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Good Thursday Morning,
Americans will spend close to $2 billion on flowers today, and it might surprise you that most of those roses will be flown in from Latin America. “Climate certainly plays a role in the Andean nations’ dominance. Even California, the leading producer of domestic roses, isn’t always warm enough to produce the volume of roses shoppers have come to expect around Valentine’s Day. But climatic differences don’t tell the whole story. There’s the fact that labor costs are much lower in Colombia and Ecuador.”
The environmental costs, just for the weeks leading up to Valentine’s Day, are big: “The International Council on Clean Transportation crunched the numbers last year and estimated that those three weeks of flower delivery flights burn approximately 114 million liters of fuel, emitting approximately 360,000 metric tons of carbon dioxide into the atmosphere.”
Some florists, like Debra Prinzing, founder of the Slow Flowers movement, encourage people to buy in-season flowers from growers in their area: “Slow Flowers’ website includes a directory of more than 700 growers in the United States and Canada, many of whom will have flowers available for Valentine’s Day—but most won’t be roses.”
Many small businesses will get a big tax break this year, thanks to the new rules, but they may also face a big headache—figuring out whether the tax break applies to them: “The problem is that a centerpiece of the legislation is a write-off for ‘qualified business income,’ but it’s unclear whether certain activities count…
“It’s not just qualified business income that’s used to figure eligibility for the deduction; it’s also total taxable income. So if you make $250,000 in your business and your spouse makes $200,000 in a salaried job, the total income on your return is $450,000. In that case, you could lose the qualified business income deduction. Not necessarily, though.” Better call your accountant.
Silicon Valley companies talk a lot about diversity, but they have come up with a novel way to keep their actual employment numbers secret: “More and more, firms including Oracle and Palantir Technologies argue that detailed, government-mandated figures on the number of women and people of color they employ must remain confidential. Making them public, they say, would be tantamount to giving away proprietary technology and hand competitors a ‘road map’ to poach talent.”
In 2017, Jamie Dimon declared Bitcoin a “fraud” and said he would fire any JP Morgan Chase employee caught trading it. Yesterday, JP Morgan announced that it’s rolling out JPM Coin, the first cryptocurrency from a big US bank in an attempt to transform the payments business: “Each JPM Coin is redeemable for a single US dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins. Clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars.”
Apple will soon release a new all-you-can-read magazine service, similar to Spotify, where a monthly fee will guarantee subscribers unlimited content. No more paywalls. But several magazine publishers are objecting because Apple will pay its partners only 50 percent. The news comes after a slew of digital pub layoffs and “the challenges to the publishing industry are well documented—with the dominance of Facebook, Google and Apple as the main distribution points…Apple is trying to position itself as friend to the publishing world.”
Still struggling with how to use Twitter? Don’t feel bad. Even Twitter’s CEO feels the same way: “Twitter CEO Jack Dorsey and Recode co-founder Kara Swisher agreed to conduct an interview Tuesday on Twitter, and it had all the makings of a great read: The CEO of one of the most influential and controversial tech platforms in the world taking questions from one of the industry’s most ferocious reporters. The only problem? No one could follow along…
“‘I am going to start a NEW thread to make it easy for people to follow (@waltmossbergjust texted me that it is a ‘chaotic hellpit’),’ Swisher tweeted, referencing Recode’s other co-founder, the now-retired Walt Mossberg. ‘Ok. Definitely not easy to follow the conversation,’ Dorsey replied. ‘Exactly why we are doing this. Fixing stuff like this will help I believe.’”
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Despite warning signs, the job market remains strong with December openings climbing to 7.3 million, the most in 20 years: “Businesses have shrugged off a variety of potential troubles for the economy in the past two months and kept on hiring. The 35-day partial government shutdown began Dec. 22, and growth in China, Europe and Japan has weakened, threatening US exports. Still, employers added 304,000 jobs in January, the government said earlier this month, the most in nearly a year.”
Well, maybe not. Virgin Trains, the train operating company that takes passengers from Miami to West Palm Beach, elected to stay a private company. The details are shady, but Ben Porritt, a Virgin VP, says the company found alternative sources of funding. “For several months, Virgin Trains had been ramping up for an offering of what the company predicted would be more than $500 million worth of 28 million shares of common stock at between $17 and $19 per share.” It was set to be the largest IPO of 2019, so far.
ZACK ELLER’S DEALS OF THE DAY
Amazon and GM are in talks to invest in Rivian Automotive, an electric pickup truck manufacturer that would value the company between $1 and $2 billion. “Tesla CEO Elon Musk told investors last August that an electric pickup is “probably my personal favorite for the next product” from the company, though he has spoken only in general about a potential launch, saying that it would happen “right after” Tesla’s Model Y, which the company has targeted to start production in 2020.”
JibJab, a company that lets people insert selfies into videos, gifs and e-gift cards has been acquired by Catapult Capital, a private equity firm out of Los Angeles, California. The transaction amount wasn’t disclosed but Catapult typically makes investments between $10 million and $100 million. “JibJab’s big break came during the 2004 presidential campaign, when its satirical, animated video, “This Land,” racked up more than 80 million views.”
Artificial Intelligence may eventually transform the economy—making new products and new business models possible, predicting things humans couldn’t have foreseen, and relieving employees of drudgery—but it may take longer to have a real impact on businesses than many assume: “Achim Daub, an executive at one of the world’s biggest makers of fragrances, Symrise, wondered what would happen if he injected artificial intelligence into the process. Would a machine suggest appealing formulas that a human might not think to try?
“Daub hired IBM to design a computer system that would pore over massive amounts of information—the formulas of existing fragrances, consumer data, regulatory information, on and on—and then suggest new formulations for particular markets. … Daub is pleased with progress so far. Two fragrances aimed at young customers in Brazil are due to go on sale there in June. Only a few of the company’s 70 fragrance designers have been using the system, but Daub expects to eventually roll it out to all of them.
“However, he’s careful to point out that getting this far took nearly two years—and it required investments that still will take a while to recoup. [The system’s] initial suggestions were horrible: it kept suggesting shampoo recipes.”
Nonetheless, autonomous tractor-trailer start-up TuSimple just raised $95 million to expand its fleet of test vehicles that it hopes will be ready for prime time by early 2021: “Most of the attention surrounding the development of autonomous vehicles has been focused on self-driving cars and the race to build autonomous ride-hailing companies.” But, said Cheng Lu, CFO of TuSimple, “There are just under 3.5 million semis on the road in the US, according to the American Trucking Association. With e-commerce growing by double digits every year, freight shipping is not slowing down.”
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And that’s what’s ahead.