mean that all tech IPOs will get the same reception because some companies don’t have a clear path to profitability.

“It won’t be … the tide that lifts all boats,” Davidson said. “The market will still be selective.”

What excites investors most about these large tech companies, most of which are unprofitable, is revenue growth, according to Deloitte’s Daniels. Lyft’s revenue in 2018 doubled to $2.2 billion while it lost $911 million, 32% more than the year before.

“A lot of these startups made a conscious decision early in their lives to grow and grow quickly,” Daniels said. “It would appear they’re going to be rewarded for it.”

Daniels says most companies that have been considering IPOs are speeding up the process to ensure they debut this year. Though a couple of companies may opt for a direct listing, a process that foregoes underwriters, he expects this to be the year of the IPO.

“It feels like it’s going to be real exciting here for the next couple of months” and continuing into the year, Daniels said. “It’s going to be a historic year.”

Data Sheet—Why Twitch Pivoted to Video Games, and Why It Worked

Upgraded. Remember that meeting between Google CEO Sundar Pichai and the Pentagon? It seems it turned into more of an Oval Office affair, as President Trump tweeted about talking with the tech exec, too. Pichai “stated strongly that he is totally committed to the U.S. Military, not the Chinese Military,” Trump wrote. At the other end of the political spectrum, the Human Rights Campaign, the largest U.S. LGBTQ group, withdrew its positive corporate rating of Google over an app in Google’s Play store promoting conversion therapy.

Third class. After three generations of failure, Apple is finally apologizing for its terrible butterfly keyboard design–sort of. Wall Street Journal columnist Joanna Stern mocked the design in a piece titled “Appl Still Hasn’t Fixd Its MacBook Kyboad Problm,” prompting the company to issue a statement saying the problem was limited to a small number of users “and for that we are sorry.” Hopefully, the laptop maker comes up with a new design soon instead of an apology. (I am also not a fan, as you may have read.)

Caught in the act. The Department of Housing and Urban Development announced on Thursday it is charging Facebook with violating housing discrimination laws over the company’s advertising targeting features. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face,” HUD Secretary Ben Carson said in a statement. No immediate response from the company, which has already moved to end the practice.

Challenging times. Four former IBM employees filed an age discrimination lawsuit against the company on Wednesday. All four were age 55 or older when IBM let them go in 2016. The suit also attacked IBM’s requirement that departing employees waive their right to collective legal action in order to obtain severance. “We are confident that our arbitration clauses are legal and appropriate,” the company told the San Jose Mercury News.

Nailed. Federal regulators uncovered one of those bogus tech support scams that relied on phony alerts generated by supposed PC cybersecurity apps. The bad guy? Retail chain Office Depot, which agreed to pay $25 million to settle the charges.

Facebook charged with racial discrimination in targeted housing ads

The Facebook logo is reflected on a woman’s glasses in this photo illustration taken June 3, 2018. REUTERS/Regis Duvignau/Illustration

(Reuters) – The U.S. Department of Housing and Urban Development (HUD) charged Facebook Inc on Thursday with violating the Fair Housing Act, alleging that the company’s targeted advertising discriminated on the basis of race and color.

HUD said Facebook also restricted who could see housing- related ads based on national origin, religion, familial status, sex and disability.

Facebook said it was surprised by the decision and has been working with HUD to address its concerns and has taken significant steps to prevent ads discrimination across its platforms.

The social media giant said last week it would create a new advertising portal for ads linked to housing and employment that would limit targeting options for advertisers.

“Facebook is discriminating against people based upon who they are and where they live,” HUD Secretary Ben Carson said. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”

The Fair Housing Act prohibits discrimination in housing and related services, which includes online advertisements, based on race, color, national origin, religion, sex, disability, or familial status.

Reporting by Akanksha Rana in Bengaluru; Editing by Saumyadeb Chakrabarty

Burley Encore X Review: A Fun but Flawed Bike Trailer

“There’s no reason to be afraid,” my spouse scolded, as my 1-year-old and 4-year-old shrieked at the top of their lungs. You would’ve thought they were being roasted alive, instead of merely strapped into the Burley Encore X as their parents gingerly hauled it down a small, steep hill to the beach.

For a minute, the stroller was poised over a three-foot drop. I held the roll bar from the top and lowered it to my spouse as I braced my feet on a tree root and thought, “Hey, I might start shrieking, too.” You can’t blame toddlers for tantruming when the tantrum makes perfect sense.

Our kids are used to this. Ever since my son has been big enough to hold his head up on his own, we’ve been hauling them around in the active parents’ bike trailer of choice, a Thule Chariot. The Chariot has different iterations at different price points, but each iteration can be modified for jogging, biking, or cross-country skiing.

This year, Burley released a series of new, rugged child bike trailers. While the the Eugene, Oregon-based company is known for super-safe designs, it’s hoping that the new Cub X, D’Lite X, and Encore X will get more Burley trailers off the streets and onto the sand, snow, and dirt.

I opted to test the Encore X performance sport stroller-trailer. It has suspension, in comparison to the more affordable Encore, but fewer of the luxury features of the D’Lite model. After a few weeks of testing, I still prefer our Chariot. But Burley’s many fans will find plenty of reasons to love the Encore X.

