Tuesday, June 30, 2015

Crisis-Ready Europe Urges Tsipras to Step Back From Brink (BusinessWeek)

Image result for Greece Bankruptcy

European leaders raised pressure on Greek Prime Minister Alexis Tsipras to re-engage, saying it’s up to his government to step back from the brink and stay in the euro.

With Greece under capital controls and banks closed, German Chancellor Angela Merkel and French President Francois Hollande offered no concessions beyond saying that they remained open to talks, even after the referendum on the European Union’s aid proposal planned for July 5. European Commission head Jean-Claude Juncker said the “whole planet” would view a “no” vote as Greece turning its back on Europe.

Leaders were emboldened by a measured investor response to a weekend of turmoil as Tsipras’s government took emergency steps to avert the collapse of Greece’s financial system. While his decision to hold a ballot increased the risk of Greece exiting the euro, evidence of contagion elsewhere was limited, reducing his leverage over creditors.

“Europe can cope with such crises much, much better today because it has taken precautions,” Merkel said in a speech in Berlin on Monday.

The euro erased its losses after earlier dropping to a near one-month low against the dollar, and traded 0.3 percent higher at $1.1204 as of 7:00 p.m. in Berlin. European equities sank, with the Stoxx Europe 600 Index down 2.7 percent, while bond yields jumped in Italy, Spain and Portugal.

Spain, Italy

Those countries have all suffered bond panics since 2010 on concern they could slide into a Greek-style crisis. Their leaders moved to assuage concerns about contagion.

Italian Finance Minister Pier Carlo Padoan took to Twitter to reassure followers about his country’s direct exposure.

Greece’s problems show “the difference between the serious policies and those policies which aren’t very serious,” Spanish Prime Minister Mariano Rajoy said at a news conference.

In Athens, people have taken to the streets. A crowd of 12,000 gathered in the centrally-located Syntagma Square late Monday to call for a ’’no’’ vote against the EU proposals, according to police estimates. Banners were displayed in front of the parliament building. One read: “Our lives do not belong to the creditors.”

U.S., Russia

Greece has also become another thing for old Cold War foes to disagree on. Russia weighed in, with Foreign Minister Sergei Lavrov said he understood Tsipras’s actions. The U.S. instead is urging the Greeks to do what they must to stay in the 19-member currency bloc
“We’ve long made clear that we expect the Greeks to keep their commitments,” White House press secretary Josh Earnest said Monday.

European leaders sought to reach out to the Greek people while offering Tsipras’s government little leeway after he broke off negotiations over future bailout aid at the last-minute on Friday. Tsipras, who promised to return “dignity” to the people and reject budget cuts imposed by creditors, appealed for “calm” after weekend-long queues at ATMs and gas stations.

Unraveling Efforts

The prime minister’s efforts to shield the poorest Greeks from the effects of his decision are already starting to unravel. Twelve hours after issuing the capital controls decree, the government revoked a provision in the law exempting pension payments from the 60-euro ($67) daily limit on bank withdrawals.

The about-face came as industry officials warned that the move to waive limits for pensions would have soaked up much of the system’s remaining liquidity and highlights the hurdles Tsipras still has to overcome to reach the July 5 vote.

Jeroen Dijsselbloem, the Dutch finance minister who leads meetings of his euro-area counterparts, said he regrets that the Greeks walked away.

“But they’ve chosen their path and we cannot interfere,” he told reporters in The Hague.

Monday, June 29, 2015

The Next World War: A Cyberwar first, shooting war second

The US already has lost the first battles, and may not have the national will to defend itself in the inevitable global conflict to come. David Gewirtz looks at the geopolitical implications of cyberwarfare.(ZDNet Government)
Credit: map.ipviking.com

Everything we do revolves around the Internet. Older technologies are finding themselves eclipsed by their Internet-based substitute solutions.

Even technologies historically unrelated to networking (like medical instruments) are finding themselves part of the Internet, whether as a way to simply update firmware, or using the network to keep track of telemetry and develop advanced analytics.

Whether we're talking about social networking, financial systems, communications systems, journalism, data storage, industrial control, or even government security -- it is all part of the Internet.

That makes the world a very, very dangerous place.

Historically, wars are fought over territory or ideology, treasure or tradition, access or anger. When a war begins, the initial aggressor wants something, whether to own a critical path to the sea or strategic oil fields, or "merely" to cause damage and build support among certain constituencies.

At first, the defender defends, protecting whatever has been attacked. Over time, however, the defender also seeks strategic benefit, to not only cause damage in return, but to gain footholds that will lead to an end to hostilities, a point of leverage for negotiation, or outright conquest.

Shooting wars are very expensive and very risky. Tremendous amounts of material must be produced and transported, soldiers and sailors must be put into harm's way, and incredible logistics and supply chain operations must be set up and managed on a nationwide (or multi-national level).

Cyberwar is cheap. The weapons are often co-opted computers run by the victims being targeted. Startup costs are minimal. Individual personnel risk is minimal. It's even possible to conduct a cyberwar without the victims knowing (or at least being able to prove) who their attackers are.

Cyberwar can be brutal, anonymous -- and profitable.

But the damage done by a cyberwar can be huge, especially economically. Let's follow that idea for a moment.

