It’s been a busy week at Juul’s San Francisco headquarters amidst a CEO turnover, a slashed valuation, and a pending federal criminal investigation. But despite the negative news, the company’s investors are positive e-cigarettes are here to stay.

Altria Group showed it understood the upcoming generations push for tech when it made a big bet on Juul. While Altria had a 54% market share of the tobacco industry, it faced with a steadily decreasing percentage of the US population that smoked traditional cigarettes. So, in December 2018, Altria invested $12.8 billion in a 35% stake in Juul, an e-cigarette company with 75% market share in the US –resulting in a  $38 billion valuation. However, this number has recently been slashed to $24B by investor Darsana Capital Partners.

But more bad news for Juul was yet to come. Although its e-cigarettes do not contain tobacco, the FDA’s Deeming Rule extended the definition of a tobacco product to include e-cigarettes three years ago. Despite this label, Juul’s popularly soared. However, last month Juul received a warning from the FDA not to market its products as safer than cigarettes without scientific evidence. States and major retail chains have banned vaping products, flavored pods (80% of domestic sales), and online sales. And in response, Juul had to suspended all product advertising and federal lobbying.

To try and turn the tide, Juul hired K.C. Crosthwaite, who has spent his entire career in the tobacco industry, to be its newly minted CEO. It also hired Jerry Masoudi in 2018 to be its Chief Legal Officer – previously the chief counsel of the FDA.

However, the trendiness of vaping has seemingly conquered all boundaries. 25% of high school students partake, and they haven’t seemed to slow in the face of a few deaths caused by street-market pods. And while the increased regulation may diminish Juul’s market share, it has also given Juul a 3-year head start on any potential copycats.

Meanwhile, Altria has launched IQOS, a similarly sleek, lower-toxin, FDA-approved device that heats, versus burns, a tobacco “heatstick.” This proves that whatever else happens to the industry, alternative cigarettes are not going away.

The Juul Kids’ Club- Here to Stay

At its most recent event, Amazon introduced a range of potential new Alexa-enabled products that aim to further ingrain the company’s voice assistant into the everyday lives of its consumers.

Much of the proposed hardware comes in the form of wearable gear that will allow Alexa to go where users go, moving toward an even more constant stream of connection between consumer and AI tech.

The introduction of “Echo Buds” marks Amazon’s entrance into the wireless headphone market, allowing Alexa to stay in your ears all day, and for Amazon to compete with Apple’s AirPods. A pair of normal-looking eyeglasses, “Echo Frames,” are equipped with microphones that give you the ability to conversationally engage with and task Alexa without ever having to open your phone. The last of the accessory-like category of products, “Echo Loop,” is a ring that keeps Alexa on your finger—the company’s take on smart jewelry (think, Apple watch, but, no screen)—and accessible via whisper. The event also announced the launch of several updates to existing Echo product lines, an interactive Alexa doorbell, celebrity voices as Alexa, and a venture into the culinary world with an updated Alexa Smart Oven. While the eyeglasses and ring are part of the “beta” group of products, meaning they are still being tested and only available by invitation, the advances that these products embody in the mobility and integration of AI into all facets of human life have significant implications for data privacy.

While Amazon has retained a significant advantage in the market for home AI integration through Alexa, Google and Apple, however, have dominated the mobile AI market because their versions of Alexa are seamlessly built into their respective smartphone models—a product that Amazon lacks. As Amazon takes steps to become a larger player in an on-the-go AI world, it marks a transition toward a more intimate relationship between consumer and device, and between the entities that control the information consumers feed to those devices. The volume of information received by the voice assistants of the modern world is rapidly increasing and, so too, the privacy concerns about what happens to customer data, when data is being collected, and how it is protected.

Amazon began to address some of the questions about privacy and their products. The company is aware of the various concerning privacy matters that have arisen regarding Alexa devices, including that the devices are sometimes indirectly triggered and listen to conversations that they were not meant to. For starters, customers have had the option since May to command Alexa to delete anything she heard that day, but David Limp, the senior VP of Amazon, acquiesces that this is an area where they want to improve.

It seems that, especially in light of these new products on the cusp of formal roll-out, the most crucial area for refinement of voice assistants is when and how they listen, and how much control customers have over when their data is at risk.

