Corals Are in Serious Trouble. This Lab Could Help Save Them

Nestled among giant fish tanks at the California Academy of Sciences, there’s a black box—just big enough to hold six aquariums and maybe five humans. What it lacks in size, though, it makes up for in preciousness: Running here is a experiment that could help save corals from annihilation.

The corals in these tanks are reproducing sexually. Which is weird, because even out in the wild, coral spawning is a fragile process, easily disrupted by changes in temperature and acidity. Reproduction has to be precisely timed with the phases of the moon, and it occurs just once a year, as corals release great clouds of sperm and eggs that mix together, fertilize, and descend once more to the seafloor.

Corals are animals, not plants; each organism is made up of lots and lots of polyps. Some species can reproduce asexually, essentially producing clones of themselves. But not the ones in this black box, which are somehow spawning away thanks to some fancy technology and a team of doting humans.

Researchers have brought gravid corals back to the lab before, where they immediately got down to business. But the Academy of Sciences is on the verge of establishing a more permanent population that could reproduce year after year, allowing researchers to perform crucial long-term studies. That’d make this only the second lab to do so, after London’s Horniman Museum. If it works, these scientists could turn corals in model organisms, like fruit flies and mice. They’d have a reliable population to study in detail over multiple generations.

“We built this whole dark room, but that’s only the first part of it,” says Rich Ross, aquarium biologist at the Academy. “What really comes into play is controlling the light—the moonlight, the temperature, and the intensity of all that light. The coral spawn is triggered by all of those factors.”

What used to be a human turning knobs at all hours is now a computer-controlled system. LED lights throw out a range of wavelengths to mimic not just the intensity of sunlight and moonlight as it changes throughout the day, but range of colors you get with, say, sunrise and sunset. This is meant to match the conditions in Palau, where scientists collected the corals.

The system can calculate these light conditions—water temperature too—as they change over the course of a day or a season. Academy researchers inputted information into what’s called a season table. “So we put in for each month the moonrise, the moon set, when the full moon is, when the sunrise and sunset is, and the maximum and minimum temperatures,” says Ross. The computer handles the rest to create a sort of Palau-in-a-tank.

To say the ruse has to be realistic would be an understatement. A temperature bump of just a few degrees can send the corals haywire. In response to the stress, they release the photosynthetic algae that provide them energy, which bleaches the coral.

While corals don’t have eyes like we would understand them, they ain’t blind. “They do have pretty sophisticated photo sensory systems so it’s all linked into their circadian rhythm,” says coral reef biologist Rebecca Albright, who’s overseeing the project. “There are photoreceptors all over the animal.”

When it comes to spawning, the corals need to somehow know when to release eggs and sperm simultaneously. Otherwise, you’re just wasting your gametes. So certain species agree on certain conditions. Some go a few nights after a full moon, others like to go after sunset.

And some species time this with astounding accuracy. “There are certain populations around the world that have been very heavily monitored, that we know down to within the minute sometimes when these corals are going to spawn,” Albright adds. Sperm and eggs mix and ideally fertilize, drifting on currents and settling once more to start new corals.

After a month of carefully timed lighting, the Academy’s corals spawned together on April 15 in total darkness, and they did so at the expected hour—9 pm in Palau time. But they lagged behind their wild counterparts by a week. That may have to do with the stress of flying across the Pacific Ocean and adjusting to a new home.

But spawn the corals did, which means they aren’t altogether unhappy in their custom-built darkroom. Which means the Academy may be able to keep the population breeding. And if they can keep the population breeding, they could be on their way to making these corals model organisms.

The downside is that even a model coral could only spawn once a year, which doesn’t afford researchers as much science time as they’d like. “Ideally, we would like to do is multiply the system and stagger them, and maybe even have different locations around the world so that we can induce spawning every couple of months,” says Albright.

If you’ve only got one shot a year, and something goes awry, you have to wait around and think about how to modify your techniques. But the corals of Earth don’t have that kind of time. Since 2016, half of the Great Barrier Reef has perished. That’d be one billion out of two billion corals, gone. Waters are getting warmer, and corals can’t handle it.

Saving them means better understanding them. With your typical model organism, you can recreate the whole life cycle and keep multiple generations. “We’ve never been able to do that with corals,” says Albright. “And so this would be an opportunity to try to complete that lifecycle and ask some really sophisticated questions.”

How do increasingly acidic waters affect coral fertilization, for instance? And how do the corals’ symbiotic algae play into all of this? Might researchers be able to inoculate baby corals with heat-tolerant algae to try to create reefs that would resist bleaching events? To find out, work at the California Academy of Sciences will continue deliberately and delicately.