One of the big reasons the U.S. won the Cold War (and scored highly in many of its other conflicts) is because it had the economic power to produce goods for war, whether capital ships or food for troops. A economically strong nation can invest in weapons R&D, creating a technological generation gap in terms of leverage and per-capita effectiveness compared to weaker nations.

But cyberwar can lay economic waste to a nation. Worse, the more technologically powerful a nation is, the more technologically dependent that nation becomes. Cyberwar can level the playing field, forcing highly connected nations to thrash, to jump at every digital shadow while attackers can co-opt the very resources of the defending nation to force-multiply their attacks.

Sony is still cleaning up after the hack that exposed many confidential aspects of its relationship with stars and producers. Target and Home Depot lost millions of credit cards.

The Snowden theft, while not the result of an outside hack, shows the economic cost of a national security breach: nearly $47 billion. Cyberwar can also cause damage to physical systems, ranging from electric power stations to smart automobiles.

And when a breach can steal deeply confidential information of a government's most trusted employees, nothing remains safe or secret. The U.S. Office of Personnel Management was unwittingly funneling America's personnel data to its hackers for more than a year. Can you imagine?

We think China was responsible for the OPM hack. Despite the gargantuan nation's equally gargantuan investments in America (or, perhaps, because of them), China has been accused of many of the most effective and persistent penetrations perpetrated by any nation.

Providing additional reason to worry, Russia and China have recently inked an agreement where they agreed to not launch cyberattacks against each other. They have also agreed to share cyberwarfare and cyberdefense technology, creating an Asian axis of power that can split the world in half.

On the other side of the geopolitical spectrum are the American NSA and British GCHQ, two organizations who share signals intelligence and -- if the screaming is to be believed -- spy as much upon their own citizens as enemies of the state.

It is important to note that the destabilization of Allied intelligence can be traced to Edward Snowden, who ran to and is currently living in Russia after stealing a vast trove of American state secrets. Ask yourself who gained from the Snowden affair. Was it America? No. Was it Snowden? Not really. Was it Russia? You betcha.

China, of course, supplies us with most of our computer gear. Every iPhone and every Android phone, nearly all our servers, laptop computers, routers -- heck, the entire technological core of American communications -- has come from China. The same China that has been actively involved in breaching American interests at all levels.

Russia and China. Again and again and again.

In the center of all this is the main body of Europe, where the last two incendiary world wars were fostered and fought.

Nations fall when they are economically unstable. Greece is seeing the writing on the wall right now. It is but one of many weak European Union members. Other EU members are former Soviet states who look eastward towards Putin's Russia with a mixture of fear and inevitability.

This time, Germany isn't the instigator of unrest, but instead finds itself caught in the middle -- subject to spying by and active in spying on its allies -- the only nearly-super power of the EU.


An enemy (or even a supposed "friendly" nation) decides it needs the strategic upper hand. After years of breaches, it has deep access to nearly every powerful government and business figure in the United States. Blackmail provides access into command and control and financial systems.

Financial systems are hit and we suffer a recession worse than the Great Recession of 2008-2009. Our budget for just about everything (as well as our will) craters. Industrial systems (especially those that might post a physical or economic threat to our attacker) are hit next. They are shut down or damaged in the way Stuxnet took out centrifuges in Iran.

Every step America takes to respond is anticipated by the enemy -- because the enemy has a direct pipeline to every important piece of communication America produces, and that's because the enemy has stolen enough information to corrupt an army of Snowdens.

While this is all going on, the American public is blissfully in the dark. Citizens just get angrier and angrier at the leadership for allowing a recession to take hold, and for allowing more and more foreigners to take American jobs.

Europe, which has always relied on America to keep it propped-up in the worst of times, will be on its own. Russia will press in from the north east. ISIS will continue to explode in the Middle East. China will keep up its careful dance as it grows into the world's leading economic power.

India, second in size only to China and a technological hotbed itself, remains a wild card, physically surrounded by Europe, the Middle East, China, and Russia. India continues to live in conflict with Pakistan, and with Pakistan both unstable and nuclear-tipped, Indo-Pak, too, is on the precipice.

A world war is about huge nations spanning huge geographic territories fighting to rewrite the map of world power. Russia, China, ISIS (which calls itself the Islamic State), India, Pakistan, the US, the UK, and all of the strong and weak members of the EU: we certainly have the cast of characters for another global conflict.

I could keep going (and, heck, one day I might game the full scenario). But you can see how this works. If enemy nations can diminish our economic power, can spy on our strategic discussions, and can turn some of our key workers, they can take us out of the battle -- without firing a single shot.

We are heading down this path now. I worry that we do not have the national or political will to turn the tide back in our favor. This is what keeps me up at night.

