Google says it wants to comply with Maryland's new election law that requires anybody paying for political ads to disclose their identity and how much they spent.

The trouble is that Google's systems aren't set up yet to gather or report that information before the law goes into effect on Sunday, the Baltimore Sun reported on Friday. Because of that, Google has stopped selling ads connected to Maryland's state and local elections.

"Starting June 29th, we will stop accepting state and local election ads in Maryland while we assess the new election ads disclosure law and ensure our systems are built to comply with its new requirements," a Google spokesperson said in a statement.

Maryland's general assembly passed the law to help prevent election tampering. This is part of the backlash to allegations that the Russian government bought ads on social media and internet services to sway the last US presidential election.

Advertisement

Russian operatives are accused of paying tens of thousands of dollars to run ads on some of Google's ad platforms, according to The Washington Post story in October.

The irony is that Maryland's election law doesn't affect elections for federal posts, such as president or US senator.

Google told the Sun that the company agrees that there should be more transparency in political advertising, but that how the law will be interpreted remains unclear.

Domo, a Utah-based analytics startup, saw its shares pop 30% in its long-awaited IPO on Thursday.

It's a welcome bit of relief for a company that has been under scrutiny because of its troubled financials: Domo's IPO prospectus revealed that the company had a mere $72 million in the bank, exhausted its lines of credit, and run up a deficit of $803.3 million. Worse, the prospectus warned that if Domo didn't raise more capital by August, it could face a restructuring.

Even with the stock's pop on Friday, Domo's market capitalization of about $681 million is well below its $2.2 billion private market valuation, reflecting Wall Street's wariness of the company.

But finances aside, there may be another reason for Domo investors to be concerned, as insiders tell us that some women at the company have expressed unease with Domo's corporate culture and with the way women are treated in the workplace.

Advertisement

Several insiders connected to the company that Business Insider spoke to pointed the finger at CEO Josh James, who has majority control over the company, for creating an environment that they say makes Domo an undesirable place for women to work. Those insiders, who asked not to be named discussing internal company matters, related several incidents that they said left some employees feeling alienated in an organization where the executive ranks are predominantly white males.

A Domo spokesperson told Business Insider that James is very committed to workplace diversity. "Anyone who knows Josh knows he cares deeply about creating a workplace where the best talent - regardless of their gender, race, religion, sexual orientation, age, or any other factor, feels welcome," the spokesperson said. "The implication that a story could portray Josh as insensitive to diversity is not only offensive, but also so off the mark."

James could not immediately be reached for comment.

A shopping story that didn't go over well

Several sources cited an all-hands meeting at the end of 2017 when James was discussing the ParityPledge, a program asking CEOs to pledge to interview at least one woman for any open role at the VP level or higher.

As part of the discussion, Domo insiders say, James told a story about a trip to Jacksonville, Florida, with his family. We're told that James, who is white, said he and his family were shopping at a Nordstrom department store when he suddenly became aware that they were the only shoppers who weren't black.

Advertisement

The experience, James allegedly told his staff, taught him what's it's like to be an outsider — and our sources say that he then likened it to the disorientation that a woman might feel on a management team comprised mainly of men.

While employees generally seemed to believe that James meant well in making his original comments, numerous employees felt the comments were dismissive of women and people of color, and gave the impression that the company was out of touch on important diversity issues.

"In the meeting, Josh was giving background on experiences he had in his life -- like being in a store outside of Utah, a state that is pretty homogeneous, where he was the minority. It was one of those moments that, as a business leader, made him pay attention to the topic of diversity in the workplace," the Domo spokesperson said. The company also points to blog entries that James has written on the importance of inclusion, and the ParityPledge in particular.

Still, James' presentation resulted in a flurry of complaints within the company and James ultimately apologized at a second all-hands meeting, the company confirms.

"Josh did indeed call a second meeting right after realizing his good intentions were misinterpreted. It was important enough for him to apologize for not communicating well, and doing what he could to make sure his intentions were understood," says a Domo spokesperson.

The Mykonos party test

Mykonos meanmachine77/Shutterstock James is also said to have told employees that he builds relationships with people he would feel comfortable bringing with him to party on Mykonos, the Greek island. He then noted that his wife would feel uncomfortable if he brought a woman on such a trip, making it more difficult for him to build relationships with female executives, we're told.

The comments appear to have been part of an honest discussion of institutional bias, specifically at Domo and more broadly, in the industry, but some employees were nonetheless disturbed.

