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07.05.16 | 12:45 pm

Elon Musk calls “BS” on report that Tesla withheld fatal crash from shareholders prior to $2 billion stock sale

Tesla founder and CEO Elon Musk is aggressively pushing back against a Fortune claim that the company did not disclose a material fact to shareholders when it sat on the news of driver Joshua Brown's fatal crash in a Model S while in autopilot mode in early May. For public companies, withholding a material fact is a serious matter that often results in litigation by angry shareholders.

The company "immediately" reported the May 7 accident to the National Highway Traffic Safety Administration, but did not disclose the crash publicly until the NHTSA did, on June 30. But eleven days after the tragic death, on May 18, Tesla and Musk sold more than $2 billion of Tesla stock in a public offering, reports Fortune, which noted:

To put things baldly, Tesla and Musk did not disclose the very material fact that a man had died while using an auto-pilot technology that Tesla had marketed vigorously as safe and important to its customers.

At Tesla's annual shareholder meeting on May 31, Musk described the future of the company's technology, but also did not mention the crash that had occurred three weeks earlier. Per Fortune, during the final editing of its story, Musk angrily emailed the writer that the crash "is not material to the value of Tesla," adding:

Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.

After the story was published, Fortune editor Alan Murray tweeted that the death "seems pretty material" to me. And Musk fired back in his own inimitable style:

The NHTSA is now investigating the autopilot function in Tesla's Model S cars. Separately today, the agency released statistics on traffic deaths related to human-driven cars, which it said rose to 35,200 last year, up from 32,675 the year before.

[Photo: Flickr user Steve Jurvetson]


12.03.16 | 3:18 pm

David Sacks is out as CEO of Zenefits

After just 10 months on the job, David Sacks is stepping down as chief executive of Zenefits and will lead the search for his own replacement. Sacks took the reins of the embattled HR software startup in February, hoping to turn it around after a slew of legal mishaps. The company is still reportedly hemorrhaging cash—to the tune of $100 million in the first half of this year.

Sacks will assume the role of chairman. According to multiple media reports, including in the New York Times and the Wall Street Journal, he may be considering an opportunity to assist with Donald Trump's transition team, although Sacks has not confirmed this. 

12.02.16 | 7:42 pm

Obama blocks Chinese fund from acquiring Aixtron’s U.S. business

The Treasury Department said Friday that POTUS blocked a bid by the Chinese investment firm Fujian Grand Chip Investment Fund (FGC) to acquire the U.S. affiliate of the German company Aixtron, which makes semiconductor equipment. The administration blocked the deal to protect U.S. national security interests, the Treasury Department said. 

The Obama administration may have feared that China would use the acquisition to gain access to the secrets of producing a material called gallium nitride used in military equipment, a Reuters report said. President Obama used an executive order to block the deal.

12.02.16 | 7:07 pm

Key analyst: Apple wants to de-emphasize Jobs-style hit-making

Speaking at a UBS conference, noted Apple analyst Horace Dediu said Apple's heritage as a maker of world-changing hit products might be harming Apple's employees. The legacy of Steve Jobs, he suggests, may be hard to live up to for current Applers. 

"That's not to say they're not going to have more hits, but they don't want the company to be seen as a hits business. One of the big audiences that Tim [Cook] has is actually internal employee morale. I think the hit-driven mindset is demoralizing internally, and there is a concerted effort to tone down this 'Let's hit home runs' mind-set."

Or it may be that Apple is coming to a point in its history when revolutionary new products are less important than the services it sells through them. With more than a billion pieces of hardware already in use around the world, Apple would probably like each of them to be like little vending machines for services like iTunes and iCloud, and like little ATM machines for Apple.

12.02.16 | 4:11 pm

Fintech companies can soon get limited-purpose federal bank charters 

The Office of the Comptroller of Currency says it will grant fintech companies limited-purpose federal bank charters. With a charter of this nature, fintech companies can roll out products and services nationwide more easily. 

"We believe that companies that offer banking products and services should have the choice to become national banks if they wish to do so," said head of the Currency Comptroller's office, Thomas Curry at the Georgetown University Law Center. While this marks good news for fintech startups, banks are nervous. The Independent Community Bankers of America expressed concern that new fintech companies would not be as tightly regulated under the charter—giving them a competitive advantage. To that, Curry said this:

"The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision. Granting national charters to the companies who desire and warrant one doesn't weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones."

12.02.16 | 3:48 pm

How GE Healthcare is using magnets to cut down on liquid helium 

Now, this is cool. The health care arm of manufacturing giant GE has come up with a potential solution to the helium shortage (note: some describe the fear about the shortage as "overblown"). With many fearing that we're running out of the noble gas, which is essential for the functioning of medical equipment like MRIs, GE has designed a magnet-based alternative called "Freelium." 

The machine uses super-conducting magnets to take high-definition images of the patient's brain, tissue, and organs. Today, it requires thousands of liters of liquid helium to keep the magnets super cold, GE tells me. Freelium is designed to require only 20 liters. 

Check out the technology in action: 

12.02.16 | 3:25 pm

Afternoon intel: diversity in tech, glamp dreams, Trump’s faulty tower

• Security costs for Melania and Barron Trump to live in Trump Tower instead of the White House would be an "unsustainable" burden on city funds, members of the New York City Council argue.