Friday, June 26, 2015

The state of virtual reality content (TechRepublic)

What the industry is doing to create compelling experiences

While virtual reality headsets are poised for consumer adoption in the months ahead, here's what the industry is doing to build content to show off the value of VR and keep people coming back. 
Bart Simpson dropped the ball on the all-important follow-up question. For all the relentless hounding as to whether his family was "there yet," he never asked what would happen once they actually were.
For virtual reality, there's an overwhelming need to ask that question. As VR headsets arrive in the hands of consumers in the next year, what will they actually do with them?
The focus has been getting them to market, but that's not enough. There's got to be a compelling reason to use VR again, and again, and again.
That reason has to be great content, but the situation is trickier than the broad concept of having both "enough" and "good enough" VR experiences to make a case for the survival and adoption of the technology.
That's partly because already, VR means a lot of different things to a lot of different people.
Take Oculus founder Palmer Luckey — recently he said in an interview that for at least the first two years, VR will be for hardcore gamers and enthusiasts who are willing to invest in high-end computers capable of running the Rift.
"I'm the most optimistic guy about VR out there. I have crazy visions of what we'll be doing in the future. But it's not going to reach hundreds of millions of people in the next three years," he said.
That is, in part, why Oculus remains focused on gaming content, and perhaps operates on the assumption that VR will survive long enough to grow beyond gamers.
"There's a big old world out there beyond gamers," said Altimeter analyst Jessica Groopman.
She looks at the behemoths that are standing behind Oculus right now. Facebook, of course, acquired Oculus in 2014 for $2 billion. And in June, Microsoft and Oculus announced a partnership that features the inclusion of the Xbox wireless controller with the Rift, and streaming access to Xbox One games.
"The likes of Microsoft and Facebook, they're not interested in small, segmented markets, they're interested in bringing these thing sup to scale," she said. "It'll die on the vine if it's not something that's accessible, if it's not providing value to a much wider audience, or at least many types of value to potentially many different segments."
The case is similar for the HTC Vive and Sony's Project Morpheus — gaming's the thing.
What's important to note, though, is that virtual reality is a spectrum. Oculus, Vive, and Morpheus represent high-end gaming, but obviously, that's not the whole market.
Take Samsung's Gear VR, which runs on the latest Galaxy phones. Between the Samsung platform and their Milk VR app, they already offer a slate of 360 videos, photos, games, game demos, cinematic VR, and computer-generated VR experiences.
They're aiming at a far more mainstream audience.

Where content comes from

One thing Oculus and Samsung share, is an awareness for community. It plays out differently for each, though.
Oculus is an open platform. Samsung is not.
There are benefits and drawbacks to each approach. Oculus Share houses a lot more content than Samsung. Though, users can be fairly certain that what they find on Samsung's platform will be high quality.
Samsung's vice president of strategy and creative content, Matt Apfel, sees it as curation.
At the Silicon Valley Virtual Reality Conference in May, Apfel talked to the audience about the power of community. Making content as a community is one of the greatest challenges, and he said Samsung can't do it alone.
In December, Samsung launched Milk VR, and app that corals 360-degree videos, with the goal of cultivating a "daily VR viewing habit."
Milk VR features a lot of branded content, from videos from music festival South by Southwest, to snowboarding and skateboarding experiences from Mountain Dew.
By partnering with brands, Samsung is effectively helping shape this particular streak of content that's branded, but not aggressively so.
Apfel said they generally work with two kinds of brands — the ones who come in with a very clear idea of what they want and how to do it, and others who just want to make something cool.
Either way, Samsung essentially provides a starter kit to guide the brands through the process of creating VR, complete with studio recommendations, if necessary. And beyond that, they hope to encourage brands to "own" their space, in the sense of becoming a channel for VR content, instead of dabbling one or twice.
He said it's not a hard sell at the moment, in fact, brands have approached them, instead of the other way around. As time goes on, that could change.
"VR is still the good-looking kid at the prom," he said.
Big brands aside, there are many other potential sources of content.
Jaunt is in the cinematic VR game (capturing the real world, versus creating CG worlds). If you've used Google Cardboard or Gear VR to watch Paul McCartney perform from a perch near his piano — that's Jaunt.
Jaunt's vice president of VR content Scott Broock said they initially focused on making the tools to help content creators produce high-quality cinematic VR.
"We came out of stealth, just a week or so after Oculus was bought by Facebook, we kind of stepped into the world with people coming at us with opportunities for content creation," he said.
As time went on, the need became obvious for starting a studio, which they recently announced.
When they forge partnerships, they work with brands as big as Elle Magazine, but also with folks like YouTube star Brandon Laatsch.
"We've been very careful to make sure that we create experiences with partners that reflect the totality of the experiences that we want people to understand that they can have with this new medium," Broock said.


Another part of this picture is how users actually find content to consume.
V is a platform that aims to help with the discovery process by essentially putting only two clicks in between a user and the content he or she wants to try — click to download, and click to play.
CEO and co-founder Tyler Andersen said V vets content on about five different computers to make sure it works, and works well. For anyone who's recently spent time trying to install Oculus Rift Development Kit 2, that's a big deal.
V also gives developers analytics on things like crashes, or how long users stayed in the app. If a whole swath of users split after 6 seconds, it's obvious there's something going wrong that the developer needs to fix.
One of the main reasons Andersen sees for why it's important to make it easy to find content, and partake in it without glitches is the old idea of not poisoning the well — word of mouth and negative perceptions will kill you.
"If people fall in love with VR, it makes our jobs so much easier because we don't have to convince anyone anymore," he said. "There needs to be tons of effort and energy put into making sure that it's very easy to play VR and it's not this niche, that neck beards and guys on Reddit really dig into it, that it's something that every person can enjoy."
For Jaunt, mobile will be the driver for discovery and adoption as just about everyone as a smartphone in their pocket.
Though Jaunt apps have already been available through Google Play, as of June 23, they announced a partnership with Google to be a prefered content creator for Google and its partners. In part, that means Jaunt will have early access to Google Jump, thenew 16-camera rig announced recently at I/O, along with Google's furthered investment in VR via Cardboard.
"Google and Jaunt deepen their commitment to VR, and to immersive experiences for everyone," the announcement said.