Indeed, Business Insider has heard from several people close to the company that James has a habit of keeping his friends close. And the Domo executive team is predominantly white and male.

And some employees feel that it's hard to advance at Domo without meeting that profile, we're told. That said, the management team is not entirely male: Catherine Wong serves as Domo Executive VP of Product, making her a direct report to James.

The Domo spokesperson said that James' Mykonos story had been misunderstood. "The point he was trying to make with the stories he told was that people tend to recruit who they know. If you don't typically socialize with women, you don't have a good network of women you can tap into. Trust is built when you have an established relationship with someone," the spokesperson said.

Separately, Business Insider has learned that Domo Chief Operating Officer Matt Belkin departed the company shortly before the company filed to go public. He had been with the company since 2014, making the timing of his departure unusual.

James is well-known in the tech industry for founding Omniture, a data analytics startup which was sold to Adobe for $1.8 billion in 2009. Domo, founded in 2010, came out of stealth mode in 2015 with a $1 billion valuation and a lot of hype.

Advertisement

In 2016, Domo insiders told Business Insider that James was a charismatic leader who is nonetheless prone to exaggeration, with a history of at times, overpromising and underdelivering. People close to the company tell us that this is still the case, with James an expert at motivating employees and marketing, but less reliable when it comes to results.

Now that Domo has begun trading on the public markets, under the ticker symbol "DOMO," we'll get to see if James' next act is as successful as his last.

Back when YouTube and Google Search helped people find pirated films and TV shows and generally helped to lay waste to Hollywood's home-video market, it was hard to find anyone in the film or TV industries who would say anything good about the internet company.

Relations are warmer now. So much so that Google announced plans this week to launch a new cloud region in Los Angeles, specifically to sign up and service the thousands of production companies, animation houses and film studios.

Modern film and TV production requires the storage and handling of huge amounts of data, a job ideally suited for the brawny datacenters that Google, Amazon and Microsoft all operate.

But according to one studio executive that Business Insider spoke to, that's not why Google is bringing its cloud to Hollywood.

Netflix CEO Reed Hastings Elizabeth Fuentes/Getty The real reason is Netflix. The world's most popular subscription streaming-video service has turned home entertainment on its head and has been in the cloud since 2012.

Now, all the other major media and entertainment companies, like Disney and Comcast, want to build their own version of Netflix. And to do that they need cloud computing — not for video production, but for video distribution.

"All these traditional media companies want to be (an on-demand service) like Netflix ," said the studio executive, who wished to remain anonymous. "The amount of money Netflix spends on cloud services is enormous."

It's a pot of gold tempting enough to lure Google into traditionally hostile territory.

Netflix is the best cloud advertisement that Amazon, Microsoft and Google have in Hollywood.

Disney Before Netflix, most of the big studios hired technologists and tried to keep everything in house. We once toured the tech area at Warner Bros. Studios and saw rows and rows of servers.

"That doesn't make a lot of sense anymore," the studio executive said. "The cloud is cheaper, faster, you get all kinds of storage. It's more secure and you no longer have the burden of maintaining security standards...I don't think Sony would have been hacked had they been in the cloud."

That's a reference to the famous 2014 incident in which Sony Pictures servers were infiltrated and sensitive material, including an unreleased feature film and personal emails belonging to major film stars, were published. The hack cost several top execs at the studio their jobs.

So, the entertainment industry is ready to move to the cloud but which of the top three cloud players will win?

If the Netflix-wannabes wish to follow that company's lead, they'll sign Amazon, Netflix's cloud provider.

Microsoft has enjoyed a good relationship with the film studios for decades and has operated a cloud region in Los Angeles for a while, according to TechCrunch.

But Google sees an opportunity to make inroads, despite the tense history it's had with the entertainment industry.

And according to the entrainment industry insider that BI spoke to, Google may be right. "Prior relationships don't matter," the source said. "What matters is cost and security. Microsoft was a great partner but if they don't meet the cost and security offers of the others, then they won't get the business. Yes, Google was considered evil but it won't matter if they offer the best cloud service."

Business may slow in summer, but the IPO boom powers on.

Tenable, a Maryland-based cybersecurity company, officially filed to go public on Friday. The company plans to list on the NASDAQ under the ticker "TENB."

Tenable describes itself as a "cyber exposure" company, and sells a Software-as-a-Service product to detect security vulnerabilities, as well as a platform to enable chief information security officers to "manage and measure risk."