Amazon’s Newest Product Announcements and Implications for Privacy

In March of 2018, former Twitch user Tyler “Ninja” Blevins was streaming live when other industry leaders Drake, Travis Scott, and Juju Smith Schuster joined to play Fortnite. Ninja usually had an audience of 70,000 viewers, but this night was different. When the rapper, pop superstar, and up and coming NFL wide receiver came together to stream, more than 600,000 viewers took notice. Ninja is no longer with Twitch and has since left to work for Microsoft. Twitch chief executive Emmett Shear says the competition is “healthy, and hasn’t yet affected the company’s long term goals of being the streaming platform for all interests.”

25,000 attendees gathered each day at TwitchCon, and many brands that are outside of the gaming industry were also present. Gaming enthusiasts continue to comprise the main audience for Twitch, but the company is focused on other areas as well in order to relate to their core users’ interests. MAC, a cosmetics manufacturer, is taking notice of the power Twitch has in reaching audiences from around the world on its streaming platform. Cary Neer, MAC’s executive director of global integrated communications and content, noticed the similarities between MAC’s motto and Twitch’s vision by saying, “Our motto is all ages, all races, all genders. And then you see the sign that greets you when you walk into Twitchcon, ‘You’re already one of us.’ ” With current makeup streamers and Instagram users making tutorials and other home videos daily, Twitch allows users to get a live view of their favorite artists and connect with them in a personal way on a daily basis.

Twitch currently has over 27,000 partners and more than 150,000 affiliates, and the number continues to grow each day. Other companies have taken notice of these growing numbers. The non-gaming industry companies that participated at TwitchCon were Honda, TikTok, Hershey’s and Kraken Rum. Live streaming will soon be able to expand to industries outside of gaming and have a noticeable impact on viewers’ accessibility to their favorite brands across the world.

State Farm Insurance also made their first appearance at the gaming convention, with sponsored esport athlete, Ben “DrLupo” Lupo. While raising thousands of dollars for St. Jude’s Research Hospital, Lupo shared his thoughts on the growing live streaming industry and noted that having a sense of community and talking live by the second is great for engaging with fans. Twitch chief executive Emmitt Shear also gave a lot of credit to gamers like Lupo by saying, “Gamers are always the early adopters. Gamers are always the ones to show up first to technology.” While gamers continue to pave the way for other industries to join live streaming industry leaders like Twitch, we will see a greater connection between audiences and stars who are using the platform to build a sense of community.

Gamers paved the road for a streaming future. Twitch wants to add more lanes.

News of Volkswagen Group’s diesel emissions scandal first broke in September 2015. Yet after four years, and more than $30 billion in fines and settlement, legal repercussions stemming from the scandal continue today. Within the last week, German prosecutors brought stock market manipulation charges against three current and former executives. Additionally, the Federation of German Consumer Organizations (VZBV) initiated suit on behalf of 470,000 consumers. In response to these new charges, the company’s share price dropped 2.4%.

The indictment against VW executives alleges that they were aware of the rigged emissions tests months before U.S. authorities brought the practice to light. Under the European Union’s Market Abuse Regulation (MAR), publicly traded companies are subject to a continuous disclosure regime and must release known information “as soon as possible” to provide for “timely assessment” by the public and market. If German prosecutors are successful in proving the VW executives violated MAR by deliberately withholding information, they could face up to five years in prison.

Meanwhile, the suit brought on behalf of German consumers seemingly piggybacks on the buyback offers and compensation that was part of the company’s settlement with consumers in the U.S. To date, VW has only paid out U.S. consumers for the scandal. The VZBV aims to show German car owners should be compensated as well because the company’s emissions monitoring software similarly harmed them. However, VW vehemently asserts that German consumers lack a legal basis for their claims and refused the German court’s initial request to consider settling.

Since the scandal, Volkswagen has undertaken a rebranding of the company, somewhat ironically, by shifting its focus to affordable emission-free cars. Just last month, the company debuted a prototype of the ID.3, its new battery-powered vehicle. But despite its best efforts, the company’s renewed legal battles may distract from its push to reestablish footing with consumers and reinvent the VW brand. It may take several more years before VW can earn the trust of their consumers and shareholders, and ultimately put this scandal behind them.