More coral science

  • Bet you’ve never seen coral like this before.

  • The California Academy of Sciences is also pioneering the study of so-called deep reefs, which are very weird and very intriguing.

  • Coral reefs can be truly massive ecosystems, so NASA’s helping map them from space.

After Uber's Fatal Crash, Self-Driving Cars Should Aim Lower

More than a month after a self-driving Uber struck and killed a pedestrian crossing the street in Arizona, it’s still not clear what sort of failure might explain the crash—or how to prevent it happening again. While the National Transportation Safety Board investigates, Uber’s engineers are sitting on their hands, their cars are parked.

The crash and its inconclusive aftermath reflect poorly on a newborn industry predicated on the idea that letting computers take the wheel can save lives, ease congestion, and make travel more pleasant. An industry dashing toward adulthood—Google sister company Waymo plans to launch a robo-taxi service this year, General Motors is aiming for 2019—and now, suddenly, on the verge of being rejected by a public that hasn’t even experienced it yet.

In other words, AV makers are clearing the technological hurdles and tripping over the psychological ones. And it’s important to recognize there are lots of stakeholders here. If these vehicles are to proliferate and change the world for the better, they’ll need support: from the public, politicians, and from regulators.

In defending their technology, the self-driving promoters always resort to the same set of facts. Every year, 40,000 people die on American roads. Worldwide, it’s about 1.25 million. Millions more are left with serious injuries. Robot drivers, who don’t get tired, distracted, or drunk, could stop the bleeding.

It’s a compelling and worthy objective, but one that’s almost impossible for regular drivers to relate to. Road deaths are a problem for society, not for the vast majority of people who aren’t personally affected. Driving is such a quotidian and often necessary task, it’s easy to ignore the risk that comes with every moment behind the wheel. At the same time, crashes are so common, they become background noise—and they get tuned out. Moreover, putting a serious dent in road death numbers would take decades, since robots could have to gradually replace more than a billion vehicles worldwide.

Knocked onto its heels by the Uber crash and the death of a Tesla driver using Autopilot a week later, the robo-car industry needs a win—and a new playbook.

“Trying to boil the oceans, and solve the complete problem all at once, has a high failure rate,” says Timothy Carone, a business professor at Notre Dame and author of Future Automation—Changes to Lives and Businesses. “One key reason that project leaders lose stakeholder support is because they don’t see the benefits clearly.”

Rather than promising to save millions, the developers in Silicon Valley, Detroit, and elsewhere should offer immediate, tangible proof of their value. And no, Waymo, launching a real-deal robo-taxi service doesn’t cut it. “All they’ve proven is that a car can drive itself around Phoenix,” says Carone. “So what? They haven’t demonstrated the value.”

Community Service

Even if Waymo’s service does make roads safer, the problem is that people are no good at recognizing the upsides of things that don’t happen. If it wants to win over a population rattled by Uber’s crash—which surely hurt the reputation of this technology as a whole—it should offer not just a high-tech taxi, but a solution to a discrete, noticeable problem. Take teenage drunk driving: Why not offer a free service for people aged 16 to 25, between 10 pm and 2 am? You’re giving parents peace of mind, knowing their kids have an easy, convenient, way to get home if they’ve been drinking. And maybe collecting some positive statistics in the process.

Here’s another idea for Waymo, Uber, Cruise, and everyone else working on computer driving: Start a shuttle service for people in suburban towns, taking them home from the local train station. It’s an easy to way to solve the last mile issue, especially for people who don’t have cars—and will make the people in neighboring towns eager to have the tech, too.

“If the goal is specific, targeted, and it resonates with your customers or important stakeholders, then they buy into it,” says Stephanos Zenios at Stanford’s Center for Entrepreneurial studies, who teaches successful launch techniques at a “Startup Garage” MBA course. “It has to solve a real problem that someone has, and which is a pain for them.”

The small, driverless, pod-like shuttles which companies like May Mobility are trialing are a sensible solution to mobility in downtown cores. They can pootle around at a safe 25 mph. But to a car driver, used to speed, and flexibility to choose a route, they’re hardly irresistable. What if they made their services more attractive by negotiating with cities to use bus and HOV lanes to save riders time? The results don’t have to be glorious—just tangible and relatable. If commuters save 20, even 10 minutes a day because they get to make part of their trip in an autonomous shuttle, they’re likely to think better of the tech—and vote for the politicians and regulators who support it.

Rocket Science

Carone cites the the SpaceX Falcon rocket program as an example of where this step-by-step tactic has worked to build support. Elon Musk’s company now has launched 53 Falcon rockets, with 51 full mission successes (including one Falcon 9 Heavy), one partial failure, and one total loss of spacecraft.