Though founded in 2002, the company gained notoriety in 2015 after raising a mega-sized $250 million series B from investors at Insight Venture Partners and Accel. That round valued the company at $550 million, according to PitchBook, and at the time was considered to be the largest-ever cybersecurity funding round to date.

Advertisement

Tenable president and CEO Amit Yoran was previously on the executive team at Symantec and RSA. He also has a background doing security work for the US government.

Like many modern tech IPO candidates, Tenable is unprofitable. The company saw $187.7 million in revenue in 2017, but reported $41 million in losses. The company has a cumulative deficit of $408.5 million, according to the S-1.

But the company is growing. Tenable's revenue grew 51% from 2016 to 2017, which the company attributes to subscription growth.

While scooter startups Bird and Lime are courting top Silicon Valley investors, Spin is looking to raise money in a different way: making its own cryptocurrency.

The news was first reported on Friday by TechCrunch and confirmed to Business Insider by a person close to the company.

Spin is raising $125 million via a Secure Token Offering, although the company hasn't officially listed its tokens for sale on an exchange yet. The person told Business Insider that it may list on muliple cryptocurrency exchanges, but it is waiting for more mainstream exchanges like Coinbase to support STOs.

During an STO, a new idea that is widely seen as a safer version of an Initial Coin Offering, investors will be able to buy Spin's tokens — a unit of cryptocurrency. Rather than getting a liquid asset, though, would-be purchasers of the Spin STO would be buying equity in Spin. We hear that, indeed, a portion of Spin's tokens will be backed by equity in the company.

Advertisement

The report comes a day after rival startup Bird announced $300 million funding round from some of Silicon Valley's preeminent venture firms, valuing the company at $2 billion. Investors see e-scooter companies as the next Uber and Lyft, and are clamoring to get in on the ground floor on the business.

To date, Spin has raised $8 million in a series A round led by Grishin Robotics. The company has launched in 18 cities and a number of college campuses. And while Bird and Lime have had testy histories with city officials — who claim the scooters descended on cities with little-to-notice — Spin has been relatively quiet after it was first issued a cease and desist letter in San Francisco.

Electric scooters work by allowing users to reserve a nearby scooter via a smartphone app, ride around on it for a small fee, and, at the end of the journey, leave the scooter anywhere to be claimed by the next rider.

Oracle has confused Wall Street.

The enterprise tech giant recently restated its revenue for its most recent fiscal year and nearly a half billion seemingly vanished from the topline.

The missing revenue is not really lost, it's just a result of new accounting rules that Oracle implemented. But the change appears to have caused confusion on Wall Street, wreaking havoc on the analyst research models that help shape investors' expectations for Oracle's business.

Cowen analyst J. Derrick Wood chopped $1 off of his price target for Oracle and lowered his estimates on Friday. He expects others on Wall Street to "follow suit."

Advertisement

Because of new guidelines, known as ASC 606, Oracle's restated revenue for fiscal year 2018 were lower by $457 million, around 1% down from what it reported using the old standards. Oracle's EPS was also lower by $0.08, or 2.5%.

Oracle announced its results on June 19, but then restated its revenue on June 20 using the new 606 accounting rules.

ASC 606 primarily affects Oracle's ability to recognize revenue for licenses over a long period of time. Oracle now has to record the revenue for on-premise software licenses all at once, during the quarter that the software was actually delivered to the customer. This is even the case if a company pays off its license in installments.

The total amount of revenue Oracle sees doesn't change, So while the changes impact Oracle's run rate, they won't have much of an impact on its overall cash flow, Wood told Business Insider.

Evercore analyst Kirk Materne said "there were no major surprises" in the restated figures, but also tweaked his estimates downward for fiscal year 2019 to reflect the new numbers. Evercore maintained it's target price of $53.

ASC 606 went into effect for all companies in the US for the fiscal year starting after December 15, 2017. Oracle will use ASC 606 for all quarters moving forward, but it wasn't legally required to issue these numbers during its most recent earnings.

Advertisement

The new standards change how companies report on-going and subscription revenues. This caused a small problem for investors, who base their revenue and earnings estimates, as well as price targets, on models that assume that things stay the same from quarter-to-quarter.

Oracle isn't the only company to lose or gain millions in revenue thanks to the new account standard.

At Tesla, for example, the change added $299 million onto its sales revenue in the first quarter. It looks good, but it's purely an accounting change — it doesn't actually say anything about the company's growth and in theory shouldn't make the company any more valuable.

