Sep 23, 2019

Axios Login

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Today's Login is 1,370 words, a 5-minute read.

1 big thing: The fraying cult of the founder

WeWork CEO Adam Neumann. Photo: Cindy Ord/Getty Images for WeWork

For 25 years Silicon Valley has built successful companies by handing control to inventive and driven, but sometimes eccentric or reckless startup founders. These leaders often receive special kinds of voting stock that let them sell shares to the public — and become fabulously wealthy — while retaining power over their firms.

  • That's the story of Google and Facebook, whose founders saw what had happened in the previous generation of tech leadership when Steve Jobs was forced into exile from Apple for a decade. Founders also remain in control at other big tech companies, including Amazon, Oracle and Salesforce. 

But as the latest wave of tech startups line up for their IPOs, the pendulum may be swinging the other way, with investors demanding problematic founders step back or cede control to the founders, Axios' Scott Rosenberg and I report.

Driving the news: As WeWork's public offering falters amid questions about the company's business model and the behavior of founder and CEO Adam Neumann, Softbank, WeWork's biggest investor, is pushing to replace Neumann, the Wall Street Journal reports.

  • Several stories have targeted detailing Neumann's excesses, from his penchant for alcohol to an epic pot-filled private plane flight to examples of WeWork doing business with other entities he controlled.
  • For now, Neumann still has his voting stock, but WeWork needs access to cash to keep funding and expanding its growing network of office-sharing spaces.
  • Neumann's troubles come in the wake of founder Travis Kalanick's 2017 ouster from Uber, which he had built and controlled. His board turned on him after accounts surfaced of a culture of sexual harassment, gender discrimination, retaliation and bullying that he'd overseen. 
  • There have been other cautionary tales of placing too much faith in a charismatic founder (Theranos is the most famous). In other cases, eccentric founders remain in control, such as Elon Musk, though concerns remain about his judgment, temperament and ability to adhere to securities law.

Our thought bubble:

  • Entrepreneurial drive doesn't necessarily translate into true leadership, particularly as organizations grow.
  • When control passes from founders, right now it usually goes to professional managers beholden to short-term market forces, and that isn't necessarily a great answer, either.
  • The industry needs to develop a better system for cultivating founders who have ethical values as well as disruptive ideas.

The bottom line: Being an effective CEO requires a range of skills and few individuals have all of them. But when founders are guaranteed to remain in control, they're empowered to be reckless, licensed to misbehave, and difficult to hold accountable.

Editor's note: This story has been corrected to clarify that the Wall Street Journal's coverage reported on only one pot-filled private plane flight by Neumann (not multiple pot-filled plane flights).

2. iPhone 11 Pro is more durable than predecessors

The iPhone 11 family, before undergoing drop testing. Photo: SquareTrade.

For all the criticism that there isn't a whole lot new in this year's iPhones, Apple does seem to be scoring points for the areas it did focus on, namely the cameras and battery life. Add one more to the list of things it appears Apple got right: durability.

Testing by Allstate-owned SquareTrade showed the iPhone 11 Pro to be particularly hearty, surviving the insurer's tumble test and doing pretty well in a test of water resistance. The iPhone 11 and Pro Max didn't fare quite as well as the smaller iPhone 11 Pro.

Why it matters: The price tag of high-end phones has climbed to $1,000 and up; even with insurance, a cracked screen can still be a costly slip-up.

What they're saying: "After our robots dropped, dunked, tumbled and bent the devices, we found the new iPhone 11 Pro to be the most durable iPhone we've tested in generations," SquareTrade VP Jason Siciliano, vice president and global creative director at SquareTrade. "It's the first smartphone to survive our tumble test, which simulates the effects of multiple, random impacts experienced by a smartphone during long-term use. That's a real achievement when it comes to durability."

Yes, but: None of the new iPhones survived a drop on the sidewalk, whether dropped face-down or on their rear.

Be smart: Buy a case for that pricey phone. If you love its new color, buy a clear one.