It has booked more than 100 future launches, signaling that confidence in its tech is strong. That’s because each launch slowly but surely demonstrated the benefits of the SpaceX approach to improve the cost and reliability of access to space. When failures did happen, there were previous successes to confirming the benefits of the approach.

Uber has also seen the benefits of a phased approach in its core business, ridesharing. The app started in 2009 as a way for people to book rides in fancy black cars. It evolved into a peer-to-peer service, a useful alternative to lacking public transit and expensive, hard-to-find taxis. Over the years, it added special features for large groups, kids, people with pets, and riders in wheelchairs. And so when London threatened to withdraw Uber’s licence to operate in the city, more than 850,000 people signed a petition to keep the company around. That’s the kind of support Uber could use now, for its autonomous driving program.

Same goes for Tesla, and other automakers offering semi-autonomous systems that take over the driving task, with human supervision. Last month, a Model X driver using Autopilot hit a highway barrier and died. In response, Tesla wrote a blog post that said, “If you are driving a Tesla equipped with Autopilot hardware, you are 3.7 times less likely to be involved in a fatal accident.” It added that there is one automotive fatality every 86 million miles across all vehicles. In cars with Autopilot, it claims, that plunges to one every 320 million miles.

Those are impressive numbers, sure, but they’re also hard to comprehend. Hardly anyone drives a million miles in their life, so the difference between 86 million and 320 million feels academic. But if Tesla could break down the stats, and told you hey, on this road you drive everyday, cars with Autopilot crashed, say, 20 percent less often than those without, the tech seems a lot more relevant—and more worth the extra $5,000.

Even if it won’t save your life, it could keep you out of a fender bender that makes you miss that meeting and sees your insurance premium skyrocket. “If you do that, it provides policy makers with information and data that says we’re going in the right direction and we’ve saved 50 or 100 lives this year,” Carone says.

Writing in the journal Nature Human Behavior, researchers from UC Irvine say “as with airplane crashes, the more disproportionate—and disproportionately sensational—the coverage that autonomous vehicle accidents receive, the more exaggerated people will perceive the risk and dangers of these cars in comparison to those of traditional human-driven ones.” You don’t win those people back with lofty promises of crash-free roads and millions of lives saved. You do it by making their lives better, one helpful ride at a time.

Driving on My Own

Why So Many People Make Their Password 'Dragon'

Each year since 2011, the security firm SplashData has released a list of the most commonly used passwords, based on caches of leaked account credentials. The annual list, intended as a reminder of humanity’s poor password practices, always includes predictable entries like “abc123,” “123456,” and “letmein.” But one entry, finishing in the top 20 every year, has stood out since the beginning: “dragon.”

But why? Is it because of the popularity of the television adaption of Game of Thrones, which first premiered the same year as the popular passwords list? Is it because so many Dungeons & Dragons fans got their accounts pwned? Well, maybe, in part. But the most convincing explanation is simpler than you might think.

Chasing the Dragon

The “dragon” phenomenon does not appear to be a quirk of SplashData’s password analysis methodology. The creature took the 10th spot last year on another top passwords list, this time created by WordPress platform WP Engine, using data compiled by security consultant Mark Burnett. Dragon doesn’t show up on a 2016 list created by Keeper Security, but that one took into consideration accounts likely created by bots. And the top 100 passwords have stayed relatively stable through the years, largely ruling out a Game of Thrones spike.

“I believe in my book I even listed hundreds of passwords that contain the word ‘dragon,'” says Burnett, whose Perfect Passwords came out in 2005. “People often base their passwords on something that’s important to them; apparently dragons fall into that category. And between D&D, Skyrim, and Game of Thrones, dragons have played a big part in our culture.”

The way researchers examine password data in the first place may also contribute to dragon’s popularity. While tens of thousands of people likely really use it, the kind of password data that researchers have access to comes with some inherent biases. Academics can’t call up a company and ask it to hand over customer passwords, so they instead largely rely on credentials that get hacked and leaked to the public.

That often means sites that have poor overall security—and weak password requirements. “The sites that have the most complicated password policies don’t get leaked as often,” says Lorrie Faith Cranor, a computer scientist at Carnegie Mellon University who has studied password creation in her lab for over eight years. “Dragon” might be disproportionately popular because hacked sites are less likely to require users to include, say, a number or special character in their password.

The type of site a password data set comes from can also skew results. WP Engine examined 5 million passwords believed to be associated with Gmail accounts, for example. The company looked at the associated email addresses and tried to estimate the gender and age of the people who created them. For example, “[email protected]” would be assumed to be a male born in 1984. Using this method, the researchers found that the dataset skewed both male, and toward people born in the 1980s. That’s likely because many of the credentials came from eHarmony and an adult content site.