Oracle's stock remained fairly stable on Friday, though it has yet to recover from a big self-off caused by sweeping changes to the way it reports out cloud revenue. The stock fell 7.5% following earnings on June 19, and remains down around 5.3% from where it opened before earnings.

By numerous measures — and in particular gross domestic product taking into account relative prices of products — China has outpaced the US economically.

A top Chinese business professor who has spent considerable time in both countries believes that a major cultural difference between the countries may be fueling China's economic rise, he told Business Insider.

Dr. Zhang Weining, a professor at Cheung Kong Graduate School of Business, grew up in China, earned his MBA at Western Kentucky University in Bowling Green, Kentucky, and his PhD at the University of Texas in Dallas.

Zhang, who splits his time between the US and China, said that when he visits villages in rural China, the conversations he hears between villagers, farmers, and other people is about technology, business models, and artificial intelligence.

Advertisement

Meanwhile, when Zhang returns to his former homes in Kentucky or Texas, the dominant conversations both among academic circles and regular people is about the governor, the legislature, or hot button political topics of the day like gun control or abortion. The situation has only exacerbated in the Trump era.

"[Chinese people] only care about this: Who can be richer? What are the ways to get rich legally?," Zhang said. "We argue more about business models and new technology."

Zhang believes the American obsession with politics sucks up energy and time that Americans could spend working on new technologies or developing new businesses.

"When you are only arguing about politics, it does not help your life at all," Zhang said. "No one is paying you for that."

Zhang recognizes that political discussions happen in th US because so much of the culture is based around preserving personal freedom. But, he said, Chinese people are currently focused on a different kind of freedom: the freedom for economic development.

Advertisement

By way of example, Zhang points to the country's 1.2 million couriers, or kuaidi, who zip around Chinese cities delivering packages, food, and just about every other convenience you can imagine. Most work 12-14 hours a day, six days a week.

"It's almost unimaginable in the US," said Zhang.

According to data from the World Bank, 68% of China's female population aged 15 and above participate in the labour force, compared to 58% in the United States. Aly Song/Reuters

Journalists from the US often come to China and interview the couriers, many of whom are university graduates, about their labor rights. Many couriers lack the rights provided by western labor laws like overtime pay, workers' compensation benefits, or insurance in case of accidents.

But what those journalists fail to understand, Zhang went on, is that the couriers want the work, regardless of the long hours and the danger. Couriers can make as much as $2,000 a month after taxes — enough money in China to feed a large family and save for the future.

Advertisement

The obsession with economic advancement isn't limited to those in the service industry, Zhang said. It goes up the economic ladder. Middle class people in white collar jobs like tech and finance work crazy hours as well, either to chase their dreams or chase the status and respect of others, according to Zhang.

"Go visit Tencent's offices at 2 a.m. in the morning and see how many lights are still on and how many employees are still coming out," said Zhang. "All the young people in this country work overtime ... they think if everybody else is going to work eight hours, I'll work 10 hours. And if everyone else is going to work 10 hours, I'll work 12."

Take all of that energy and drive together, according to Zhang, and you have the answer as to why China is developing so much faster than the US right now.

At the beginning of the year, consultancy Quinlan & Associates made a call that the bitcoin markets would tank in 2018.

And so, far the firm's predication has been spot on.

Quinlan & Associates put out a report in early January titled "Fool's Gold: Unearthing The World of Cryptocurrency" in which they outline a case for the crypto markets dropping in value to a total $223 billion in 2018. At last check, the market was down to $233 billion, according to CoinMarketCap data.

Quinlan & Associates At the same time Quinlan made the call, other market observers were calling for bitcoin to hit $25,000 to $40,000 in 2018.

As for bitcoin, the consultancy expects crypto to dive even lower from its current price just below $5,900 to $1,800 by December.

"'Despite fulfilling most of the characteristics of a traditional fiat currency, cryptocurrencies are largely being utilized as speculative investment assets, leading to considerable volatility in their value," said Benjamin Quinlan, chief executive and managing partner, in a statement shared with Business Insider at the time of the January report.

Despite the bearish call on bitcoin, the firm expects the cryptocurrency market to rebound — driven by those cryptos with a clear utility — and reach $407 billion by 2020.

Teens told Business Insider that these are their most-used slang words.

Here's what they mean.

Lit: When something is very exciting or energetic — like a "lit" party.

Bet: "Bet" is usually a one-word agreement — sort of like "I bet you do." You can replace "Ok" with "bet."

Shook: Shocked or surprised. Can't believe what you're seeing.