And It Was All Yellow


The Encore X is easy to assemble and use. Like Burley’s jogging stroller, the Solstice, the manipulable parts are set off in bright yellow plastic, so you know exactly which parts you are supposed to wrestle with and which ones you should leave alone.

At 31 inches across, it’s narrow enough to fit through our front door—just barely—and at 24.7 pounds, it’s lighter than our Chariot Cheetah, which weighs 26.5 pounds. It comfortably fits my two kids, but it’s worth noting that its total capacity is only 100 pounds. I’m probably only going to be able to carry both children in it for another year or so.

I might be able to use it for a little longer if I can resist packing it full of stuff. The Encore X has an awe-inspiring cargo capacity. It’s hard not to start tossing random things into the 60-liter cargo bin, like picnic blankets, tennis rackets, or dog food. You can also remove the seats to convert it to a cargo trailer.

It also comes with a one-wheel stroller conversion kit. To use it, screw the Burley hitch on your rear axle. When you want to bike, hook up the trailer hitch with by sliding in the pin and locking it; flip small front wheel up and you’re ready to go. When you want to convert it to a stroller, unhook the pin and flip the front wheel down. The transition is quick and easy, and unlike the Chariot, you don’t have to worry about finding a way to carry or store the hitch bar. Some convertible strollers, like the Thule Chariot, do have a sturdier ball-and-socket attachment in addition to a pin.

Finally, the Encore X comes with all the standard features that help make the company’s trailers so beloved among biking baby-havers: it comes with a skid guard to protect the bottom of the trailer, and the wheels have guards and are easy to switch out with the pop of a big, yellow button.

And the suspension works! I biked two kids and all their stuff on everything from dirt trails, to sand and gravel paths, and no one protested or cried (except for that one time).

Not so Burly


As a bike trailer, the Encore X is nearly perfect. For two weeks, I towed my children to and from school. A sunshade and UV-protective panels protected my kids from the sun, and the big storage container meant that I didn’t have to attach panniers to my bike rack to carry all their backpacks and jackets. I could throw in a friend’s skateboard in the back when he wanted to walk with us, or a basketball to play at the park.

When I took it on more adventurous excursions, cracks began to show. The Encore X meets ASTM F1975-09 safety standards and survived extensive drop- and crush-testing thanks to its heat-treated aluminum roll frame, but I have some concerns with its durability.

The first flaw is that the trailer’s handlebar doesn’t lock into place. When I picked up the bike trailer an inch or two to pull it around a gate or over a curb, the handlebar popped out, rotated, and plonked my children on the ground. When we had to lift the trailer over a log on the trail, my spouse and I picked the stroller up by its frame and ignored the handlebar altogether; it was just easier.

Burley assured me that you can tighten the clamp to lock the handlebar in place. However, in order to do so, you need to pop out the barrel nut that holds the handlebar in place. And if you tighten it too much, you might snap the handlebar’s cinch lever. As I pondered this conundrum, I couldn’t help but think that a sport trailer should be a little hardier than this.

I also wonder how long the Encore X will hold together. The fabric is made from tough 600-dernier polyester, but after a mere two weeks of being folded up and shoved in the back of my car, it has already started to wear through. The damage isn’t covered by the three-year warranty. Burley suggests a little Tenacious Tape might do the trick, but I’ve owned the Thule Chariot for three years and put it through similar paces, and its only signs of wear are fading from the sun.

The Thule Chariot’s accessories also just make more sense. For example, the Chariot’s two-wheel stroller kit is included in the base price, whereas with the Burley, the two wheel stroller kit is an add-on. The one-wheel stroller conversion kit might be more convenient in some ways, but I missed having two wheels. They make the stroller smaller and easier to maneuver, and I wouldn’t want to pay extra for them.

I was excited to test Burley’s sand- and gravel-riding kit, but I found that the big, fat, 16-inch tires were unnecessary. If you want to bike to the beach and push the stroller through sand, you have to buy the $149 jogger kit on top of the $199 fat tires. Without the jogger kit, the puny front tire sunk into the sand, tipping the stroller forward.

If you pick the Encore X, my advice is to skip the sand kit and stick with the ski kit for snow. Opt for the jogger kit if you want to go on sand or trails, or the two-wheel kit if you live in a city.

Encore Ready

If you want a one-and-done bike trailer that you can also hoist over a tree root without your children screaming, my vote would still be for one of the Thule Chariots like the one I recommended in our Best Strollers guide. Still, I found it to be a surprisingly difficult decision.

The Encore X has many admirable qualities, especially if you don’t go off-roading very much. It’s lighter and narrower, with much better storage options. With a few refinements to improve its durability, and a little Tenacious Tape, I might see a lot more of these on the roads and trails this summer.

Auto1 may consider IPO in future but no need for cash now: CEO

BERLIN (Reuters) – German used-car dealing platform Auto1 said it could seek a public offering in future but a 2018 cash infusion from Japan’s Softbank means it has no immediate need for extra funding of its European growth plans.