User generated content

Obviously, indie developers will play a significant role in creating VR content, but there's even a level beneath that — the non-developers.
At Facebook's developer conference F8 in March, CEO Mark Zuckerberg traced an evolution of communication from text, to pictures, to video, and on through VR. He talked about the idea of spherical video.
The obvious question is how does one produce spherical video? What Facebook showed was shot with 24 different cameras. That ups the ante just a bit when you consider most of what people snap and shoot can go from their phones to social media in a matter of seconds, without setup, or stitching.
But taking a spin around a place like the 2015 Augmented World Expo, and it's evident that camera-makers and related companies are getting up to speed.360Heros makes camera holders to house a set of GoPros to take VR-ready video. On the lighter end, Ricoh's Theta is just about palm-sized, less than $300, and lets users see what they shot, using a Gear VR, in minutes.
"[User-generated content] has a role as it has in any digital context for which content is central," Groopman said.
And of course: "It adds to the content pile," she also said.

The killer app

If you spend time with anyone outside the immediate bubble of VR love, you quickly learn that they're still unsure of what utility VR offers. It's cool. Then what?
At the AWE in June, a panel discussed VR content.
One thought the panel seemed to like was that of a "sandbox" app — something likeTilt Brush, which lets users paint in VR and walk around their creations.
VR could also be a good opportunity for episodic entertainment.
"We think [consumers are] going to want to be in these beautiful worlds, very masterfully designed and episodically be able to go back to that world over and over again," said Eugene Chung, founder of Penrose Studios, and former head of film and media at Oculus.
Apart from entertainment, there's also a lot of potential for adoption in education. Google announced Expeditions, a program that amounts to VR field trips for classrooms, and to a point, it could get young kids used to using virtual reality regularly.
Investment banking firm Digi-Capital released a forecast that projected virtual reality as a $30 million market by 2020, made primarily from games, 3D films, and niche enterprise users.
Informally, the metric of choice regarding adoption seems to be whether moms will be sucked into VR. Those poor, un-tech-savvy moms, as the thinking goes.
Either way, whether or not virtual reality content is up to par will be a continuing assessment in the months and years ahead.
"If you [said] in 2007 when the iPhone came out, that 8 years later the killer app on your iPhone would be a taxi caller, people probably would have laughed you out of the room. But today, of course, Uber is a 50-billion-dollar company," Chung said.

Thursday, June 25, 2015

This Is How Uber Takes Over a City (BusinessWeek)

Charlie Hales, the mayor of Portland, Ore., was running a zoning hearing last December when he missed a call on his cell from David Plouffe, the campaign mastermind behind Barack Obama’s ascent. Although Hales had never met him, Plouffe left a voice mail that had an air of charming familiarity, reminiscing about the 2008 rally when 75,000 Obama supporters thronged Portland’s waterfront. “Sure love your city,” Plouffe gushed. “I’m now working for Uber and would love to talk.”

Hales, like many mayors in America, could probably guess why Plouffe was trying to reach him. Uber’s made a name for itself by barging into cities and forcing politicians to respond. It started in 2010, providing swanky rides at the tap of an app in San Francisco. “I pushed a button, and a car showed up, and now I’m a pimp,” Chief Executive Officer Travis Kalanick said four years ago. The company has since expanded to take on lower-cost taxi service in more than 300 cities across six continents, ballooning to a $40 billion valuation. At the time of Plouffe’s call, Uber already operated in several Portland suburbs, and over the previous few months Hales’s staff had asked the company to please hold off on a Portland launch until the city could update taxi regulations. Plouffe may be a big name, but Hales didn’t immediately call him back.

The next day, City Hall heard from a local reporter that Uber cars would hit the streets that very evening. The company’s unauthorized kickoff put Hales in a bit of an artisanal pickle. Portland had just become the first city to explicitly allow short-term rentals through Airbnb and other sites, and welcoming Uber could help build the city’s sharing-economy brand, a logical extension of its communitarian roots. On the other hand, aggression is so not the Portland way.

Hales gathered Transportation Commissioner Steve Novick and three aides to call Plouffe. Hales would play the good cop to Novick’s bad cop. The roles were fitting: Hales comes off like the thoughtful baby boomer dad on Family Ties, while Novick’s known around town for his fiery wit. (In a campaign ad mocking the idea that voters should elect politicians who are relatable drinking buddies, Novick, who was born without a left hand, pops open a bottle of beer with his prosthetic metal hook. “Steve Novick,” the voice-over said. “He’s always found a way to get things done.”) The group huddled around Hales’s cell phone on speaker mode as the mayor dialed Plouffe.

A year ago, Colorado passed the first ride-sharing legislation in the country. Since then, about 50 U.S. jurisdictions have adopted ordinances recognizing Uber and Lyft as a new type of transit provider called “transportation network companies.” Each government, whether municipal or state, goes through its own process to craft rules, but in the end, officials generally codify the insurance coverage, background-check policies, and inspection protocols Uber already has in place. Uber makes the rules; cities fall in line. There are some small differences between their regulations, but, as Plouffe says, “the core is remarkably similar.”

