Start Up No.1,057: WeWork’s mad S-1, Apple’s mixed results, carbon-capturing technology, Pixel 3 fluffs it, and more

Jakarta is sinking fast – so Indonesia’s government will name a different city as its capital. CC-licensed photo by Mulya Amri on Flickr.

You can sign up to receive each day’s Start Up post by email. You’ll need to click a confirmation link, so no spam.

A selection of 9 links for you. Use them wisely. I’m @charlesarthur on Twitter. Observations and links welcome.

WeWork files for IPO…which is funny all by itself • Dealbreaker

Thornton McEnery:


Every time we’ve learned anything about WeWork, it looks more and more like the company is a financial sandcastle built on a rainy day using sand that SoftBank bought at a 500% markup. We know we like to make a big deal here about spending more than you make, but we sometimes get the urge to give WeWork a pass, because it spends sooooo much more than it makes and then creates nonsense accounting principles out of thin air to justify said drunken sailor budgeting decisions. WeWork is so brazenly full of shit about so many things that we legitimately respect the company at this point. After all, how can you not kind of love a real estate arbitrage plan that has spent so much time cosplaying up as a tech unicorn that it has staked claim to new frontiers in the exploration of affected tech pomposity? 

The release of the WeWork S-1 is going to be something of a secular holiday at Dealbreaker HQ. We look forward to waking up late, eating a reasonably strong THC edible to prepare our minds properly and then digging into the document, reading line after line composed with the single objective of pretending that “The We Company” is indeed a $70bn revolution in modern living and not just a wildly overvalued machine powered by its founder and CEO passing money between his own hands with such speed and force that he has somehow created the financial accounting equivalent of cold fusion.

Man, this IPO is gonna be a rocket.


“Dude, are you one of the dragons in Game of Thrones because you sure burnt them to a crisp.”
unique link to this extract

Apple’s iPhone sales drop 17% • WSJ

Tripp Mickle:


Apple’s core iPhone business, which accounts for about two-thirds of total sales, has been hobbled by smartphone owners holding onto devices longer and by competition in China where local competitors offer lower-priced, feature-rich handsets. Its iPhone sales fell 17% in the quarter to about $31bn.

Apple blunted the damage from its iPhone business by extending the robust growth of services like app sales and streaming-music subscriptions, which collectively jumped 16%. It also said it would increase the size of its ongoing share buyback program by $75bn.

The report on Tuesday capped off a mixed bag of results from tech giants, including a major stumble by Google’s parent company Alphabet Inc. that caused its stock to plunge nearly 8% on Tuesday. The digital-advertising giant and e-commerce giant Inc. both over the past week reported their slowest revenue growth in four years as their core businesses showed signs of maturity.


The headline’s a little misleading: Apple’s iPhone revenues dropped 17%. (Counterpoint Research reckons iPhone unit sales dropped by 20%.) Mac revenues dropped 5%, but iPad revenues were up 21% (!), “Wearables, Home and Accessories” up 30% (!!) and Services up 16% (~, wait for News+ and TV+ and so on to feed in). China was down 22%, which apparently isn’t as bad as some had been expecting. The revenue falloff – and iPhone sales drop – was all in emerging markets, and China.
unique link to this extract

Bloomberg alleges Huawei routers and network gear are backdoored • Ars Technica

Peter Bright:


Vodafone, the largest mobile network operator in Europe, found backdoors in Huawei equipment between 2009 and 2011, reports Bloomberg. With these backdoors, Huawei could have gained unauthorized access to Vodafone’s “fixed-line network in Italy.” But Vodafone disagrees, saying that while it did discover some security vulnerabilities in Huawei equipment, these were fixed by Huawei and in any case were not remotely accessible, and hence they could not be used by Huawei.

Bloomberg’s claims are based on Vodafone’s internal security documentation and “people involved in the situation.” Several different “backdoors” are described: unsecured telnet access to home routers, along with “backdoors” in optical service nodes (which connect last-mile distribution networks to optical backbone networks) and “broadband network gateways” (BNG) (which sit between broadband users and the backbone network, providing access control, authentication, and similar services).

In response to Bloomberg, Vodafone said that the router vulnerabilities were found and fixed in 2011 and the BNG flaws were found and fixed in 2012. While it has documentation about some optical service node vulnerabilities, Vodafone continued, it has no information about when they were fixed. Further, the network operator said that it has no evidence of issues outside Italy.