FILE PHOTO: A worker loads a second hand car on a car transporter truck at the company grounds in Zoerbig, Germany January 28, 2017.REUTERS/Fabrizio Bensch /File Photo

Last year’s Softbank’s deal valued Berlin-based Auto1 at 2.9 billion euros ($3.27 billion), making it one of Germany’s top so-called tech unicorns.

It is virtually unknown to consumers except through its used car buying arm Wir Kaufen dein Auto (We Buy Your Car) in Germany and similar names elsewhere. It operates from Finland to Romania to Portugal, 30 countries in all.

Revenues rose by 32 percent to 2.9 billion euros last year, and although it is profitable in Germany, investments in other markets have led to a loss on group level.

“Currently, an initial public offering is not a topic for us,” Auto1 co-founder Christian Bertermann told Reuters, adding this could change in future.

Auto1 buys cars using its vehicle pricing database to calculate an offer within minutes and then sells the vehicles on to one of its roughly 35,000 dealerships for a commission.

Its platforms helped 540,000 vehicles change hands in 2018.

The company will now also start a retail platform to compete with Scout24’s Autoscout unit or Ebay’s offering, Bertermann said.

He confirmed a Reuters report about Auto1’s talks with Scout24 about an acquisition of Autoscout, adding that these would not lead to a takeover.

Scout24 in February agreed to be acquired by buyout groups Hellman & Friedman and Blackstone.

Auto1 was set up in Berlin by entrepreneur Christian Bertermann after having trouble selling two old cars owned by his grandmother, along with Koc, who previously worked at Rocket Internet-backed firms Zalando and Home24.

Reporting by Nadine Schimroszik,; Writing by Arno Schuetze; Editing by Alexandra Hudson

Google's new gaming service will let game makers use rival clouds, executive says

SAN FRANCISCO (Reuters) – A Google executive offered new details on Wednesday about the company’s upcoming video game streaming service, telling Reuters that game makers may use competing cloud providers and must avoid some inappropriate content.

Google vice president and general manager Phil Harrison speaks during a Google keynote address announcing a new video gaming streaming service named Stadia that attempts to capitalize on the company’s cloud technology and global network of data centers, at the Gaming Developers Conference in San Francisco, California, U.S., March 19, 2019. REUTERS/Stephen Lam

Google, owned by Alphabet Inc, unveiled Stadia on Tuesday, saying the service launching this year would make playing high-quality video games in an internet browser as easy as watching a movie on its YouTube service.

The game would operate on Google’s servers, receiving commands from a user’s controller and sending video streams to their screen. Player settings, leaderboards, matchmaking tools and other data related to the game would “not necessarily” have to reside on Google’s servers, Phil Harrison, a Google vice president, said in an interview.

Hosting the data elsewhere, however, could lead to slower loading times or less crisp streaming quality, he said.

“Obviously, we would want and incentivize the publisher to bring as much of their backend as possible” to Google servers, he said. “But Stadia can reach out to other public and private cloud services.”

The approach could limit Google’s revenue from Stadia. It has declined to comment on the business model for the new service, but attracting new customers to Google’s paid cloud computing program is one of Stadia’s aims.

If a game publisher was using Amazon for some tools, “the first thing I would do is introduce you to the Google Cloud team,” Harrison said.

In addition, Stadia will require games to follow content guidelines that build upon the system of Entertainment Software Rating Board (ESRB), a self-regulatory body, he said.

“We absolutely will not have A-O content,” Harrison said, referring to the ESRB’s moniker for the rare designation of a game as adult-only because of intense violence, pornography or real-money gambling.

He said Stadia’s guidelines would not be public.

Asked about growing public concerns about game addiction, Harrison said Stadia would empower parents with controls on “what you play, when you play and who you play with.”

Google views Stadia as connecting its various efforts in gaming, including selling them on its mobile app store, Harrison said. But game streaming, he said, is an opportunity to tackle among the most complex technical challenges around and potentially apply breakthroughs to other industries.

“We think we can grow a very significant games market vertical,” he said. “And by getting this right we can advance the state of the art of computing.”

Reporting by Paresh Dave; Editing by Leslie Adler

Samsung Electronics sees tough 2019 for component business: CEO

Kim Ki-nam, president and co-chief executive officer of Samsung Electronics Co.¡¯s semiconductor division, speaks during the company’s annual general meeting at a company’s office building in Seoul, South Korea, March 20, 2019. REUTERS/Kim Hong-Ji/Pool

SEOUL (Reuters) – Samsung Electronics Co Ltd expects a tough year due to global trade tensions, slowing economic growth and softer demand for memory chips from data center companies, the firm’s co-chief executive said on Wednesday.

The world’s biggest memory chipmaker reiterated its forecast of a weak 2019 as shareholders gathered for its annual general meeting in Seoul, citing a slowdown in demand for memory chips.

“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Co-Chief Executive Kim Ki-nam told the meeting.

Samsung is seeking new growth in areas such as network equipment manufacturing as sales of its mainstay chips and smartphones begin to drop.

The company would continue to make bold investments in semiconductor manufacturing in the face of stiffening Chinese competition, Kim said.