You can imagine how, in a dataset like this, “dragon” theoretically might appear more often, given how relatively popular The Lord of the Rings, Dungeons & Dragons, and *Game of Thrones are among men in their early-to-mid-30s.

Other kinds of password data bias can be more obvious. In 2014 for example, Burnett helped SplashData compile its annual common passwords list. When he first ran the numbers, he noticed that “lonen0” appeared incredibly high on the list, taking the seventh spot. That happened not because tens of thousands of people suddenly thought of the phrase, but because it was the default password for a Belgian company called EASYPAY GROUP, which had suffered a hack. Ten percent of users had simply failed to change the default password.

Cracking Up

Another reason that “dragon” appears so popular, along with other passwords like “123456,” is that they’re both incredibly easy to unmask. Companies often “hash” the credentials that they store, so that in the event a hacker does access them, they’re harder to access than they would be if they were just sitting out in plaintext. Hashed data is mathematically obscured to look like random strings of characters that humans can’t parse. Some hashing schemes have weaknesses that allow hackers to crack them, but even if hackers can’t expose every password, they can still run scripts to figure out the hashes for the most common passwords. “They are using computer programs that are using the most popular passwords first,” says Cranor.

Despite potential biases, careful researchers like Cranor and Burnett take time to construct their databases as carefully as possible. At this point, so many websites have been breached that they also have very robust datasets to analyze. Still, Burnett says, figuring out the “most commonly used” passwords across the web probably cannot be called a genuine science, due to biases and lack of controls.

Cranor’s research has shown that people choose passwords like “dragon” for the same reason they use common names, like Michael and Jennifer, or beloved activities, like baseball. “One of the things we’ve seen is that people tend to create passwords about stuff they like,” says Cranor. “‘iloveyou’ is one of the most common passwords, in every language.”

In her research, Cranor also wondered why so many people gravitate specifically toward animals and mythical creatures in creating passwords—particularly “monkey,” which like dragon, always ranks highly. During one study she conducted, Cranor actually asked participants who chose the primate to explain why they picked it.

“Basically people said they like monkeys, monkeys are cute,” says Cranor. “Some people said they had a pet named monkey, they had a friend whose nickname was monkey, it was all very positive.”

It turns out many people have chosen dragon for similar reasons. “I started with ‘dragon’ back in the early 90s, and it morphed over time,” one person who uses that password explained to WIRED. “The inspiration for it was a mixture of having played Dungeons & Dragons for 10 years at the time and having just installed Legend of the Red Dragon.” (They have been granted anonymity for obvious, password-related reasons.)

“Passwords, I was told, were supposed to make it hard for other people to get into your accounts, and dragons are big and scary and less common in real life than, like, bears,” another “dragon” user said. “Admittedly I was mostly using very nerdy forums and games and stuff.”

Sometimes, though, the reason you choose “dragon” as your password is just because you’re young, and dragons are, well, really cool. As one “dragon”-user put it: “I was 13 at the time.”

Password Party

Shadow-boxing tough guy should protect home-alone Japanese women

TOKYO (Reuters) – Behind the apartment’s curtain, a tough guy is boxing, throwing left and right hooks and jabs, and lunging forward, enough to make any passing criminal think twice before breaking in.

Leopalace 21 Corp employee, Mai Shibata, poses with her mobile phone during a demonstartion of the company’s security system ‘Man on the Curtain’ in her room in Tokyo, Japan, April 20, 2018. REUTERS/Kwiyeon Ha

The image is nothing more than a projected shadow but one that a Japanese apartment management company hopes will help protect and reassure women living by themselves.

Still in the prototype stage, “Man on the Curtain” uses a smartphone connected to a projector to throw a moving shadow of a man doing various energetic activities onto a curtain.

Leopalace 21 Corp employee, Mai Shibata, poses in front of a window, on which the company’s security system ‘Man on the Curtain’ projects a man’s shadow, in Tokyo, Japan, April 20, 2018. REUTERS/Kwiyeon Ha

Customers can choose from a dozen different scenarios that show their man boxing, doing karate and even swinging a baseball bat.

A man’s shadow is projected on the window by ‘Man on the Curtain’ security system developed by Leopalace 21 Corp, in Tokyo, Japan, April 20, 2018. REUTERS/Kwiyeon Ha

To mix things up a bit, the man can calm down and do more mundane things like get dressed, chill out with a guitar or even do some vacuuming around the flat.

The system was developed for security at buildings run by Leopalace21 Corp,, said Keiichi Nakamura, manager of the firm’s advertising department.