3. New streamers battle over old shows
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Table: Axios Visuals

Streaming services are putting up billions of dollars to win the rights to TV classics like "Friends" and "Seinfeld," both of which debuted over 2 decades ago on broadcast, Sara Fischer reports.

Why it matters: Many of these classic shows had previously been made available on other streaming services, but they're now being scooped up — and often for a lot more cash — by rivals that think they're necessary to compete for users.

Yes, but: One of the biggest challenges the streaming industry will face in the next few years is that there's no real way to determine how much companies should actually shell out for content.

  • When it comes to traditional television, Nielsen ratings have for years guided executives in deciding how much to pay for shows and whether they're even worth an investment. In the streaming era, no such metric exists.
  • And although Nielsen has begun putting out ratings for some streaming properties like Netflix, the streamers don't rely on them. Netflix famously called Nielsen's estimates "inaccurate" when they were first debuted in 2017.

Case-in-point: Hulu, which currently owns the streaming rights for Seinfeld, reportedly paid $130 million for the rights to stream the show domestically over 6 years starting in 2015 (Amazon currently has the international rights). Netflix, meanwhile, reportedly paid more than $500 million for the global streaming rights for Seinfeld over 5 years starting in 2021.

Yes, but: Many analysts believe such older shows, sometimes dubbed "catalog content," help reduce subscriber turnover.

  • The idea is that while investing in new content may be an effective way to draw a subscriber in, the way to keep them from canceling their subscriptions once they've finished new content is to give them access to deep libraries of old classics.
  • Even for streamers like Netflix that have already spent years building big libraries of original and licensed content, catalog content is critical— hence Netflix's big investment in Seinfeld.

What to watch: Streamers will eventually need to invest in their own versions of what will one day be considered catalog content. Netflix and Hulu have been able to do this with a few popular original series like "Orange is the New Black" and "The Handmaid's Tale."

Meanwhile: The streaming services are doing pretty well on the original series front as well, cleaning up at last night's Emmys. Overall, including the Creative Arts Emmys, HBO led all networks with 34 total wins, while Netflix nabbed 27, Amazon claimed 15, National Geographic won 8, NBC earned 7, CNN picked up 5 and FX Networks picked up 5, per the Hollywood Reporter.

Go deeper: Streaming's cancel culture problem

4. The world through AI's eye

How ImageNet sees Axios reporter Kaveh Waddell. On the left: "beard," on the right: "Bedouin, Beduin"

Maybe you've seen images like these floating around social media this week: photos of people with lime-green boxes around their heads and funny, odd or in some cases super-offensive labels applied.

What's happening: As Axios' Kaveh Waddell reports, the images are from an interactive art project about AI image recognition that doubles as a commentary about the social and political baggage built into AI systems.

Why it matters: This experiment — which will only be accessible through Friday — shows one way that AI systems can end up delivering biased or racist results, which is a recurring problem in the field.

  • It scans uploaded photos for faces and sends them to an AI object-recognition program that uses ImageNet, the gold-standard dataset for training such programs.
  • The program matches the face with the closest label from WordNet, a project that started in the 1980s to map out word relationships throughout the English language, and applies it to the image.

Some people got generic results, like "woman" or "person." Others received hyper-specific labels, like "microeconomist." And many got some pretty racist stuff.

"The point of the project is to show how a lot of things in machine learning that are conceived of as technical operations or mathematical models are actually deeply social and deeply political," says Trevor Paglen, the MacArthur-winning artist who co-developed the project with Kate Crawford of the AI Now Institute.

Go deeper: Kaveh has more here.

5. Take Note

On Tap

  • Niantic is holding its Augmented Cities conference in Oakland, Calif. today and tomorrow. I'll be moderating a session on AR and cities tomorrow.
  • PagerDuty hosts its PagerSummit user conference in San Francisco today though Wednesday.

Trading Places


6. After you login

If you find yourself needing peace or encouragement in the week to come, consider watching (and re-watching) this video of an alligator giving a ride to egret.