Shareholders are expected to vote on the appointment of board directors.

Reporting by Ju-min Park; additional reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates

Samsung Electronics sees tough 2019 for component business: CEO

Kim Ki-nam, president and co-chief executive officer of Samsung Electronics Co.¡¯s semiconductor division, speaks during the company’s annual general meeting at a company’s office building in Seoul, South Korea, March 20, 2019. REUTERS/Kim Hong-Ji/Pool

SEOUL (Reuters) – Samsung Electronics Co Ltd expects a tough year due to global trade tensions, slowing economic growth and softer demand for memory chips from data center companies, the firm’s co-chief executive said on Wednesday.

The world’s biggest memory chipmaker reiterated its forecast of a weak 2019 as shareholders gathered for its annual general meeting in Seoul, citing a slowdown in demand for memory chips.

“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Co-Chief Executive Kim Ki-nam told the meeting.

Samsung is seeking new growth in areas such as network equipment manufacturing as sales of its mainstay chips and smartphones begin to drop.

The company would continue to make bold investments in semiconductor manufacturing in the face of stiffening Chinese competition, Kim said.

Shareholders are expected to vote on the appointment of board directors.

Reporting by Ju-min Park; additional reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates

Samsung Elec sees tough year with trade risks, slow growth: co-CEO

Kim Ki-nam, president and co-chief executive officer of Samsung Electronics Co.¡¯s semiconductor division, speaks during the company’s annual general meeting at a company’s office building in Seoul, South Korea, March 20, 2019. REUTERS/Kim Hong-Ji/Pool

SEOUL (Reuters) – Samsung Electronics Co Ltd expects a tough year due to global trade tensions, slowing economic growth and softer demand for memory chips from data center companies, the firm’s co-chief executive said on Wednesday.

The world’s biggest memory chipmaker reiterated its forecast of a weak 2019 as shareholders gathered for its annual general meeting in Seoul, citing a slowdown in demand for memory chips.

“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Co-Chief Executive Kim Ki-nam told the meeting.

Samsung is seeking new growth in areas such as network equipment manufacturing as sales of its mainstay chips and smartphones begin to drop.

The company would continue to make bold investments in semiconductor manufacturing in the face of stiffening Chinese competition, Kim said.

Shareholders are expected to vote on the appointment of board directors.

Reporting by Ju-min Park; additional reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates

Samsung Elec sees tough year with trade risks, slow growth: co-CEO

Kim Ki-nam, president and co-chief executive officer of Samsung Electronics Co.¡¯s semiconductor division, speaks during the company’s annual general meeting at a company’s office building in Seoul, South Korea, March 20, 2019. REUTERS/Kim Hong-Ji/Pool

SEOUL (Reuters) – Samsung Electronics Co Ltd expects a tough year due to global trade tensions, slowing economic growth and softer demand for memory chips from data center companies, the firm’s co-chief executive said on Wednesday.

The world’s biggest memory chipmaker reiterated its forecast of a weak 2019 as shareholders gathered for its annual general meeting in Seoul, citing a slowdown in demand for memory chips.

“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Co-Chief Executive Kim Ki-nam told the meeting.

Samsung is seeking new growth in areas such as network equipment manufacturing as sales of its mainstay chips and smartphones begin to drop.

The company would continue to make bold investments in semiconductor manufacturing in the face of stiffening Chinese competition, Kim said.

Shareholders are expected to vote on the appointment of board directors.

Reporting by Ju-min Park; additional reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates

Amazon's second headquarters clears blocks in Virginia funding vote

WASHINGTON (Reuters) – Inc’s planned second headquarters in northern Virginia cleared a key test on Saturday when local officials approved a proposed financial package worth an estimated $51 million amid a small but vocal opposition.

People move about in front of the rostrum before a news conference about the announcement that Crystal City has been selected as home to Amazon’s new headquarters in Arlington, Virginia, U.S., November 13, 2018. REUTERS/Kevin Lamarque

Amazon in November picked National Landing, a site jointly owned by Arlington County and the city of Alexandria, just outside Washington, along with New York City for its so-called HQ2 or second headquarters. That followed a year-long search in which hundreds of municipalities, ranging from Newark, New Jersey, to Indianapolis, competed for the coveted tax-dollars and high-wage jobs the project promises.

Amazon in February abruptly scrapped plans to build part of its second headquarters in the New York borough of Queens after opposition from local leaders angered by incentives promised by state and city politicians.

The five-member Arlington County Board voted 5-0 in favor of Amazon receiving the financial package after a seven-hour meeting held in a room filled with up to about 150 citizens and representatives from local unions and minority advocacy groups.

There was strong opposition from some residents and labor groups, many of whom chanted “shame” and waved signs with slogans including “Don’t be the opposite of Robinhood,” “Amazon overworks and underpays,” and “Advocate for us and not Amazon.” One protester was escorted out of the meeting by police.

A few dozen protesters outside the county office chanted, “The people united will never be defeated.”

Danny Candejas, an organizer for the coalition “For Us, Not Amazon,” which opposes the company’s move into the area, said: “We are fighting to make sure people who live here are not priced out by wealthy people.”