Queries from the public prompted the company to think bigger and consider offering it for sale. But some people have had doubts about how effective it might be, said Nakamura.

In particular, criminals might sooner or later work out that a “man behind the curtain” who spends his whole time shadow boxing, actually means a woman is alone inside.

“If projecting a shadow makes a woman an easy target by showing criminals there’s nobody home, that would put the cart before the horse,” he said.

“So we’d like to commercialize it once we add variety, such as releasing a new video every day.”

Reporting by Kwiyeon Ha; Writing by Elaine Lies; Editing by Robert Birsel

Barbara Bush: These 17 Timeless Quotes by the Former First Lady Will Inspire You

Born in 1925, Barbara Bush — wife of George H. W. Bush, the 41st President of the United States, and mother of George W. Bush, the 43rd President of the United States — was one of the nation’s most beloved First Ladies. Sadly, she died this week in Houston, Texas at the home she shared with her husband after a series of hospitalizations. She will be laid to rest Saturday after a funeral service to be held adjacent to the George H. W. Bush Presidential Library on the campus of Texas A&M University.

Barbara Bush was well known for being outspoken, a quick wit, and an ardent supporter of literacy, education, AIDS awareness, and other important social causes. But she was also known for being a devoted wife and mother — always keeping her family at the center of her universe. Given the code name “Tranquility” by the Secret Service, Barbara Bush wrote a popular autobiography in 1994, and a children’s book about the White House adventures of her family’s Springer Spaniel.

While Barbara Bush is no longer with us, her words — which sometimes sparked controversy for the plainspoken, unvarnished way she presented them — will live forever. Here are 17 of her most memorable quotes.

1. “Never lose sight of the fact that the most important yardstick of your success will be how you treat other people — your family, friends, and coworkers, and even strangers you meet along the way.”

2. “When you come to a roadblock, take a detour.”

3. “I hate the fact that people think ‘compromise’ is a dirty word.”

4. “You don’t just luck into things as much as you would like to think you do. You build step by step, whether it’s friendships or opportunities.”

5. “Believe in something larger than yourself…get involved in the big ideas of your time.”

6. “Some people give time, some money, some their skills and connections, some literally give their life’s blood. But everyone has something to give.”

7. “If human beings are perceived as potentials rather than problems, as possessing strengths instead of weaknesses, as unlimited rather that dull and unresponsive, then they thrive and grow to their capabilities.”

8. “Whether you are talking about education, career, or service, you are talking about life. And life must really have joy. It’s supposed to be fun.”

9. “Cherish your human connections: your relationships with friends and family.”

10. “You have two choices in life; you can either like what you do or dislike what you do. I have chosen to like what I do.”

11. “Libraries have always seemed like the richest places in the world to me, and I’ve done some of my best learning and thinking thanks to them.”

12. “Giving frees us from the familiar territory of our own needs by opening our mind to the unexplained worlds occupied by the needs of others.”

13. “People who worry about their hair all the time, frankly, are boring.”

14. “Study hard, work hard, and play hard too.”

15. “Why be afraid of what people will say? Those who care about you will say, ‘Good luck!’ and those who care only about themselves will never say anything worth listening to anyway.”

16. “Don’t cry over things that were or things that aren’t. Enjoy what you have now to the fullest.” 

17. “At the end of your life, you will never regret not having passed one more test, not winning one more verdict or not closing one more deal. You will regret time not spent with a husband, a friend, a child, or a parent.”

Indonesia's Go-Jek planning Philippine expansion: regulator

MANILA (Reuters) – Indonesian ride-hailing and online payment company Go-Jek is looking to expand into the Philippines, Manila’s transport regulator said on Friday, just days after Uber Technologies Inc [UBER.UL] shut down its local business as part of its exit from Southeast Asia.

Go-Jek executives have requested for a meeting with the regulator next week, Aileen Lizada, a board member at the transport regulator, told Reuters.

A Go-Jek spokesman declined to comment.

Reuters reported in March that Go-Jek, which counts Alphabet Inc (GOOGL.O), Singapore’s Temasek Holdings Ltd [TEM.UL] and China’s Tencent Holdings Ltd (0700.HK) as investors, was set to announce its first expansion to another country in Southeast Asia in the “next few weeks.”

The move comes weeks after Uber sold its loss-making Southeast Asia business to regional rival Grab, and just days into Uber’s exit from the Philippines, to the dismay of the riding public that has complained of higher fares, longer waiting time and picky drivers.

The Philippines’ transport regulator this week approved the accreditation of homegrown ride-hailing companies Hype Transport Systems Inc, HirNa Mobility Solutions Inc and Golag Inc to spur competition.

