1 big thing: Betting on your future salary
Amid a political uprising against student debt, some colleges and skills schools are offering a tuition scheme in which students commit to paying a fixed percentage of their after-graduation salary for five or more years.
What's happening: The system, called "Income Share Agreements," responds to what many experts call a student debt crisis: Some 44 million Americans now owe about $1.5 trillion, and most of the Democratic presidential candidates are calling for some form of free college or trade school and debt forgiveness.
- ISAs look a lot like loans, and typical terms result in students paying back 150%–250% of the original tuition.
- But loans have much the same results, and ISAs are missing a key downside to straight borrowing — you shouldn't be able to default on one because you typically only start repaying once you are employed and earning a certain minimum income.
Driving the news: In an announcement today, the Flatiron School, a data boot camp owned by WeWork, said it will fund $100 million in ISAs to future students. Offered in WeWork offices and in online versions, Flatiron courses cost $15,000 in tuition.
- After graduation, you begin repaying the tuition at 10% of your gross salary as long as you are earning $40,000 or more. If you earn, say, $70,000 a year, you would end up repaying $21,500 over approximately five years.
- "In any month they are not employed or earning the equivalent of $40,000 or more a year, they don't pay. With student loans, you owe regardless if you work," said Adam Enbar, CEO of the Flatiron School.
Background: The idea of promising a portion of your future income as a form of investment in your potential goes back to 1945, and a book by Nobel laureate economists Milton Friedman and Simon Kuznets. Many experts call student loan programs a favorable aspect of the U.S. higher education system since they allow students to go as far as they can academically, all the way through a world-class doctorate.
- "If you are going for a master's degree, there is no limit to what you can borrow. You can do income-based repayment," said Kevin Carey, an expert at New America.
- But many students also get in over their heads, either from borrowing too much or failing to get a job paying enough.
- So in 2016, Purdue University, reaching back to the Friedman-Kuznets idea, began a still-small trend among universities by offering ISAs to its students.
The bottom line: ISAs are not the answer to the student debt problem. In a vocational school such as the boot camps, they offer financing for students who cannot afford to pay monthly. Experts say that, in most cases, loans are still the best option for financing college. "Because ISAs are a shiny object, it doesn't mean they are the best option," Carey said.
- But ISAs are a strong option in certain cases — like in vocational programs and for students who worry they will get into financial trouble.
2. Amazon in the Middle East
Just days after exiting China, Amazon has spotted an open lane in another populous part of the world: the Middle East.
Erica writes: Analysts and Amazon executives don't often cite the Middle East as a region the behemoth hopes to crack, focusing instead on India, Brazil and China. But Arab countries are filled with millions of potential new Prime members — and there's little local competition to contend with.
The big picture: Amazon fumbled in China because it underinvested and fell to homegrown rivals Alibaba and JD.com. And while the company's North America business has boomed, international sales have been comparatively weak, growing just 9% between the first quarters of 2018 and 2019.
The Middle East has the potential to help Amazon boost that growth, experts say.
What's happening: Two years ago, Amazon bought Souq.com, the Arab world's largest e-commerce platform. Yesterday, it rebranded Souq.com as Amazon.ae. The company also announced that it is setting up shop in Israel.
- In the Middle East, "there is a very dense population, which makes it much easier to create a high-performing Prime offering," says James Thomson, a former Amazon executive who now consults for small sellers.
- “Many Israeli retailers have e-commerce options on their websites but they are all dwarfs next to Amazon,” notes Barak Ravid, an Axios contributor based in Israel.
The bottom line: Amazon is now in more than 60 countries. It already has 1.2 billion users, which makes it the biggest online marketplace in the world.
- But, but, but: Alibaba is on its tail, with 1.1 billion users, per Retail Dive. The Chinese giant, which has amassed its massive user base in just 15 countries as of last September, could quickly surpass Amazon as it expands.
3. A dangerous sleepwalk
In a daze, we're being nudged, prodded and pulled every which way by powerful companies that have learned our preferences, habits and basest desires.
Kaveh writes: In a new podcast called "Sleepwalkers," co-hosts Oz Woloshyn and Karah Preiss try to open our eyes to these hidden forces.
- In the first episode, available today, they explore how technology manipulates people by appealing to the instincts behind pleasure, love and addiction.
- "We are jacked into these systems," Tristan Harris, a former Google employee, says on the podcast. "We are jacked into these environments that are telling us and steering us toward flows of attention and ways of seeing the world that are inevitable."
Among the examples in the episode:
- Dating apps that hook you on swiping to the detriment of your actual love life.
- YouTube algorithms that steer you from 9/11 newsreels to conspiracy videos.
- Anti-extremism ads displayed alongside Google searches about ISIS — but only if your profile suggests you're susceptible to terrorist propaganda.
The podcast's name is an allusion to how great powers wandered blindly into World War I, Woloshyn tells Axios, without regard for the huge technological shifts that would turn it into one of the deadliest conflicts in history.
- But it's not all dystopia. Future episodes will explore the potential for AI to change art and improve medical diagnostics beyond human capabilities.
4. Worthy of your time
5. 1 AI thing: A band called DEEP LEARNING
On a recent hunt for a new soundtrack to work to, I shuffled through a curated playlist of ambient music. I looked up at one point to see what I was listening to — it was an artist called DEEP LEARNING, Kaveh writes.
That's the name of a popular machine learning technique — not usually the fodder of musicians and their work. But here I was, listening to tracks like "Deepfake" and "Softbody Test" off an album named "Dataverse."
These atmospheric songs aren't composed with AI — they're good old-fashioned human-made electronic tracks.
- So why the AI-themed names? Richard Pike, the man behind the band, tells Axios he chose them because AI is the zeitgeist.
- "AI is a shift that's in its infancy and is already affecting humans," he said. "Including myself."