Some supporters in the meeting held up signs saying ‘vote yes’ and ‘Amazon is prime for Arlington’.

One hundred and twelve people were registered to speak, an unusually high number for a local county meeting, forcing board chair Christian Dorsey to cut the talking minutes to two minutes, from three, for every regular speaker, and to four minutes, from five, for representatives of organizations.

Many speakers who were opposed to the Amazon headquarters especially opposed direct incentives, citing rising housing costs, the likely displacement of low-income families, accelerated wage theft for construction workers, and lack of investment guarantees in affordable housing funds.

“Speculators are already driving up home prices, landlords are raising rents and general contractors are raising their quotes for home improvement projects,” said one resident, Hunter Tamarro.

Unions including the AFL-CIO objected to Amazon not signing a project labor agreement with wage and benefit safeguards for workers hired to construct the new buildings.

But supporters such as resident June O’Connell said Amazon’s presence would ensure Arlington is allocated state funds for investments in transportation and higher education. “I want that money from the state,” O’Connell said. “Without Amazon, we wouldn’t get a penny of it.”

Holly Sullivan, Amazon’s worldwide head of economic development, spoke briefly and said the company will invest approximately $2.5 billion, create more than 25,000 jobs with an average wage of over $150,000, which will generate more than $3.2 billion in tax revenue.

“Regarding incentives, Amazon is only eligible for the financial incentive after we make our investments and occupy office space in the community,” she said.

Dorsey, the board chair, had said before the vote that he expected the measure to pass. He said that rejecting Amazon would not solve the community’s problems and concerns, and that this was the first deal the county has struck where new revenue growth will be used to fund it.

To be sure, the vote approved an estimated $51 million, a fraction of the $481 million promised by the county. Only 5 percent of the incentives are direct. Also, Amazon has been offered a $750 million package by the state that the Virginia General Assembly approved with little opposition.

The $51 million includes a controversial direct financial incentive or cash grant of $23 million to Amazon over 15 years, which will be collected from taxes on Arlington hotel rooms. The grant is contingent upon Amazon occupying six million square feet of office space over the first 16 years.

Arlington has also offered to invest about $28 million over 10 years of future property tax revenue in onsite infrastructure and open space at the headquarters site.

A filing on the county board’s website says the $23 million grant and the $28 million in strategic public infrastructure investments were “instrumental in Amazon choosing Arlington for its headquarters.”

Reporting by Nandita Bose in Washington; Editing by Richard Chang and Daniel Wallis

New Apple TV Ad on Privacy Hits Facebook and Google Where It Hurts—Without Mentioning Them

Apple is taking another swipe at its fellow tech giants for their privacy policies, this time in a new commercial that touts Apple’s stated focus on protecting user privacy. Without naming the likes of Google, Amazon, and Facebook, the TV ad invokes what many consider to be their lax privacy stances.

“If privacy matters in your life, it should matter to the phone your life is on,” the ad says, jumping among a few dozen images of people wanting privacy, including slamming doors, hushed diner conversations, windows locking, padlocks clicking shut, and one visitor to the men’s restroom nervously seeking out the most private urinal.

[embedded content]

Under CEO Tim Cook, Apple has promoted its efforts to protect user privacy on its devices. Unlike Facebook, Google and, increasingly, Amazon, Apple doesn’t rely much on advertising revenue, making money instead from sales of devices and service subscriptions.

At times, Apple has gone to great lengths to protect user privacy. The company, for example, has built most of its A.I. technology on Apple devices themselves, rather than storing personal data in the cloud, as most tech giants do. That decision has led some to argue that Apple is lagging Google and Facebook in the race to develop A.I. products.

But Apple has had its own privacy lapses, including a security flaw in its FaceTime app (which the company fixed last month) that potentially allowed people to listen in on users’ conversations. So far, though, the company has escaped the brunt of criticism that Facebook in particular has received for how it has managed and secured the personal data of its users. Facebook has been attempting to retool its products to focus more on privacy.

Cook has publicly slammed his tech rivals’ privacy policies several times. Last June, he chided them for not using humans to filter out fake news. A few months later, Cook called out the “data-industrial complex” that has “weaponized” personal data. And in January, he wrote a piece in Time calling for a federal privacy law. “It’s time to stand up for the right to privacy—yours, mine, all of ours,” Cook wrote.

The 45-second commercial began airing on U.S. television on Thursday, including during broadcasts of the highly rated National Collegiate Athletic Association’s March basketball tournament.

PagerDuty Joins A Flurry Of Silicon Valley Companies Planning To Go Public This Year


Jennifer Tejada, chief executive officer of PagerDuty Inc., speaks during the Fortune’s Most Powerful Women conference in Dana Point, California, U.S., on Wednesday, Oct. 3, 2018. The conference brings together leading women in business, government,© 2017 Bloomberg Finance LP

PagerDuty took the next step forward to a planned IPO, joining a windfall of startups expected to go public this year. But the cloud-based software company’s debut will be an exception among the tech IPO wave—it’s one of the few enterprise companies run by a woman, CEO Jennifer Tejada.