Yeet: Yeet was a dance that went viral on Vine in 2014. Now it can be used as an expression of excitement or a verb to describe someone throwing something over a long distance.

Key: The more succinct sibling of "major key," key indicates something important or vital to one's success.

Slay: Succeeded in something amazing.

Astronauts on the International Space Station (ISS) are getting ready to make room for 20 new rodent roommates.

On Friday morning, a SpaceX Dragon spaceship blasted off from Florida carrying the mice. The rodent crew is expected to arrive at the ISS on Monday. Their record-breaking journey — this is the longest mice will be off the planet — is part of a study on how Earth-dwellers' guts and sleep schedules respond to the stress of being in space.

The NASA research is led by neurobiologists Fred Turek and Martha Vitaterna from Northwestern University. The plan is to leave 10 of the mice in space for three months (those are the record breakers), while 10 will stay at the station for 30 days.

Shutterstock

"Ninety days might not seem like a long time, but for a mouse, it is," Vitaterna told Business Insider, explaining that mice respond to the effects of being in space more quickly than humans do.

Keeping a group of identical mouse siblings on the ground for comparison will allow scientists to observe how being in space changes a mouse's physiology and behaviors. Specifically. the scientists hope to learn more about how the mouse microbiome is affected by space travel and life on the ISS.

What the mice will do in space: sleep, eat, poop

The animals are not exactly twins — they're actually a much bigger identical troupe.

"I don't know what the word for 10 genetically identical siblings is," Vitaterna said. "We have a decuplet of one family and a decuplet of another family that are going to space."

NASA's mouse habitat. NASA

The 20 mice on Earth will live inside a NASA simulator that will mimic the conditions the mice are subject to on the ISS (except those on Earth will be in gravity's pull, of course). There will also be other mouse control groups on the ground that don't live in the ISS simulator or eat the controlled space diet.

Every two weeks, astronauts on the ISS and scientists on Earth will take stool samples from all of the mice to compare their excrement. They'll also keep tabs on how much the bodies of the mice in space are changing relative to their peers on Earth, using a special mass-measurement device that doesn't rely on gravity.

The researchers will watch videos of the mice to track changes in their sleep cycle, and monitor the animals' bone density, since often the bones and muscles of people (and mice) become much weaker in space.

Studying twins helps scientists pinpoint what space does to the body

This isn't the first time that NASA has compared a twin on the ground to a sibling in space.

Scott Kelly, left, and his identical twin brother Mark Kelly. Getty Images/Bill Ingalls/NASA

When astronaut Scott Kelly spent a year in space, scientists kept close tabs on the changes happening inside his body and compared that information to his identical brother Mark, who was back on Earth.

The mouse study is similar, but superior in one key way, according to Vitaterna.

"The human twin study was one pair of twins, so the mouse study is statistically better powered," she said, adding that the Kelly brothers' results left unanswered questions that the mice could help solve.

For example, Scott Kelly's gut bacteria changed, but the scientists aren't sure how much of that was just due to differences in diet. So the mice will have much stricter laboratory controls over what they eat than the men did.

The scientists hope that any new information about how the mouse gut changes in space will inform future treatments they give astronauts or even people on Earth.

"If we understand, 'oh, this intervention helps protect the microbiome, which in turn helps protect the immune system and metabolism,' that's useful information — not just for space," Vitaterna said. "It's not like stress is just a space flight thing, people here have stress as well."

For more than a decade, Eddy Lu tried to find the next big thing: 99-cent smartphone apps, golf apparel, Japanese desserts. They all flopped, but he wasn't headed back to the Wall Street world he left.

Then he got into high-end sneakers with an online marketplace called GOAT— as in "Greatest of All Time," as they say in sports and rap. And in 2015, on Black Friday, GOAT blew up. It couldn't keep up, and thousands of orders went unfilled. Lu felt sick about it, but he also knew he finally had something worth fighting for.

He told us what that was like, in an episode of Business Insider's podcast, "Success! how I Did It": "We responded to every single customer-service message. I think there were about 4,500 that day. But at that point it was better to be hated than unknown."

Advertisement

Today GOAT is the world's largest sneaker-resale market. It has over $100 million in funding, 7 million users, more than 300 employees, and 400,000 pairs for sale. It raised its latest round of funding at a valuation of $250 million, according to Recode. Earlier this year, it merged with the retail store Flight Club, an iconic reseller in the sneakerhead world, and one that can provide GOAT with the international reach it needs to scale.