The country’s transportation agency caps the number of ride-sharing vehicles at 65,000 across all brands and reviews the figure every three months.

Reporting by Neil Jerome Morales; Editing by Biju Dwarakanath

Ex-CEO of Bankrupt Bitcoin Exchange Mt. Gox Has a New Job in Crypto

Mark Karpelès, the CEO who presided over Bitcoin exchange Mt. Gox until it went bankrupt in 2014, has had a hard time finding work for the last four years. After all, when he announced in February 2014 that he’d lost all of Mt. Gox’s 850,000 Bitcoins, he instantly became the biggest villain of the cryptocurrency world.

And while Karpelès ended up finding 200,000 of the Mt. Gox Bitcoins—and authorities believe the other 650,000 were stolen by outside hackers—he’s currently on criminal trial in Japan for charges of embezzlement, manipulation of electronic data, and breach of trust. Initially arrested in 2015, Karpelès was held in jail for almost a year on those charges.

“I have no way to be sure that I’ll still be able to work in one year, two years,” Karpelès told Fortune in an interview in Tokyo in March. “So I cannot really get a normal full-time job.” In other words, he acknowledges, he may be sent back to jail. (For the full tale of how the Mt. Gox hack mystery has unfolded, see my feature story “Mt. Gox and the Surprising Redemption of Bitcoin’s Biggest Villain” from the May issue of Fortune.)

But whether it’s what he considers “normal” or not, Karpelès recently did land a new job—and a major one, as a C-level executive at a U.S. corporation. He’s the new chief technology officer of London Trust Media, a Denver-based company that boasts the world’s largest paid virtual private network (VPN) service.

London Trust Media is also increasingly investing in cryptocurrency: It was an early investor in Zcash, a privacy-focused digital coin, and has also backed Purse, a startup allowing people to buy Amazon items with Bitcoin.

Karpelès, however, was not forthcoming about his latest career move in our initial meeting. Instead, he’d said he was juggling four to five different IT consulting jobs, working on projects related to online video games, network communications and IP (Internet protocol) services—all “unrelated to cryptocurrency.” He refused to name his employers at the time, saying that as a contractor, he was prohibited from discussing them.

It wasn’t until afterwards, when I stumbled across his LinkedIn profile, that Karpelès finally opened up about his new position. On LinkedIn, he lists himself as London Trust Media’s CTO since January of this year. “I’d say it’s currently my main job,” Karpelès wrote in a message to Fortune.

On the other hand, Karpelès’s new employer was more than happy to trumpet the news of his new hire. “Mark fought and fell. And although he fell, his skills, experience and know-how unarguably continue to exist,” says Andrew Lee, cofounder, chairman and chief of lab division at London Trust Media. “And so, bringing in a seasoned warrior makes perfect sense to me. I am more than willing to give a second chance to Mark in this fight’s critical hour.”

The fight Lee is referring to is what he calls the “crypto wars”—cryptocurrency’s battle against increasing government regulation and oversight, including moves by the New York attorney general this week.

Lee, who also once sold a company to Mt. Gox and was in charge of Mt. Gox’s North American operations for a short time, says Karpelès will be working on London Trust Media’s cryptocurrency ventures as well as its other products. Karpelès’s experience in the Bitcoin industry—despite ending in disaster—will prove valuable, Lee adds: “I wouldn’t dare say that the person who architected the Titanic should never again architect another ship.”

Karpelès, who has never been to the U.S., will work remotely from Japan, where he is currently required to stay while he is on trial. He says he was attracted mostly to London Trust Media’s commitment to protecting its customers’ privacy through its VPN services, citing recent outrage over Facebook’s sharing of user data with Cambridge Analytica. “Advertising-driven overreach on people’s privacy has been a matter I’ve been worried about for some time,” he says.

After all, Karpelès has lately been less than enthusiastic about Bitcoin and other cryptocurrencies, telling Fortune he’s had “enough of cryptocurrency” between all his problems at Mt. Gox, and has essentially washed his hands clean of it. “The main issue with Bitcoin itself is that the community around it right now is kind of too polarized,” Karpelès says, citing the split between Bitcoin and Bitcoin Cash over a disagreement in how best to scale the digital currency. (He’s not taking a side, in order to “stay neutral and not get involved in more trouble than I am already.”)

“Bitcoin right now is, I believe, doomed,” Karpelès adds. “Its original promise of being the future of currency is clearly out of reach.” Then again, that’s what some said about Karpelès’ career.