Founded in 2009, San Francisco-based PagerDuty acts as a watchdog for technical issues. The operations management software identifies problems in real time and directs engineers to the root of the problem, an alert system that’s attracted 10,800 customers in 90 countries.

In 2018, PagerDuty scored unicorn status after a $90 million round led by T. Rowe Price Associates and Wellington Management. Its first nine months of revenue last year rose 48% from the period to $84 million. However, the company took a $34.5 million loss during that time,up $4.7 million from 2017. It didn’t reveal data on the full year.

The company’s institutional investors own more than half of its shares, including early investor, Andreessen Horowitz, which owns the largest share of the company at 18.4%, followed by Accel and Bessemer Venture Partners. PagerDuty’s cofounders, Baskar Puvanathasan, Andrew Miklas and Alex Solomon, each hold 7.1%.

PagerDuty landed a spot in the top 50 on the Forbes Cloud 100 list in 2017, just a year after Tejada took over as CEO. “It was a neat brand, even though it’s a small company,” Tejada told Forbes back in July 2016. Tejada owns over four million shares of the company.

LIVE: Tesla Debuts the Model Y, Its Baby SUV

It’s been a weird few weeks for Tesla. Stores opened and stores closed, a $35,000 Model 3 appeared, the SEC asked a federal judge to charge CEO Elon Musk with contempt of court. But drown it all out, folks, because tonight is about that old school Musk magic. Expect him to walk onstage around 8 pm PDT to unveil Tesla’s latest, greatest offering, the Model Y, its first baby SUV.

If the Model 3 was the EV for the masses, the Model Y is the EV for the masses that the masses really want. The US loves big cars: SUV and crossover sales are currently up 13 percent year-over-year, and just short of half of all light vehicles sold in 2018 slot neatly into those categories. And Tesla certainly believes it has a hit on its hands. “The demand for Model Y will be maybe 50 percent higher than Model 3. Could be even double,” Musk said during a January earnings call.

As the hour of the unveil draws near, though, we have plenty of questions. Musk told investors that the Model Y would share about 75 percent of its part with the Model 3—but how different will it look? How much will it cost? Will it have gullwing doors like its more expensive predecessor, the Model X? How about a third row of seats? When will it be available? And how does Tesla—the company that went through “production hell” to create the Model 3—intend to pull it all off?

Tune in with us as we watch the show go down, and check back below for our latest, live updates.

9:00 pm PDT

And we’re done! Elon seemed to have a lot of fun with the audience during this unveil, cracking lots of jokes and giggling at the outbursts from (adoring) hecklers. But the whole thing was pretty short—just about 30 minutes—and the Tesla CEO spent most of his time reviewing how far his little-electric-vehicle-company-that-could had come. We have so many more questions! Stay tuned to for what we know so far about the Model Y.

8:57 pm PDT

A big surprise: The Model Y will have seven seats! But it won’t have gullwing doors. Here’s my big question: What becomes of the Model X now?

8:55 pm PDT

And we have some pricing information! Tesla says the Performance Model Y will show up in fall 2020, with a 280 mile range, a 150 mph top speed, a 0 to 60 time of 3.5 seconds, and a $60,000 price tag. The Dual Motor AWD is also slated for fall 2020, with a 280 mile range, a 135 mph top speed, a 0 to 60 sprint of 4.8 seconds, and a $51,000 price tag. Next up in fall 2020: the Long Range Model Y, topping out at 300 miles of range, for $47,000. Finally: The standard range Model Y is set to be released in spring 2021 with a 230 mile range, for a cool $39,000.

8:50 pm PDT

At last, it’s here! Dressed in blue, the Model Y comes on stage. It’s a bit bigger than the Model 3, with a higher roof and a third row, so it seats seven. Musk starts off talking about safety, and a bit on performance, saying it’ll be as functional as an SUV, but as fun to drive as a sports car. The big battery pack in the floor helps keep the center of gravity low, and the motor will provide a 3.5 second 0 to 60 mph time. Range: 300 miles.

8:48 pm PDT

We’ve got an update on Tesla infrastructure: 1,400 supercharger stations and 12,000+ superchargers in 36+ countries. The Canadians in the audience express discontent, and quoth Elon: “I’ve specifically asked about a Saskatchewan supercharger and I’m told it’s under construction.” (Musk’s grandfather is from the Canadian province.) He also promises a station in Kazakhstan, great news for Kazakh Tesla owners. And it feels like he’s about run out of things to say that aren’t about the Model Y. We hope…

8:45 pm PDT

Elon is on to the factory portion of his presentation, talking the Nevada Gigafactory and the one in production in Shanghai, which he says should be finished by the end of the year. I would not call this a “tight five”, but the audience seems to be eating this up.

8:30 pm PDT

Play the hits, Musk: the Roadster, the Model S, the Model X, the Model 3. (Elon confirms that “S” stands for “sedan”, not “saloon”.) The company’s tale, according to Elon, is a lot of “They couldn’t say we could do it…and then we did!” Which, fair enough! He notes that he would have called the Model 3 the Model E—to spell S-E-X—but that Ford holds the “Model E” trademark. “Ford killed sex.”