Lu's cofounder, Daishin Sugano, has been with him for every failed startup. And Lu says it's thanks to him — and a pair of counterfeit sneakers — that they finally hit the ground running.

Listen to the full episode here:

Subscribe to "Success! How I Did It" on Apple Podcasts, Google Play, or your favorite podcast app. Check out previous episodes with:

Transcript edited for clarity.

Advertisement

Eddy Lu: My cofounder, he's a huge sneaker enthusiast. He started buying sneakers when his dad bought him his first pair of Jordans, the Jordan 5 Grapes, back in the day.

Rich Feloni: Yeah, with the purple in them.

Lu: Yeah. And 23 years later, because Michael Jordan's number is 23, they rereleased the Jordan 5 Grapes. He went on eBay, bought a pair, and he got them, and they just didn't feel right. They turned out to be fake. He tried to ask the seller for his money back; he tried to contact eBay. It's just an onerous process. We were just, like, "We could build a really great app to help clean up this market." So we built GOAT.

Dropping everything to build anything

Feloni: At what point in your life did you realize you wanted to be an entrepreneur?

Lu: After my aspiring basketball career ended. The Lakers didn't draft me out of college. It's not like I had a network of lemonade stands when I was a kid or anything like that.

Advertisement

Feloni: So you're not falling into that mythology there, no?

Lu: For me, I always liked building things, and that's why I did computer science. I graduated in 2003 when CS wasn't in favor. It was after the dot-com bust, and it was just because I liked building things that I wanted to do computer science. I went into the corporate life. I was a consultant. I was an analyst at Lehman Brothers when that still existed.

Feloni: Why did you get into finance if you got a computer-science degree?

Lu: I never wanted to do hardcore programming. I did like building businesses, and thinking about new problems. But going into corporate life, I realized I'm not a good employee, to be honest. Every night, and this is back to when I worked at Lehman, I became roommates with Daishin. Every night after work we would just talk about what we could build on the side, what we could do, how to create a new business. It wasn't a startup back then, it was just, "Let's create a new business while we're young."

Feloni: Why? What do you think drove you to say that?

Lu and his cofounder Daishin Sugano have been building businesses together since 2007. GOAT Lu: I don't know. Besides the fact that we always wanted more, for some reason. I left my job in consulting to do banking because I was just kind of bored. It just wasn't stimulating, so I thought doing a banking job would be a lot more rewarding and challenging. There was a lot more work, but it still wasn't challenging to me and us. We just kept talking about other ideas on the side. Working corporate jobs like that, demanding corporate jobs, it's really hard to try to do another business on the side. Daishin and I quit cold turkey on the same day in 2007. We were just, like, "Let's just quit and figure it out." Much to the chagrin of our parents. My dad was very happy I had a Lehman Brothers job. But we just didn't feel like it was right. We wanted to try something while we were young, so we just quit and started to do stuff. Thankfully Daishin is a designer; I was a developer. That was when the iPhone just came out, so we built a bunch of those 99-cent apps.

Feloni: Like games and stuff?

Lu: Games. Little apps. Little to-do apps. All those types of things to just start our startup journey. That's where we started, and we just never looked back, thankfully. It's been a long, painful, meandering road to GOAT.

Feloni: Do you think that you and Daishin would have quit your jobs cold turkey had you guys not had these conversations? Would you have done it on your own if he had not been in your life?

Lu: Having a cofounder you can trust is so important. You hear it all the time; it's really hard to start a startup by yourself. I've seen it through the years, and believe me, Daishin and I have worked through our issues. We're an old, married couple now, but in the beginning, we had physical fights, we've thrown each other to the ground, there was this one time at a restaurant, I remember. We had a disagreement about some business term, and we were yelling at each other at the restaurant — people were looking at us. He got up and walked away, and I kept on barking at him, walking out the door. We totally forgot to pay. We just walked out the door all mad at each other. But we knew that, just right after that, we were just like, "OK, let's just focus again. Let's just get to it." And that's what's really built the company. Resilience is another one of our core values, and it's because we were able to bounce back so quickly from setbacks. Thankfully, since we've been together, and worked through all those issues for so long, now that we're doing GOAT it's just so much easier. We know our lanes, we know what each other's good at, and we just can execute.

Feloni: Yeah, and in the early years, when you were learning ... you had a bunch of odd businesses like golf apparel, those phone apps, high-end tea, the Japanese cream puff things. What were you trying to accomplish? Were you just throwing things at the wall and seeing what stuck?