The success, says Justin Kintz, Uber’s head of public policy for North America, is “a tale as old as time—it’s the power of the people.” It’s also a tale about the power of backroom lobbying. Although Uber promotes itself as a great disrupter, it’s quickly mastered the old art of political influence. Over the past year, Uber built one of the largest and most successful lobbying forces in the country, with a presence in almost every statehouse. It has 250 lobbyists and 29 lobbying firms registered in capitols around the nation, at least a third more than Wal-Mart Stores. That doesn’t count municipal lobbyists. In Portland, the 28th-largest city in the U.S., 10 people would ultimately register to lobby on Uber’s behalf. They’d become a constant force in City Hall. City officials say they’d never seen anything on this scale.

When Hales got through to Plouffe, he said he’d heard a “disturbing rumor” that Uber planned to start operations. “That,” he said, “would be a bad way to start.” Plouffe responded with a drawn-out silence. Before Plouffe mustered a reply, Novick erupted: “Mr. Plouffe, if you come to Portland without following our rules, we’re going to throw the book at you!” But as Portland would learn, a city of 600,000 can play tough with a $40 billion company, particularly one that is used to getting its way, for only so long.

Kicking off the pilot episode of the TV show Portlandia, actors Fred Armisen and Carrie Brownstein set the scene for the show’s satirical wet kiss to the city. Portland, they sing, is a magical place of awesome weirdness. “It’s like Portland’s almost an alternative universe,” Brownstein swoons. “In Portland, it’s almost like cars don’t exist. People ride bikes or double-decker bikes, they ride unicycles. They ride trams. They ride skateboards!”

The parody could double as an ad for the city’s transportation department. Among urbanists, Portland’s a transit darling. People can bike in protected lanes, ride the bus or MAX trains (one of the nation’s busiest light-rail systems), or tool around in Smart cars from car-sharing company Car2Go. But there are holes, especially for residents living far from downtown, the disabled, and late-night partyers. The city’s taxis have been known to fall short of demand. Portland has fewer cabs per resident than most comparable cities, and drivers take home just $6.22 an hour, according to a 2012 survey. The taxi companies didn’t hold traditional political power as major campaign donors or lobbying forces, but their furor succeeded in resisting, or at least delaying, change. It took a nasty four-year battle for a group of largely immigrant drivers to get permits in 2012 to start Union Cab, a driver-owned cooperative.

Uber first targeted Portland in 2013, when it wanted to introduce its luxury car service, UberBlack. It couldn’t legally operate because a city ordinance required black-car trips to be reserved an hour in advance, the legacy of a 2009 agreement that carved out separate markets for hire cars and taxis. When Uber showed up, Hales had recently been elected, and his director of strategic initiatives, Josh Alpert, says overhauling the taxi rules was something on Hales’s first-term to-do list.

In a town Portland’s size, City Hall can juggle only so many issues. Alpert told Uber that before the city could deal with a taxi battle, it had to address more pressing matters, starting with the $21.5 million budget shortfall Hales inherited. “I explained to them that there was going to be a process, and we were nowhere near starting that process,” he says.

That didn’t sit well with Uber. “Portland has some of the most extreme protectionist laws that we’ve seen around the country,” Kalanick told a local TV station. A few days later, Uber defiantly said on its blog that “outdated local regulations” didn’t prevent it from making deliveries, so it ran a one-day promotion serving ice cream around town. It was like when the company shuttled puppies from shelters to offices in 10 cities before the Super Bowl. In City Hall, the ice cream tasted like belligerence. “It was like, ‘Whoaaaa,’ ” Alpert says. “I know every city says this, but we are not used to that in Portland. It was just all about Uber.”

Uber soon asked the city’s Private For-Hire Transportation Board—made up of industry reps, drivers, and community members—to remove the one-hour requirement. It also deployed some classic political strategies.

Plouffe likens customers to campaign volunteers, and the ice cream stunt provided the company with a database of consumers it could turn into advocates. In an era of low voter turnout, Uber has managed to get almost a million people to sign its petitions in the past year. “Not many private-sector companies have that kind of passionate set of consumers that will go the extra mile,” Plouffe says. In Portland, almost 1,700 people signed a change.org petition to “tell Uber to bring their stylish rides to Oregon.” The company also solicited supportive letters from local business leaders.

Uber stopped pushing, as the company’s focus across the country was shifting from black cars to the low-cost uberX service, which fell under a different set of regulations. “Uber, to their credit, did go away for a while,” Alpert says.

When the company came back almost a year later, both the city and Uber had reason to think the negotiations would be fruitful. Uber had a new local face, General Manager for the Pacific Northwest Brooke Steger, whom Alpert calls “a much easier person to work with.” And Portland had just crafted the Airbnb rules, which established that the city wasn’t necessarily hostile to sharing-economy services.

Yet Uber was still Uber, and it began strangling Portland. It launched just to the north, in Vancouver, Wash. “Hey Portland,” Uber taunted on its blog. “We are just across the river.” Soon Uber started operating in several adjacent suburbs. “They basically forced their way into the market and surrounded us, then put the pressure on for us to do likewise,” Hales later told a conference of mayors.