Volkswagen’s Continued Emissions Fallout

What would you do with $100 billion? Masayoshi (“Masa”) Son, UC Berkeley graduate and SoftBank founder and CEO, raised that amount for SoftBank’s Vision Fund (“Vision Fund”) to use as a vehicle for private equity investments. In the process, he has subsequently transformed the private market, venture capital (“VC”), and investing landscape. To put the size of Vision Fund in perspective, total 2018 VC fundraising in the U.S. last year came to approximately $54 billion across 200 different funds. Vision Fund drew its financial backing from SoftBank, Saudi Arabia’s sovereign wealth fund, Abu Dhabi’s national wealth fund, Apple, Qualcomm, Foxconn, and others. Given the large fund size, Son set an unprecedented $100 million floor for individual investments with a focus on late-stage technology companies.

Since its inception, Vision Fund’s financial metrics have been impressive. Last May, Son announced a 45% return and 29% net blended IRR (after fees), bolstered in part by exits in Nvidia and Flipkart and unrealized gains in OYO, Compass, Opendoor, DiDi, and DoorDash. Vision Fund states that its investment return targets are over 7-10 years from the initial investment, and with over 80 portfolio companies yet to achieve realized gains, there is certainly high potential for continued outsized returns in the years to come. As a result of these successes, Son recently announced fundraising targets for an even larger second vision fund (“Vision Fund II”).

However, Vision Fund has also drawn its share of criticism. Jamal Khashoggi’s death in October 2018 drew attention to Saudi Arabia’s financial stake in Vision Fund, causing several Silicon Valley VCs to publicly speak out about the role that Saudi Arabia plays in funding U.S. startups. Additionally, some VCs are concerned about the size of Vision Fund’s individual investments, which are forcing traditional VCs to either increase their investments in prospective portfolio companies or risk getting priced out of fundraising rounds. Some skeptics argue that larger private investments add excess cash to startups, which may spur lax corporate governance, unprofitable business models, and an over-inflation of private company valuations.

While Vision Find II was tentatively set to make its debut in late 2019, WeWork’s recently botched IPO placed the spotlight on SoftBank and brought their plans for Vision Fund II into question. Vision Fund was the largest financial backer of WeWork, pouring over $10 billion into the unprofitable business. SoftBank reportedly scrapped WeWork’s IPO after its $47 billion private market valuation was set to implode down to $15 billion. Other high-profile Vision Fund portfolio companies – think Uber and Slack – have faced similar scrutiny. For example, Uber’s stock fell nearly 30% from its initial IPO price and Slack’s stock is down 4% from its direct public listing price.

SoftBank’s stock decreased by 10% in the past month, and reports indicate that it does not have enough cash to independently fund Vision Fund II. Son originally planned to finance much of Vision Fund II using realized gains from existing portfolio companies, but public investor enthusiasm for unprofitable high-growth companies has recently cooled. Combined with the negative press surrounding Saudi Arabia’s financing of Vision Fund, it remains to be seen where Vision Fund II will draw its financial backing. In the meantime, the investment world cautiously awaits Vision Fund II’s official launch.

SoftBanks’s Vision Fund II- Uncertainty Amidst WeWork’s Failed IPO

After leading a botched attempt to take WeWork public, Adam Neumann succumbed to pressure from the boardroom to step down from his position as chief executive of the fabled unicorn. His resignation came at the wake of the company’s announcement to delay its much-anticipated IPO amid concerns about the company’s governance and its burgeoning losses. It remains doubtful, however, whether Neumann’s departure is enough to lead the company into a profitable future.

At the outset, the company has placed its faith in insiders, Sebastian Gunningham and Artie Minson, to take the reins as co-chief executives. Shortly after their appointment, the company filed a request with the Securities and Exchange Commission to formally withdraw its IPO prospectus. WeWork was expecting to raise approximately $3billion through new stock issuances and secure $6billion in bank loans that were contingent on the IPO. Since that is no longer possible, it is now faced with the urgency to look for alternative sources of capital to keep the lights on.