Bloomberg hyped this like crazy, but it feels storm-teacuppy here.
unique link to this extract

These ads think they know you • The New York Times

Stuart Thompson:


“The way ads are targeted today is radically different from the way it was done 10 or 15 years ago,” said Frederike Kaltheuner, who heads the corporate exploitation program at Privacy International. “It’s become exponentially more invasive, and most people are completely unaware of what kinds of data feeds into the targeting.”

With that in mind, we want to share how we targeted these ads, what we learned, and why it might disturb you.

Targeted advertising was once limited to simple contextual cues: visiting ESPN probably meant you’d see an ad for Nike. But advertising services today use narrow categories drawn from a mind-boggling number of sources to single out consumers. (Like many publishers, The Times uses targeted advertising to find potential subscribers and readers.)

To build the ads for our experiment, we imagined some extremely specific targets and built profiles of those people. Then we chose 16 attributes that matched those profiles from a list of about 30,000 – a list that’s rarely seen by people outside the industry.

We could do this because many companies, like retailers and credit card providers, sell customer information to data companies. Most data providers declined to tell us where their data comes from or how they built their models, so the sources in the ads below come from the ad experts who helped us create the campaign. Our experiment would have been blocked on Facebook because the company bans most ads showing how you’ve been targeted…

…“In the next election, I think it is inevitable that every single voter will have been profiled based on what they have been reading, watching and listening to for years online,” said Johnny Ryan, the chief policy officer at Brave, a private web browser that allows users to block ads and trackers.


Very clever piece of work.
unique link to this extract

Indonesia’s planning minister announces capital city move • BBC News


Indonesia is moving its capital city away from Jakarta, according to the country’s planning minister.

Bambang Brodjonegoro said President Joko Widodo had chosen to relocate the capital in “an important decision”.

The new location is not yet known. However state media reports one of the front runners is Palangkaraya, on the island of Borneo.

Jakarta, home to over 10 million people, is sinking at one of the fastest rates in the world.

The announcement comes after Mr Widodo declared victory in the country’s general election earlier this month, though official results will not be announced until May 22.

The idea of moving the capital has been floated several times since the country gained independence from the Dutch in 1945. In 2016, a survey found that the mega-city had the world’s worst traffic congestion. Government ministers have to be escorted by police convoys to get to meetings on time.


They’re moving it because of the sinking, not the traffic: at present rates the whole city will be underwater by 2050. That’s 30 years away. One generation.
unique link to this extract

Lackner’s carbon-capture technology moves to commercialization • Arizona State University


The proprietary technology acts like a tree that is thousands of times more efficient at removing CO2 from the air. The “mechanical trees” allow the captured gas to be sequestered or sold for re-use in a variety of applications, such as synthetic fuels, enhanced oil recovery or in food, beverage and agriculture industries. 

Unlike other carbon-capture technologies, SKH’s technology can remove CO2 from the atmosphere without the need to draw air through the system mechanically using energy-intensive devices. Instead, the technology uses the wind to blow air through the system. This makes it a passive, relatively low-cost and scalable solution that is commercially viable. If deployed at scale, the technology could lead to significant reductions in the levels of CO2 in Earth’s atmosphere, helping to combat global warming…

…The “mechanical tree” is a novel geometery that is agnostic to wind direction. Each one contains a stack of sorbent-filled disks. When the tree-like column is fully extended and the disks spread apart, air flow makes contact with the disk surfaces and the CO2 gets bound up. During regeneration, the disks are lowered inside the bottom container. Inside the chamber, the CO2 is released from the sorbent. The released gas is then collected, purified, processed and put to other uses, while the disks are redeployed to capture more CO2.


Promising, though shouldn’t it just be sequestration?
unique link to this extract

This pollution-busting window cleans the air with photosynthesis • WIRED UK

Anna Marks:


What if your windows could photosynthesise? London-based design practice ecoLogicStudio has created Photo.Synth.Etica, a “biocurtain” that captures one kilogram of carbon dioxide per day – the equivalent of 20 large trees. The carbon-neutral biocurtain uses microalgae to capture carbon dioxide from polluted air and produce oxygen. “It is a new kind of urban symbiosis,” says co-founder Claudia Pasquero.

As the Sun’s rays shine through Photo.Synth.Etica, the microalgae photosynthesise: polluted urban air enters the bottom of the curtain and gradually rises to meet the cyanobacteria cells in the living cultures. These consume the toxic particles so that the air is cleaned as it rises, while also sequestering the carbon and producing oxygen, which is released at the top. “The curtain interacts with the air of the environment in which it is embedded,” Pasquero explains. “It acts as a medium that allows the air to flow through and trade CO2 with the microalgae before escaping the system.”