The city told Uber that updating the taxi regulations could, finally, happen soon, but first the transportation department had to fix Portland’s pothole problem, which required finding millions of dollars in new revenue for the street maintenance budget. Around Thanksgiving, Uber was next in the queue. Uber wanted a firm time frame, which Alpert couldn’t give. “I kept telling them: ‘A little bit longer,’ ” Alpert says. “Strangely, at the last minute, when it was in sight, they were like, ‘Well, we’re done.’ ”

After Plouffe’s call to Hales, Uber went ahead with its unsanctioned Portland launch, throwing a party in a loft to show, the invite said, how Uber was “proud to call Portland (and all of its rain, quirks, and bridges) home.” Partygoers could take photos with protest signs or stop by a postcard station to “drop a note to Mayor Hales.” Uber canned the kinder motto, #WeWantUberPDX. In the first four hours, more than 7,000 people signed a petition now asserting #PDXNeedsUber.

The company released a video with the most Portlandish introduction it could muster, featuring an Uber driver dramatically navigating in the rain, crossing a bridge over the Willamette River, and giving a ride to the Unipiper, a well-known local who rides a unicycle while wearing a Darth Vader mask and playing a fire-breathing bagpipe.

After a weekend of scrambling, the city sued Uber on Monday. Although Uber’s fines would eventually total $67,750, the city’s enforcement efforts evoked the Keystone Cops. Agents conducted stings, but Uber turned off the accounts of city staff so they couldn’t use the app. And at the time, the city believed it lacked the authority to impound cars. Still, the lawsuit captured attention. Portland residents on social media said the law-breaking felt “icky.”

Even the Unipiper backpedaled. “Wow, this whole #Uberpdx thing is really getting crazy,” he tweeted. “No they did not explain to me that they were going to launch illegally,” he wrote. “I do think Portland has been slow to act.” (About the legality of the launch, an Uber spokeswoman now says: “Often regulations fail to keep pace with innovation. When Uber launched, no regulations existed for ride-sharing.”)

Uber’s rules-be-damned approach had served the company fairly well around the country, but the Portland showdown came at a time of particularly intense scrutiny. An executive had mused aloud about spying on journalists, an alleged rape by a driver in India made headlines worldwide, and two California district attorneys sued Uber, claiming it misled consumers about driver background checks. And there was Novick, the transportation commissioner in a city known—even mocked—for being progressive, telling the New York Times that “Uber seems like a bunch of thugs.”

Uber hired a new team of local lobbyists headed by Dan Bates, who used to work as Portland’s own lobbyist in the state capitol. Across the country, Uber’s lobbyists have similarly intimate connections. In Kansas, it hired Governor Sam Brownback’s former campaign manager and another lobbyist who also works for Koch Industries. In Connecticut, it contracted with a former House speaker’s firm, and in Illinois it brought on the former governor’s chief of staff.

Soon, Alpert’s phone rang. It was Mark Wiener, whom one local alt-weekly dubbed “The Man in the Shadows” and the “most powerful political consultant” in Portland. Wiener helped both Hales and Novick get elected and is known to work only with clients he thinks will win. Wiener said Uber wanted to know if Hales and Novick would consider a détente. Would they be open to a “conversation about a conversation?”

On a Saturday in mid-December, the two sides met at Wiener’s house. The mayor started by saying the conversation would go nowhere unless Uber stopped breaking the law. “He said it probably five times,” Alpert says. Uber’s Steger and Caitlin O’Neill, an in-house lobbyist who used to work as an organizer for criminal justice reform at the American Civil Liberties Union, apologized. “That was a huge point for the mayor and commissioner to hear,” Alpert says.

Soon they sketched out a compromise. Uber would temporarily cease operations in Portland—a first for the company—and the city would put the lawsuit on hold and give Uber the deadline it wanted, promising to have a community task force figure out rules to get Uber back on the street by early April. It was a brilliant agreement. The city could look like it tamed Uber without costly litigation, and Uber cut in line and became a top political priority. It had a firm timeline, and if for some reason the process fell apart, Uber could say it tried to cooperate. The Wall Street Journal cited the agreement to show “How Sharp-Elbowed Uber Is Trying to Make Nice.”

And so Steger and O’Neill found themselves in a packed, fluorescent-lit city conference room in mid-January listening to a gray-haired facilitator kick off the task force with a long-winded joke about parrots and magicians. Over the coming weeks, the task force would hear a host of presentations, from the history of transportation in the city, starting with jitneys and the horse-drawn carriage, to testimony from taxi companies, drivers, and the public. Before various sessions, Uber mobilized its supporters. It hosted breakfast for drivers at a Nuevo Latino restaurant on the morning of their “listening session,” then drinks at an old-timey cocktail bar, Raven & Rose, before the public hearing.

In mid-February, O’Neill and Steger sat before the task force to formally pitch their case. Lyft, a competing company that has also been trying to enter the Portland market, was there, too. Again, Uber seemed firmly in control. “I’ve gone through this regulatory process that you all are going through now in several other counties,” O’Neill said leaning into the microphone. “We want to be a resource to you.” She and Steger then ticked through points designed to position Uber as a rule-abiding company that saves lives.

Uber’s policy group has its own team of data scientists, and its presentation included slide after slide of rosy graphics and numbers. To address Portland’s environmental bent, it showed how in San Diego, 30 percent of uberX rides start or end near a transit station. To show equitable service, it explained that Uber’s study in Chicago found wait times were consistent across the city, regardless of area income. To show drivers make livable wages, it introduced data from Princeton economist Alan Krueger, who served with Plouffe in the Obama administration, that found uberX drivers made more than $16 an hour (PDF).