• Washington, D.C., has released its first "Pathways to Inclusion Report," aimed at making the city a more diverse tech hub.

• Insurance startup Zenefits isn't doing so well. BuzzFeed reports the company had a loss of $204.5 million in the last fiscal year, in addition to its ongoing regulatory scandal.

• The unemployment rate has dropped to its lowest level in nine years, with just 4.6% of Americans without jobs.

• Plan your ultimate glamping trip in the deserts of Morocco with this new service from luxury travel company Black Tomato.

12.02.16 | 3:20 pm

Small Token Registry allows you to ask for donations to your charity instead of presents

If you want to avoid getting another ugly pajama set for Christmas, you might consider getting the Small Token Registry app, which allows you  to create a wish list of your favorite causes, which are neatly organized by categories such as women, refugees, animals, and education. 100% of the proceeds donated goes directly to the charities; the app does not take a cut. 

Celebrities sometimes use the site to draw attention to causes. Today, for instance, actress Sophia Bush announced she is using the platform to support of The Girl Project. 

A photo posted by Sophia Bush (@sophiabush) on

 

12.02.16 | 1:53 pm

McKinsey predicts that affordable luxury will be big in fashion next year

According to McKinsey's recent State of Fashion Report, the affordable luxury market will continue to grow next year, as consumers trade down from the luxury market. We've seen the growth of this segment this year, as direct to consumer brands that make high quality products without the middleman markup–such as Everlane, Cuyana, and Oliver Cabell–gain in popularity.

Stay tuned for our own predictions about the fashion industry that will be released later this month. 

12.02.16 | 1:41 pm

Trump Tower security costs are “unsustainable” for New York City, officials warn

Two members of the New York City Council are calling on President-elect Donald Trump to use federal funds—not city resources—to pay for ongoing security and protection costs at his Manhattan residence. Trump's wife and son will continue to live at the Fifth Avenue high rise instead of moving to the White House during Trump's forthcoming term—a decision city officials say creates an undue financial burden on New York taxpayers and residents, particularly those who live in the neighborhood. Nearby businesses are also being negatively impacted.

Melissa Mark-Viverito, the council's speaker, released the following statement.

"His refusal to base transition operations out of the nation's capital has placed an unprecedented financial and logistical strain on our city and its first responders, and it is simply unsustainable. I commend the NYPD for their professionalism, but it is time for a guarantee from the President-elect that their work is not being performed at the expense of City safety elsewhere and in the future."

Mark-Viverito and fellow council member Dan Garodnick launched a petition yesterday. It already has more than a thousand signatures. 

12.02.16 | 1:13 pm

This university is sending out acceptance letters via Snapchat

Forget waiting for an acceptance letter in the mail. Potential students of the University of Wisconsin-Green Bay can find out if they've been admitted to the University via Snapchat.

When a student gets an acceptance letter, they have to either screenshot the message or send the university a selfie back to let them know they've received it.

Students will still, of course, receive a traditional welcome packet in the mail, but if they're one of the members of Gen Z that's always on Snapchat, they'll likely see their acceptance there first.

[Photo: Flickr user Maurizio Pesce]

12.02.16 | 12:20 pm

Washington, D.C., officials release district’s first “inclusion report,” aim to create 5,000 tech jobs

There's San Francisco, New York, Boulder, Boston—and now, Washington, D.C. The nation's capital wants to become the country's next tech hub, but the district, where black and latino residents make up 46% and 10% of the population, respectively, also wants to serve as a national model for those other cities when it comes to building an inclusive technology economy.

Led by D.C. mayor Muriel Bowser, the city's Innovation & Technology Inclusion Council this week released its first "Pathways To Inclusion Report," in which it highlights the strengths and weaknesses of its own tech industry with regard to diversity and equity. Among the council's findings: The percentage of black households with both a computer and broadband access is significantly lower than that of white households (59% vs 96%), exposing one of the hurdles for getting young students involved and interested in STEM activities and careers. Other similar lacks in resources have led to disparities in the demographic make-up of D.C.'s 30,000 tech jobs:

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As a way forward, the council calls for more exposure to tech-focused internships for high school and college students, better skills-training programs at community colleges, and more access to capital for minority-owned small businesses, among other recommendations. Read the rest of the report here.

12.02.16 | 10:55 am

Leaked financials indicate that Zenefits is hemorrhaging money: report

BuzzFeed has reportedly obtained Zenefits's financial documents and things aren't so rosy. According to the report, the insurance/HR software startup saw a loss of $204.5 million in the last fiscal year, and another $100 million in the first six months of this fiscal year. During the first half of this year the company's reported revenue was $35.3 million. 

Zenefits has been at the heart of an almost yearlong scandal involving (among other things) employees systematically skirting insurance laws and regulations, which resulted in its founder stepping down. The company's turnaround hinges on dramatically increasing revenue, which is the one silver lining in the leaked docs: "Zenefits's revenue is increasing more quickly than its costs," BuzzFeed's William Alden reports, with an increase in 62% compared to the previous year and costs only increasing 12%. 

In response to the report, a Zenefits spokesperson told BuzzFeed, "We are proud of what we have accomplished this year." Read the company's full reply here.

Recently, Zenefits CEO David Sacks sat down with Fast Company and talked about how he approached the turnaround. "I know that turnarounds in tech are very hard—and they almost never work," he told us. You can read the entire interview here