8:25 pm PDT

Tesla CEO Elon Musk is onstage—black shirt, black jacket, black pants, custom Tesla-branded Nike sneakers—and is starting off talking history. “There was a time when electric cars seemed very stupid,” he says. He’s rolling out past Tesla models, starting with the Roadster. “It’s a bit small,” he says. Next we’ll see the Model S sedan, Model X SUV, and Model 3 sedan.

8:22 pm PDT

It’s beginning! Discover how to tune in right here.

8:00 pm PDT

We’ve reached official show time, but like any rock star, Elon Musk tends to take the stage a little bit late. In the meantime, we’ll remind you that the Model Y is not just an overall big deal for Tesla, it completes something of a quartet, so Tesla’s current lineup includes the Model S, Model X, and Model 3. Get it? S3XY. (Ford holds the trademark to “Model E”.)

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Tesla unveils Model Y SUV as electric vehicle competition heats up

SAN FRANCISCO (Reuters) – Tesla Inc unveiled its Model Y electric sports utility vehicle on Thursday evening in California, promising a much-awaited crossover that will face competition from European car makers rolling out their own electric rivals.

Tesla Inc’s Model Y electric sports utility vehicle is pictured in this undated handout photo released on March 14, 2019. Tesla Motors/Handout via Reuters

Chief Executive Elon Musk said the compact SUV, built on the same platform as the Model 3, would first debut in a long-range version with a range of 300 miles priced at about $47,000.

A standard version, to be available sometime in 2021, would cost about $39,000, he said.

Musk unveiled the car at a small event at Tesla’s design studio in Hawthorne, outside Los Angeles, that was streamed online. (

Small SUVs are the fastest-growing segment in both the United States and China, the world’s largest auto market, where Tesla is building a factory, making the Model Y well positioned to tap demand.

Tesla has enjoyed little competition thus far for its sedans, but competition for electric SUVs is heating up as Tesla tries to master a new set of economics from the luxury line that made its reputation.

On Thursday, ratings company Fitch warned that, despite Tesla’s early lead, “incumbent carmakers have the ability to catch up … thanks to their capacity to invest and their robust record in product management.”

Tesla’s targeted volume production date of late 2020 would put it behind electric SUV offerings from Volkswagen AG’s Audi, Daimler AG’s Mercedes-Benz and BMW.

Shares of Tesla are down 24 percent from an August high of $379.57, when Musk tweeted that he was taking Tesla private.

That plan – later scrapped – ushered in a period of turmoil at the company, from Musk’s public battles with regulators, a flurry of securities lawsuits, cost cutting and layoffs.

Tesla, two weeks ago, said it would close most stores and use savings to cut the price of most cars by 6 percent. But last week, Tesla reversed course and said it would leave many stores open and raised prices back by about 3 percent.

Musk has promised an easier production ramp of the Model Y, since it shares about three-quarters of its parts with the Model 3 and would need only half the capital expenditures of the sedan.

The risk is “quite low” Musk told analysts in January. Tesla would “most likely” build the Model Y at Tesla’s battery factory in Nevada, he said.

Still, the Model Y, like all Tesla’s models, has already seen pre-production delays. Suppliers were originally told that production would start in November 2019, sources told Reuters last year.

In October, Musk said “significant progress” had been made on the Model Y and that he had approved the prototype for production in 2020. In January, he said Tesla had ordered the tooling needed to build the car.

Reporting by Alexandria Sage; Editing by Peter Henderson, Greg Mitchell and Lisa Shumaker; Editing by Himani Sarkar

SoftBank, Toyota in talks to invest $1 billion in Uber's self-driving unit: sources

NEW YORK (Reuters) – A group of investors led by SoftBank Group Corp and Toyota Motor Corp is in talks to invest $1 billion or more into Uber Technologies Inc’s self-driving vehicle unit, which would value the unit at $5 billion to $10 billion, said two people familiar with the talks.

FILE PHOTO: Uber’s logo is displayed on a mobile phone, September 14, 2018. REUTERS/Hannah Mckay/File Photo

The investment would provide a cash injection for Uber’s self-driving program that is costing the money-losing startup hundreds of millions of dollars without generating revenue.

It could also help underscore Uber’s value as the ride-hailing firm prepares for a stock market debut in which its value could top $100 billion.

Uber and SoftBank declined to comment. A Toyota spokesman said the automaker “constantly reviews and considers various options for investment” but does not have anything to announce.

News of investment talks was first reported by The Wall Street Journal, which said a deal could be reached next month. SoftBank Group shares rose 4 percent in morning Tokyo trade whereas Toyota’s stock was flat.

Japan’s largest automaker Toyota injected $500 million into Uber last year to work on self-driving cars, where both companies are seen as lagging rivals like Alphabet Inc’s self-driving unit Waymo.

Uber, which last year lost about $3.3 billion, is betting on a transition to self-driving cars to eliminate the need to pay drivers.

The nascent technology came under greater scrutiny last year after one of Uber’s self-driving cars struck and killed a pedestrian in Arizona last year. Prosecutors last week declined to pursue criminal charges.