WeWork’s alarming losses have been closely linked with its obsession to pursue torrid growth. The new leadership is now considering scaling back expansion in the near term, selling some of the company’s newly acquired businesses, as well as trimming its workforce in the hopes of reducing operational expenses. It is also believed that the company is in early talks with private investors and is liaising with JP Morgan and Goldman Sachs for a new $3 billion line of credit. However, any extension of credit will most likely hinge on further equity infusion from key investors, including SoftBank, the company’s largest shareholder.

While the management shake-up is indeed a strong statement of intent from the company, it will definitely take more than just new leadership to restore investor confidence. Without strengthening its core business and demonstrating a foreseeable path to profitability, it is unlikely that WeWork will be able to revisit the public markets to raise capital in the near future.

WeWork saga: Difficult days ahead

In the latest installment of the ongoing net neutrality legal battle, the D.C. Circuit Court of Appeals upheld the Federal Communications Commission’s 2017 move to repeal Obama-era internet regulations. Current FCC Chairman Ajit Pai called the ruling a “victory for consumers, broadband deployment, and the free and open internet.” However, this decision may prove to be a hollow victory for the Republican FCC. Because the court also held that the FCC cannot preempt state internet regulations, states have a green light to enact their own net neutrality laws.

Net neutrality is the principle that all internet traffic should be treated equally, with no internet service provider (“ISP”) having the power to prioritize or stifle specific online content. Proponents argue that regulation of broadband companies ensures open access to information and boosts innovation. Critics assert that internet regulation discourages investment and overly constrains ISPs.

The majority of Americans support net neutrality, and states have stepped up where the FCC has stepped down. After the Republican-led FCC’s repeal of net neutrality regulations in 2017, dozens of states have introduced bills and resolutions to establish their own internet protections. Several states, including California, have already enacted net neutrality laws. The D.C. Circuit decision is an important boost for these state efforts to regulate.

However, the D.C. Circuit ruling may also prove to be a hollow victory for net neutrality supporters and broadband providers. A patchwork of state-by-state internet regulations will be difficult for ISPs to navigate and may result in higher costs and slower services being passed onto consumers. Inconsistent internet regulations will also be problematic for ISPs like AT&T that recently invested in their own streaming services. Far from settling the net neutrality debate, the D.C. Circuit decision has potentially created fifty new legal battle lines.

Net Neutrality Legal Battle Shifts to States

On September 24, Uber obtained a two-month permit to continue operating in London—a permit that falls far short of the five-year permit it sought. This signifies the second time that Transport for London (TfL), the city’s licensing authority, has rebuffed the ride-hailing firm. Further signaling distrust of the ride-sharing app, TfL imposed conditions on the two-month permit that allows it to scrutinize the company. With Uber already struggling with regulatory pressures and large net losses, TfL’s decision comes at a most inopportune time.

TfL and Uber’s stormy relationship goes back a few years. After initially issuing a five-year license to the company in 2012, TfL announced in 2017 that it would not renew Uber’s operating license. That decision was motivated in part by concern for passenger safety and Uber’s use of a software that could block authorities from accessing the app. However, the decision also sparked a court battle whereby TfL eventually had to grant the app-based company a 15-month license—an outcome characterized by London’s mayor, Sadiq Khan, as putting Uber “on probation.”

Now, a day before the 15-month license was set to expire, Uber has obtained a short two-month permit. The permit comes with additional requirements that, according to TfL, are aimed at ensuring passenger safety. While the transport authority has provided few details, under the new requirements, Uber must regularly provide assurance reports and must work with the London Metropolitan Police to report passenger complaints. Further, Uber will have to notify TfL of changes to its operating model in London at least twenty-eight days in advance, and it will have to add three non-executive members to its board.

The disappointingly short permit for the largest European taxi market is another in a streak of setbacks for the company. On the other side of the Atlantic, Uber is currently fighting Assembly Bill 5, a new California legislation that could significantly increase costs by reclassifying drivers as employees from their current status as independent contractors. Meanwhile, this August, Uber reported its largest quarterly net loss—$5.24bn—with the company resorting to cutting more than 400 jobs. With its stock price slipping since its initial public offering in May, pressure for Uber to succeed is now higher than ever.

London Transport Authorities Serve Uber a Disappointing Two-Month Permit