The inundation of data made it hard to spot holes. The Chicago study was just for people who had the Uber app, so it didn’t address poorer riders who can’t use Uber because they don’t have smartphones, and Krueger’s big pay analysis didn’t ask about how much drivers spend on expenses such as gas and insurance, making it an incomplete earnings picture.

Before a late-February task force meeting, a weary-looking Alpert said there were so many issues to consider that he was trying to keep everyone focused on safety so Uber could still get provisional permits in early April. Other issues, he said, could be dealt with later. “We weren’t having luck stopping them,” Alpert said. “We won’t be able to keep them off the streets much longer.”

On April 9 the task force suggested a 120-day trial period for Uber. It recommended that the City Council accept the insurance Uber provides and let both taxis and ride-hailing apps choose their own background-check providers. The task force also allowed auto shops with fewer credentials to inspect both taxis and the ride-hailing vehicles. Yet there were inequities. Taxis had to carry more insurance, and their rates were capped, while Uber could jack up fares during foul weather or other peak times—a policy the company calls surge pricing. At least 10 percent of the taxi fleet had to be wheelchair-accessible, while Uber could direct wheelchair-bound passengers to transit companies that serve the disabled.

The taxi industry and its supporters cried foul. One driver compared Uber to Enron because it “doesn’t play by the rules.” A man who regularly attends council meetings and calls himself Lightning said that Uber was already worth billions. “That is what you value the most,” he said, arguing that Uber should make a “reasonable offer” to Portland taxi drivers who lose business.

The proposal needed support from at least three commissioners to pass. The whole process was Hales’s and Novick’s baby, so they provided two likely votes. Amanda Fritz would be a long shot. She was particularly progressive, and her husband had recently died in a car crash, making her vigilant about drivers carrying adequate insurance. Nick Fish wasn’t buying the whole sharing-economy concept—he was the sole commissioner who didn’t vote to allow Airbnb. That left Dan Saltzman, the long-serving council member who championed wide-ranging rules for Airbnb. One City Hall staffer describes Saltzman as the closest thing Portland has to a free-market conservative.

Uber had been working on the council members for months. “They kinda run this,” Alpert said in February. “I keep feeling they will just wear you down. If we end up in court, we will have to lose just based on resources.”

Records show the company had 19 in-person meetings with city officials in the first three months of the year, including one at the end of March, when Uber brought back the big gun, Wiener, to meet with Saltzman, the likely swing vote. Wiener had consulted on Saltzman’s past campaigns. All the meetings, combined with phone calls, meant Uber spoke with City Hall on average almost every other workday. E-mail traffic was even heavier. The city hasn’t released the correspondence, which Bloomberg Businessweek requested in early April, saying it’s taken longer than expected because Uber and city staffers exchanged about 300 e-mails that may fall under the request.

As a gesture of good faith, Uber paid its outstanding fines, and the council scheduled the vote on a proposal Novick and Hales submitted in mid-April that echoed the task force’s suggestions with a few tweaks, notably removing the rate cap for taxis. The morning of the vote, Uber hosted a breakfast for about a dozen drivers at a downtown restaurant, then marched the group to City Hall, with TV news cameras in tow. City Council was in session, so an Uber communications manager instructed them to leave a note in the council office. That evening, they returned for official testimony. Both Uber and taxi reps were out in force, with three hours of public comments. “#PDXRides hearing in nutshell,” tweeted Oregonian transportation reporter Joseph Rose. “Uber drivers: Portland taxis never show up. Cabbies: Uber drivers are rapists, burglars, criminals.”

In the end, the council approved the 120-day trial period. Saltzman cinched the vote. That Friday, Uber started operating again. The council is slated to take up permanent regulations, with updated requirements for serving passengers in wheelchairs, in late summer.

On April 29, Uber threw a second launch party, this time at a hand-harvested sea salt factory. Duck breasts with pistachio butter and huckleberry sauce were served; the photo booth no longer had protest signs. Three City Hall aides attended.

The next day, Plouffe and Hales shared the stage at an event organized by TechFestNW. Back in December, Alpert had said he wasn’t having luck getting Plouffe to attend the conference, which is Portland’s answer to Austin’s South by Southwest. Now on stage, Plouffe and Hales were all smiles. Hales teasingly tossed a copy of the negotiating bible Getting to Yes to Plouffe, a nod to Novick’s “we’ll throw the book at you!” threat.

Plouffe told the audience that playing nice in Portland isn’t necessarily a model elsewhere. “Maybe it is. Maybe it isn’t,” he said. Despite its wins, Uber still has plenty of battles left in the U.S., not to mention abroad. It’s recently backed out of places like San Antonio, where it says new rules are too onerous.

It’s nearly impossible to calculate Uber’s ground war costs because many cities and states don’t require the disclosure of lobbying costs. Those that do show that influencing policy doesn’t come cheap. Take Texas. In 2013, Uber had no registered lobbyists in the state. Last year, it reported 14, and so far this year, that’s grown to 28 who have registered to work on Uber’s behalf, with contracts that could total $420,000 to $945,000, according to the filings, more than Philip Morris and Pfizer. In the past year, Uber spent $208,000 in Maryland and $684,000 in California.