The challenge of developing the technology is leading to previously unlikely alliances, with SoftBank and Toyota partnering up in Japan. SoftBank has invested $2.25 billion in General Motors Co’s self-driving unit Cruise, which has also received funds from Honda Motor Co Ltd.

For a graphic on ties between automakers, ride-hailing firms and technology companies, click here

Reporting by Liana Baker; Additional reporting by Katie Paul in SAN FRANCISCO, Rama Venkat in BENGALURU and Sam Nussey in TOKYO; Editing by Sonya Hepinstall and Christopher Cushing

How the FAA Decides When to Ground a Jet Like Boeing’s 737 MAX 8

When an Ethiopian Airlines Boeing 737 MAX 8 jet crashed shortly after takeoff from Addis Ababa on Sunday morning, killing all 157 people aboard, observers quickly noted that the circumstances resembled those of another flight. In October, Lion Air Flight 610 crashed into the Java Sea, killing all 181 passengers and eight crew. Both flights plummeted a few minutes after takeoff, in good weather. And both were on 737 MAX 8 jets, the plane Boeing started delivering in 2017 to replace the outgoing 737 as the workhorse of the skies. Since 2017, Boeing has delivered 387 MAX 8s and 9s. It has taken orders for 4,400 more, from more than 100 customers.

As of Tuesday evening, various foreign aviation regulators and airlines had decided that after the two crashes, the plane shouldn’t be in the air. Officials in the European Union, China, Indonesia, Singapore, Australia, and the United Arab Emirates have all grounded the planes. Of the 59 operators that fly the new 737, at least 30 have parked it.

In the US, though, Boeing’s plane is free to fly. American Airlines, Southwest Airlines, and United Airlines are still putting their 737 MAX jets—74 in total—in the air. (So is Air Canada.) And the Federal Aviation Administration—the agency that oversees American airspace—says that’s just fine.

Which might seem strange, since the FAA is notoriously safety-conscious. Planes in search of an airworthiness certificate must meet stringent standards; the certification process usually takes years. And it gets results: Just one person has died in American airspace on a commercial airplane since 2009. But, it seems, the agency has not yet found reason to ground the new 737.

In a statement Tuesday, acting FAA administrator Daniel Elwell said the agency is looking at all the available data from 737 operators around the world, and that the review “thus far shows no systematic performance issues and provides no basis to order grounding aircraft.” Elwell said the FAA “would take immediate appropriate action” should such problems be identified. The FAA and the National Transportation Safety Board both have teams at the crash site outside Addis Ababa to investigate and collect data.

The agency did note in a directive published Monday that it would probably mandate flight control system enhancements that Boeing is already working on, come April. And after the Lion Air crash, the FAA made a Boeing safety warning mandatory for US airlines.

“We have full confidence in the safety of the 737 MAX,” Boeing said in its own statement Tuesday. “Based on the information currently available, we do not have any basis to issue new guidance to operators.”

A number of senators, including Ted Cruz of Texas, Elizabeth Warren of Massachusetts, and Dianne Feinstein of California, have called for the US to ground the aircraft. But it’s the FAA chief who has final say. (Elwell has been the acting administrator since January 2018, though Politico reports that the Trump Administration is close to nominating Delta Air Lines executive Steve Dickson as administrator.) He doesn’t make that decision alone, says Clint Balog, a flight test pilot and human factors expert with the College of Aeronautics at Embry-Riddle University. Any grounding goes through a “semi-formal” process, full of discussions with experts on the specific aircraft and crash situation, both in- and outside the federal government.

“The FAA looks at all of this information and decides, ‘OK, if it’s just likely that there’s a significant problem here, it doesn’t matter what the cost to the traveling public is—we have to put safety first and ground this aircraft,’” Balog says. “However, if they look and say, ‘Well, jeez, grounding this aircraft is going to be a monumental cost to the world and we simply don’t have enough information to know what the risk really is with this aircraft, do we really want to ground it at this point in time?’”

The FAA has grounded aircraft before. In 1979, the FAA grounded all McDonnell Douglas DC-10s (and forbid the aircraft from US airspace) after a crash in Chicago killed 273 people. An investigation found the problem was maintenance issues, not the aircraft design, the FAA lifted the prohibition just over a month later.

In early 2013, the FAA grounded Boeing’s 787 Dreamliner, after two lithium ion-battery related fires in the aircraft. “We are issuing this [directive] because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design,” the FAA wrote in its emergency airworthiness directive. It didn’t let the jet take to the sky again until Boeing found and corrected its design issues. (That happened in April.)

So far, though, we have little concrete information on whatever might be going on with the 737 MAX. The investigation into the Ethiopia crash is in its earliest stages. Indonesia’s civil aviation authority has released a preliminary report on the Lion Air crash, but has not issued any findings on what caused it.

Based on its directives, the FAA hasn’t “seen any red flags that are significant enough” to ground the aircraft, Balog says. So he’d have no problem getting on a 737 MAX-8. “More importantly, I would have no problem having my family get on a 737 MAX-8 at this point.”

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