The curtain is designed to be hung from the side of a building. It is composed of 16 modules, each 2m x 7m, and made from two layers of transparent bioplastic, which are welded together to create pockets of microalgae suspended in a biogel medium. This results in a bright green, snake-like pattern that becomes luminescent at night.


Price between £270 to £1,800 per square metre, depending. Trees are pretty much free, of course, though they take a lot longer to “fabricate”.
unique link to this extract

Google Pixel 3 is a sales disappointment, sells less than the Pixel 2 • Ars Technica

Ron Amadeo:


basically Google is admitting that there is some tough competition out there for the Pixel 3 and that the phone isn’t selling as well as its predecessor. Google doesn’t break out “hardware results” in its earnings report, so we can only guess at what the year-over-year difference is. It was bad enough to mention in an earnings call, though.

We weren’t huge fans of the changes in the Pixel 3. The smaller version was $799—$150 more than the Pixel 2 from the year earlier—and the larger Pixel 3 XL was $50 more than the Pixel 2 XL, or $899. For this extra money, Google downgraded from a metal back to glass, it stuck with a meager 4GB of RAM—the lowest of any Android flagship—and it even made some software blunders like locking users into its half-baked gesture navigation system (which it is still trying to fix in this year’s Android Q release). To top it all off, the designs were pretty ugly, ranging from the dated Pixel 3 bezels to the outrageously large display notch on the Pixel 3 XL.

As for the Pixel 3’s competition, Google has to deal with mainstream juggernauts like Apple’s iPhone XS and Samsung’s Galaxy S10—phones from two companies with a stronger focus on hardware, more carrier deals, and bigger advertising budgets. In the enthusiast market, Samsung offers higher specs, and OnePlus offers better value with a device like the OnePlus 6T.

Google’s Pixel distribution network is also downright terrible compared to the competition. Google sells the Pixel in only a tiny handful of countries, while its competitors have a worldwide presence. The Pixel 3 is for sale in a whopping 12 countries and has zero retail stores. In the US, Google’s only real carrier partner is Verizon.


The distribution network is much the same as last year. The key difference is the price, really. And would Pixel 2 owners upgrade? Google would be looking to get Pixel 1 owners, and skim off others. Too late, it seems.
unique link to this extract

Huawei gains record 34% of China’s declining smartphone market • Canalys


China’s smartphone market contracted 3% to 88.0m units in Q1 2019, making it the market’s worst performance since 2013. Market leader Huawei grew its share to a record 34%, up by more than 10% on the same period last year, making it the only vendor in the top five to report growth in an otherwise declining market. Huawei (including Honor) shipped just under 30m smartphones. It was followed by Oppo, Vivo, Xiaomi and Apple, which each suffered year-on-year declines.

…”Oppo and Vivo are both shifting their product strategies to refresh their brands,” said Canalys Research Analyst Yiting Guan. Vivo is going for a bigger product portfolio in China to cover a wider range of consumer demographics than before, and now offers seven product families. Oppo has put a strong emphasis on its new Reno series to renew its appeal in the mid-to-high-end segment. More interestingly, its RealMe spin-off has been brought from India to China to compete at the low end with Xiaomi and Huawei, including Honor.

Xiaomi recorded quarterly growth against its weak Q4 last year as it improved its channel inventory situation, but still suffered a year-on-year decline in both shipments and market share…Apple shipped 6.5m iPhones in the last quarter, suffering its worst decline in two years. “Despite the iPhone’s installed base in China being well over 300 million, it is vital that Apple prevents users deserting it for Android vendors. Apple faces a challenge in China to localize its software and services offerings as quickly as in Western markets,” said Jia.


unique link to this extract

Errata, corrigenda and ai no corrida: none notified

9 thoughts on “Start Up No.1,057: WeWork’s mad S-1, Apple’s mixed results, carbon-capturing technology, Pixel 3 fluffs it, and more

  1. Re. Apple I find the iPad figures the most interesting. Tablets are the only market where Apple has an attractively (*) priced device, and they’re growing strongly there. Granted, the competition from Android is weaker than in phones (due to Google/OEMs dropping the ball a bit, and FUD a lot), but still, when asked for a tablet reco I always mention that iPads are nice-ish in most cases (if you can live with limited storage, scant ports, no widgets, and no browser addons) and not crazily priced these days.