Lu: What's funny about the cream-puff franchise is that we were building startups on the side, iPhone apps, stuff like that. We were just, like, "Hey, this is a cool, single product. Easy to do concept." Because it's just a single product cream-puff concept.

Advertisement

Feloni: When was this?

Lu: This was right about '07, '08, when we decided to do these things. We were just, like, "This could be great passive income, because we could just put some money in, hire some good managers, and they can operate the stores, and we can have passive income while we build our startup dream." Nothing is ever passive, if you know about the food-service industry. It quickly went from a passive income to something that was pretty hands-on. Especially during the '08 downturn when things were going down. We operated the store a lot; we worked the store. A lot of friends are always saying, "Oh, I would love to own a coffee shop or a restaurant someday." For me it's just, like, no, don't ever do that, because the chance for success is so hard, we quickly learned. Thankfully, we did it while we were young. But those things scale linearly. There's no exponential growth, so it's like you just have to put in capital, you might make a little bit of money, chances are you won't. We learned that tough lesson for those few years because we were in it, it was not passive, we were spending probably 80% of our time doing that, and 20% working on a startup. After a few years, we sold some, we dissolved some, and we just moved on because we just had to cut our losses. It was a great learning lesson while we were young.

Feloni: Why do you think you have that resilience?

Lu: Me, personally? I'm pretty stubborn, I guess. Yeah, I don't know. I was pretty independent growing up. My parents didn't pay for college, they didn't pay for my car; I just kind of had to figure things out when I was growing up. We had a middle-class upbringing. I just had to figure things out and couldn't just fall back on anyone. I think just because of that, I've been pretty stubborn and focused on really making sure things work.

Feloni: Was there ever a moment when you questioned what you were doing and wondered, "Do I need to go back to an office job?"

Advertisement

Lu: How many thousands of moments are we talking about? When we were doing the cream-puff franchise, and it was '09 when the economy wasn't good, and we were in debt. Every kind of debt possible. I was in credit-card debt, in debt to my ex-girlfriend, my girlfriend at the time. It was a lot of pain. I would wake up in the middle of the night with just pangs of guilt, and I was scared, yeah. I don't think Daishin and I ever thought we ... To be honest, going back to a big corporate job just was probably worse than that. I dreaded every Sunday afternoon when I was working at a big corporate job. I never felt that ever since we started doing our whole entrepreneurship journey. I just think it was not going be in the cards. I think we were just foolish and stupid, but we just thought we would just figure it out.

Getting to GOAT

Feloni: Before you got to GOAT, when you were building GrubWithUs, you raised $7 million for that, right?

Lu: Yes.

Feloni: By the time that you pivoted to GOAT, didn't you have only a million dollars left?

Lu: Yeah. It was a fun journey. We had investors at that point, and we pivoted a couple of times. A few of our investors were antsy, they wanted us to get acqui-hired, they wanted us to return the money. We tried a few times and we didn't work. We did those acqui-hire meetings. We talked to different companies. But again, we just didn't want to be a middle manager at some random company. To be honest, Daishin will be the first person to tell you, we didn't try too hard when we had those acqui-hire conversations because we knew that we wanted to just keep going. At a certain point, we made a decision, and we told our board, "Hey, we have one last go. We're going to try something."

Advertisement

Feloni: So he pitched it first?

Lu: Daishin complained to me a lot about the fake Grape purchase that he had. We looked into the sneaker market, and we didn't know if it was a big enough opportunity at the time. The recent trend is a lot of kids, and especially males, care a lot more about fashion. They're buying street wear, they're buying sneakers. But back then, we were just like, "Oh, it's kind of a still, a smaller market." So we thought about the idea, we put it on the side, and our board member, Greg, at the time, he used to work at eBay. One day at a board meeting, he was just like, "Hey, do you guys know anything about sneakers?" We were like, "Yeah." And he said sneakers are one of the few categories that's growing. People don't collect baseball cards anymore, Magic cards, stamps, coins. But sneakers were a collectible that was growing. So we decided to look into it even further, in collaboration with Greg. We were just like, "Hey, we could build this and do something." That's how GOAT was born.

A GOAT employee inspects a pair of Adidas Yeezys to verify their authenticity before they can be sold in the marketplace. GOAT

Feloni: Was this your last shot?

Lu: I don't think it would've been the last shot. We would've figured out a way to keep going.

Advertisement

Feloni: Daishin started as a sneaker fan, but you didn't personally?