City-level battles can be costly, too. Last year, Uber put more than $600,000 into a voter referendum in Seattle and spent $314,000 lobbying in Washington, D.C. The Portland campaign looks quaint by comparison. Uber reported spending about $68,000 on outside lobbyists in Portland and Oregon in the last two quarters.

Just days after the festival, Uber sent an urgent message to Portland users through its app. A bill the taxi industry supported in the Oregon statehouse would require higher insurance coverage. “Portland spent months creating thoughtful regs to welcome ridesharing!” Uber wrote. “Now that’s in jeopardy. Help keep it around.” Attached was a link to a petition, addressed to every member of the legislature.

Wednesday, June 24, 2015

Why Elon Musk's SpaceX is even cooler than Tesla

Environmentally friendly cars are important, but Elon Musk's SpaceX may have an even bigger impact on our lives. 

Tesla is cool. Elon Musk's electric car company continues to pump out beautiful, high performance cars that Silicon Valley and, increasingly, the world lusts after.
But as cool as Tesla is, SpaceX, Elon Musk's other company, is even cooler... and much more important.
Though it's easy to relegate SpaceX and its ilk to silly whims of billionaire Space Invaders fans, such a view is short-sighted, as Ashlee Vance's excellent Elon Musk biography uncovers. As "companies turn to space for television, internet, radio, weather, navigation, and imaging services," high-tech and other industries are going to need a low-cost, high-quality commercial space company.
We're going to need SpaceX.

A big, bloated market

It's not that the US doesn't have home-grown aerospace giants. We do. Boeing, Lockheed Martin, and Orbital Sciences all originated here, not to mention Amazon founder Jeff Bezos' Blue Origin.
The problem with each of these, however, is that SpaceX trounces them "on price by a ridiculous margin." Blue Origin excepted, our traditional aerospace companies have become addicted to government funds. This cash is dispensed in the billions and has led to gargantuan piles of waste.
Also of concern, "Where these competitors rely on Russian and other foreign suppliers, SpaceX makes all of its machines from scratch in the United States." This might seem like an antiquated concern, but we've already had periods of time when Russia's government intervened to block sales of its (outdated) technology to US companies. Oh, and while SpaceX's current cost is $60 million per satellite launch, Russia charges the US $70 million per passenger to ferry them to the International Space Station.
Today, the cheapest places to get access to a satellite (outside SpaceX) are China and Russia, hardly the most ideal of business partners for US (or European) companies. To make access to space affordable, predictable, and safe, the industry is starting to turn to SpaceX.

Making space competitive

It couldn't come at a more opportune time. The total market for satellites, related services, and the rocket launches has more than tripled in the past few years, largely because the need for satellite access has exploded:
"The machines in space supply the fabric of modern life, and they're going to become more capable and interesting at a rapid pace. A whole new breed of satellite makers has just appeared on the scene with the ability to answer Google-like queries about our planet.
"These satellites can zoom in on Iowa and determine when cornfields are at peak yields and ready to harvest, and they can count cars in Wal-Mart parking lots throughout California to calculate shopping demand during the holiday season.
"The start-ups making these types of innovative machines must often turn to the Russians to get them into space, but SpaceX intends to change that."
To make space affordable for governments and startups alike, "Musk's goal is to use manufacturing breakthroughs and launchpad advances to create a drastic drop in the cost of getting things to space." He's already done this, delivering commercial space access for a fraction of his competitors' cost.
And somehow he does it in style. "While the rest of the aerospace industry has been content to keep sending what look like relics from the 1960s into space, SpaceX has made a point of doing just the opposite. Its reusable rockets and reusable spaceships look like true twenty-first-century machines."
Some of the improvements Musk has made are more pedestrian.
For example, SpaceX opts to use readily available consumer technology whenever possible, rather than building its own Super-Duper Industrial Grade products. Using a commercial radio, for example, sends prices "dropping from between $50,000 to $100,000 for the industrial-grade equipment used by aerospace companies to $5,000 for SpaceX's unit."
Now, multiply those cost savings across hundreds of areas, and you get a sense for how SpaceX has managed to lower costs even while keeping quality high.

Space at a price we can afford

Today, a Falcon 9 launch costs $60 million. While dramatically lower than any of its competitors, Musk wants to push this price even lower. Through economies of scale and technological innovation, SpaceX believes it can get the price closer to $20 million per launch.
As the price drops, the ranks of companies and countries that can afford access to space will increase. As one SpaceX employee tells Vance, "A number of new nations [are] showing interest in launches, eyeing communications technology as essential to growing their economies and leveling their status with developed nations. Cheaper flights [will] help SpaceX take the majority of the business from that new customer set."
I want to drive a Tesla Model X. While I might tell myself it's so that I can ease my impact on the environment during my commute to and from work each day, the reality is that I know it will be incredible. I've driven two different versions of the Model S, and it's a religious experience.
But self interest aside, Tesla will make a dent on society's environmental impact.
SpaceX won't. Yes, it may end up helping us to colonize Mars, as Musk has set as its goal—but in the near term, it will help expand access to satellite technology, something that companies and countries, big and small, increasingly need to thrive. This won't impact our carbon footprint, but it should have a major impact on our economies.
For this reason, as important as Tesla will be, SpaceX may well be even more important.