Explainer: Ant Financial's $150 billion valuation, and the big recent bump-up

HONG KONG (Reuters) – Ant Financial’s rapid climb to become the world’s biggest super unicorn valued by some investors at around $150 billion showcases investor enthusiasm for the biggest Chinese tech companies and also how quickly valuations can shift. Just two months ago, bankers and investors were tentatively talking of a figure closer to $100 billion.

FILE PHOTO: A logo of Ant Financial is displayed at the Ant Financial event in Hong Kong, China November 1, 2016. REUTERS/Bobby Yip/File Photo


Ant’s biggest and best-known business is Alipay, the biggest player in China’s $17 trillion online payments market. Ant also sells wealth management products and offers small loans and credit scores, among other ventures. Jack Ma, founder of Chinese e-commerce giant Alibaba Group Holding (BABA.N) controls Ant.

Analysts at Barclays estimate that online payments accounted for 55 per cent of Ant’s $8.9 billion revenue last year, but they expect that to fall to one-third by 2021 as the company focuses on encouraging its 600 million customers to use more of its other, higher-margin services.


At a valuation of around $150 billion, Ant will trail only the big four state-controlled banks and insurer Ping An among financial-focused firms in China. It will also be about 50 percent more valuable than Wall Street titans Goldman Sachs (GS.N) and Morgan Stanley (MS.N).

Much of the rapid rise in its valuation is being attributed to the company’s disclosure of additional performance data, which although by no means its full financials, included some 2017 full-year figures that showed faster-than-expected growth. That helped investors and analysts tweak their financial models.

Ant’s status as one of the biggest tech groups in China is also boosting demand.

“It’s not very often to get a chance to invest in super unicorns like Ant, even in China where you’ve seen a tech boom for years,” said one existing investor in Ant. “If you miss this one, you don’t know when the next one comes.”


Robert Kapito, co-founder of U.S. asset manager BlackRock, this week described himself as “shocked” at Ant’s likely valuation but many analysts are not blinking.

Barclays analysts this month valued the company at $155 billion, based on multiplying their estimate of Ant’s 2019 net operating profit less adjusted tax (NOPLAT) by what they said was its conservative price/earnings ratio of 28.

NOPLAT is often used by analysts to measure companies’ operating efficiency because it strips out the impact of interest payments and other financing costs.

Other groups have used alternative means of valuing Ant. Jefferies analysts, who believe up to 70 per cent of Ant’s 2017 business came from online payments, used Paypal (PYPL.O) as a comparison and valued Ant at $133 billion, equivalent to seven times their estimate for its 2019 sales – in line with the multiple implied by PayPal’s share price.

Based on traditional price-earnings measures, $150 billion implies a price 71 times Ant’s 2017 pre-tax profits or 85 times its net profits, assuming a tax rate of 16 per cent – the average paid by Alibaba in recent years. Ant does not disclose actual profits and its pre-tax earnings of 13.2 billion yuan ($2.1 billion) are calculated from disclosures in filings by Alibaba, which is set to become Ant’s one-third owner soon.

Alibaba itself trades at 43 times last year’s profits as does rival Tencent (0700.HK), home of Alipay rival WeChat Pay.


Ant, expected to go public in the next two years, has vowed to reach 2 billion users worldwide in the next decade and it has been investing overseas, buying a stake in Indian payment firm Paytm and Thai financial technology firm Ascend Money, among others.

“Ant has taken a very strategic view of international expansion – with highly-targeted investments, joint ventures, and partnerships across the region,” said James Lloyd, Asia-Pacific Fintech leader at EY. “While mainland China remains core, I wouldn’t underestimate the potential upside of their international endeavors.”

But it could be China itself that causes Ant problems. While Alipay holds 54 per cent of the country’s fast-growing mobile payments market, WeChat Pay holds 38.2 per cent, according to Jefferies. Both are keen to increase their dominance.

Beijing also has a history of unexpected rule changes which can derail business plans. Last year regulators suddenly took steps to rein in the online lending market – a key growth engine for Ant – as part of its wider crackdown on easy credit.

“These things that Ant is doing are quite innovative and new. They may work this year, but stop working next year, depending on China’s regulations,” said a Hong Kong-based equity analyst with a Japanese asset manager. “It’s hard to analyze their value.”

Reporting by Kane Wu and Julie Zhu in HONG KONG; Editing by Jennifer Hughes and Muralikumar Anantharaman

Exclusive: Amazon in talks with airline Azul for shipping in Brazil – sources

SAO PAULO (Reuters) – Inc (AMZN.O) is in talks with Brazilian airline Azul SA (AZUL.N) on shipping goods in the country, two sources with knowledge of the matter told Reuters, in the latest sign of the retailer’s big plans in Latin America’s largest economy.