    Other than that, I lolled at the “processor issue” line about Macs. Didn’t prevent the rest of the OEMs from growing. Straw, meet clutch.

    I’m also doubtful about the Services strategy long-term: iServices only run on iDevices, so growing via services on a shrinking sales base is a tall order. Lower sales -> lower installed base eventually, and I doubt Apple can rise the service multiple for every iDevice indefinitely, though even a 0.1% (?) commission on Apple Card/Pay transactions certainly has potential. But overall this feels like the “retreat to services” we’ve seen umpteen times before in the Entreprise sector. I’d like to offer “pulling an IBM”.

    (*) I know iOS is magic and worth any amount of money per se, but for regular people who just want to do simple stuff and aren’t locked in to the iOS ecosystem/skillset, Android, ChromeOS even sometimes Windows work just as well. Phones and tablets are “commoditized” (is this IBM day ?). The iPad is the only iDevice I finds stand on its own from a functionality/price standpoint, w/o needing some PR magic to make it worth it.

    • Apple Music works on Android, and the forthcoming TV channels will work on other platforms, I think.

      • Indeed. How many fully non-iOS Android users do you think subscribe to Apple Music ?

        I’d commit to: “none”.

      • Interesting question. And it would be really good to figure that out. Might even knock up a google survey to see if I can get any data about it.

      • Dang I could really use an Edit button.

        “none” means Apple still needs to sell iDevices to sell iServices. iServices are ancillary sales, they don’t stand on their own. We circle back to devices being the core of the issue.

        Actually, more than device sales or even installed parc, what matters for a service business models is MAU and it’s surprising Apple isn’t communicating about that instead of installed parc. 2 points
        1- the MAU picture is probably less rosy than the devices pictures, because iUsers probably tend to have several iDevices, and increasingly so. So a growing active iDevices base doesn’t automatically translate to more iUsers, maybe someone who already had an iPhone just bought an iWatch or an iTV.
        2- People, not devices, buy services. So 10% more devices sold or active doesn’t automatically translate to 10% more potential services sales. Actually, it’s probably not even Users but Homes that matter: once someone in the home subscribes to Apple Movies, it’s unlikely some else in the same home will too, regardless of whether the home has a single iPhone or 4 iPhones, 4 iWatches, 2 iTvs and a few iPads and Macs. In any case, it’s weird that Apple doesn’t report the users/homes figure, if their focus is services.

      • It’s always fun watching someone trying to build a narrative of how Apple is going to wither and die, while ignoring that the same logic implies that every other company will wither and die, but probably sooner because they have less loyal customers.
        I don’t think it’s quite true that “what matters for service business models is MAU”. That’s true if the services are indivisible, but Apple aims to be the device provider that people are using at whatever time, and to have them consuming services on those. Hence iCloud backup, Apple Music, Apple Games+, News+, TV+, and other services. You can be playing Games+ while listening to Music, consuming News+ while watching TV+ or doing an iCloud backup. They’re additive, not self-exclusive.

        Apple might get onto reporting MAU, or users, or homes, but it’s probably wary of that metric because it would lead to direct comparisons against Facebook or Twitter, and it’s not in the same business: Those two rely on it for many of their premium users, so they’re not direct competitors in that sense. You can be on Facebook while listening to Music, doing iCloud backup, etc. That’s where that theorem about “services business models” fails.

    • Almost as much fun as watching someone being completely enthralled by PR and their own circumstances, probably.

      Again, iServices only sell on iDevices. I’m not sure when anyone worried about services being self-exclusive, I personally am making the (different) point that they still require iDevices to run on. But the list of subs Apple sells to its users is long indeed, and will surely get longer.

      In other, unreported here, news, Apple is still fighting right-to-repair (got to extract revenue from old-devices users), And xiaomi is not that far from maybe taking wwide #3 spot by volume from them.

  2. The mechanical trees sure look interesting, but worth saying that a lot of CC academics I’ve spoken to say that wind alone won’t be enough. According to them, simply waiting for the wind to blow more CO2 towards the trees will never use its full potential, it needs to be drawn in mechanically.

  3. The biggest surprise to me about yesterday’s call was that Apple didn’t talk about privacy much, and that’s the main reason (for me) to stay in their ecosystem.

    All these fancy techniques for pulling CO2 from the air overlook the massive scale needed to even make one city, say Boston, CO2 neutral. Still significantly cheaper not to put it in the air in the first place, even if you subsidize renewable energy or electric cars substantially. .

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.