FILE PHOTO: The logo of Inc is seen in Sao Paulo, Brazil October 17, 2017. REUTERS/Paulo Whitaker/File Photo

The talks with Azul, which serves over 50 percent more Brazilian airports than its nearest rival, are the strongest signal yet that Amazon is lining up distribution to sell products directly to consumers throughout the country.

It also shows that the U.S. e-commerce company is serious about overcoming the nation’s notorious logistical challenges, including shoddy roads, security problems and a national territory greater than the continental United States.

Representatives for Azul declined to comment on the talks.

Amazon said it did not comment on “rumors or speculation.”

The Seattle-based online retailer has so far waded slowly into Brazil’s highly competitive e-commerce market, starting with e-book sales in 2012, adding physical books two years later and offering third-party sales of electronics in October.

E-commerce accounts for around 5 percent of Brazil’s roughly $300 billion retail market, about half its share in the United States. Yet Brazil’s online sales have doubled in four years and are expected to grow at a double-digit pace in coming years.

Currently, Amazon relies on third-party vendors to ship their own goods sold on its Brazilian website, but that appears to be changing.

In February, Reuters reported that Amazon was looking to lease a 50,000-square-meter warehouse just outside Sao Paulo, in a sign the retailer may bring storage and distribution in-house.

In March, Reuters reported that the company met with an array of manufacturers in Sao Paulo to discuss plans to stock and sell products directly.

Both developments drove down shares in Brazilian e-commerce competitors, such as Magazine Luiza SA (MGLU3.SA) and B2W Companhia Digital SA (BTOW3.SA). MercadoLibre Inc (MELI.O) has also fought Amazon tooth-and-nail in Mexico and Brazil.

By partnering with Azul, Amazon would immediately gain access to a network of more than 100 airports in Brazil, implying its ambitions go far beyond metropolitan Sao Paulo.

Azul has built up an 18 percent share of Brazil’s domestic air travel market over the past decade by flying regional jets and turboprop planes into second- and third-tier cities underserved by other carriers.

Azul’s cargo unit, Azul Cargo Express, takes advantage of excess cargo capacity in its passenger flights to offer rapid delivery to locations ranging from far-flung Amazonian outposts to Brazil’s major metropolitan centers.

The company offers shipping to more than 3,200 municipalities, as well as a specialized e-commerce service known as Azul Cargo E-Commerce. Azul’s hub, Viracopos International Airport, is about a 45-minute drive from the warehouse Amazon has been eyeing northwest of Sao Paulo.

The sources, who requested anonymity as the negotiations are confidential, did not specify how advanced conversations were, nor did they say if the retailer has also engaged Azul’s rivals.

Competing airlines with Brazilian cargo operations include Latam Airlines Group SA LTM.SN and Gol Linhas Aereas Inteligentes SA (GOLL4.SA). Neither responded immediately to requests for comment.

Last week, Azul announced it has leased two Boeing Co (BA.N) freight aircraft “to support the rapid growth of its cargo business unit.”

Reporting by Gram Slattery; Additional reporting by Flavia Bohone, Gabriela Mello, and Tatiana Bautzer in Sao Paulo and Felipe Iturrieta in Santiago; Editing by Brad Haynes and Cynthia Osterman

Mapping startup Mapbox hires head of product from Google

SAN FRANCISCO (Reuters) – Digital maps startup Mapbox Inc told Reuters on Tuesday that it has hired a lead product manager from the local search unit of Alphabet Inc’s Google to serve as head of product for maps and search.

Andrew Chen is charged with helping engineers at Mapbox, which licenses maps to software developers, better understand consumer desires, Mapbox Chief Executive Officer Eric Gundersen said.

“Any engineering-heavy company is constantly wanting the perspective of the users, and we’re looking to people who can help illustrate how maps are being used,” Gundersen said.

Mapbox competes with Google, OpenStreetMap and other firms to license maps to software makers. The data have become a bedrock of thousands of mobile apps, with Mapbox customers including social media company Snap Inc, food delivery service DoorDash and credit card giant MasterCard Inc.

Mapbox has less live traffic information and fewer details on “social” places such as bars than Google, Gundersen said.

But Mapbox’s system, an amalgamation of 130 data sources, is appealing to some developers because it allows greater customization, Chen said. Google’s emphasis remains on its consumer Maps app, he said, while Mapbox exclusively focuses on developer tools.

Google did not respond to a request for comment.

Chen said he spent more than five years at Google overseeing development of Google Maps features including estimated wait times at restaurants and a question-and-answer system for users to learn more about businesses.

SoftBank Vision Fund led a $164 million financing of Mapbox in October.

Reporting by Paresh Dave; Editing by Leslie Adler