Lu: I've always liked sneakers, but I wasn't as crazy as Daishin, having 400 pairs, stuff like that. He definitely was the enthusiast.

Feloni: When you go into a space like this, where there are so many obsessive fans, when you're just starting out, just entering into it, how are you able to offer an authentic experience for people who take this culture so seriously if you were initially coming in as an outsider?

Lu: Daishin had all the product knowledge, so he's our head of product. He's really been driving it. But it was pretty painful in the beginning still. We launched in July 2015, publicly. There was a day in late September, it was about 6 p.m., we still didn't have a sale that whole day. I went in and bought a pair to tell the team, "Hey, guys. We got a sale." It definitely was not easy going. It's a two-sided marketplace. There's a lot of stuff that has to happen for you to be able to scale. We were just figuring out how to make an impact in this market. If you look at our site today, it looks like a retail-like experience, where you only see stock photos. It's a big deviation from the past sneaker marketplaces, especially places like eBay, where you see the seller photos and all these bad and crappy photos that they take. We decided to make it a retail-like experience, because we wanted people to trust GOAT as the single source of truth for authenticity. You don't have to trust the seller for authenticity. Actually, a lot of people in the sneaker market weren't fans of that. Big sneaker influencers in the industry emailed us and said, "Hey, not sure if this is the best way to go, because we really want see the pictures of these sneakers before we buy." We just had a point of view. We said, "No, this is how the future of the sneaker market's going to be, where you want to trust us so that there's as little friction as possible in the market." We went against some of our friends in the sneaker industry.

Feloni: It was a matter of surrounding yourself with the people in the community, but also knowing when to just stick to your own guns?

Advertisement

Lu: Yeah, and the inflection point happened Black Friday 2015. It was funny: Our head of marketing, Sen, it was a week before Black Friday, and he was just, like, "Hey, why don't we create a Black Friday promo?" And we're like, "Of course, just throw something up." We didn't think anything of it; it was just something else we were going to try for growth. We decided to discount all the hottest styles of the year; it was the first year of the Yeezy Turtle Dove, the Supreme 5s. But we said, "Hey, let's discount the 12 hottest styles of the year to retail prices." We put it out there, and the whole internet thought we had thousands and thousands of pairs. We just had sub-100 pairs, but we gained over 100,000 users because of the promo. Every single influential blog picked it up. Complex, Hypebeast, Highsnobiety. Our servers crashed every single day because we've never had scale before. This was the first time we've had scale. I was one of the back-end developers back then, and we never cached any pages, we never optimized queries. It was just such a painful week up until Black Friday. But on Black Friday, as you can imagine, it was so painful because 100,000 users tried to access our app. It just didn't work, and we got so much hate mail and hate Instagrams. I'll show you it later. A comment per second: "F--- you." "Screw this app." All this stuff, and it was a pretty traumatic experience, because we disappointed 100,000 people, when only a few dozen people got shoes. We had this whole apology tour. We responded to every single customer service message. I think there were about 4,500 that day. We just didn't know what happened. But at that point it was better to be hated than unknown. Even though it was so traumatic, I would've done it a thousand times over, because it was that inflection point in our business where people were upset, but they started to realize our value proposition. It's, "Hey, GOAT is this place where I don't have to worry about getting fakes because they authenticate my sneakers." We turned it from something that was bad into something that was good, because we started to educate them about the market, and us, and the industry. What's funny is that to this day we get some random messages that say, "I haven't forgotten about that Black Friday yet." But also we have a couple employees from that. One of our earliest customer-service managers, she participated in that event, and because of all that commotion, she was, like, "I can probably help these guys with their customer service." So she joined us. She's still with us today.

Feloni: Why do you think it is that the sneaker industry, the collectible styles, the more exotic ones, why do you think it's been so big in the last several years, 10 years even?

Lu: I just think when I was a kid, and you would go to a Foot Locker and say, "Hey, I want these Jordan 1s." And they'd be like, "Oh, sorry, we don't have your size, but we have these Pippins for you if you want them." It was just like, "Oh, I'm just gonna play basketball. OK, fine. Let me get these Pippins." This day and age, people crave individuality, and people know what they want. Today, if you walk into a retailer, and they don't have the exact thing that you want, you're going to turn away, you're going to look online, you're going to go somewhere else. I just think that, given that people crave individuality, they crave fashion, they want to be unique, they come to us because of that. You don't want to just go to the store and just get whatever they have left.

Feloni: Do you see it as a trend?

Lu: Yeah, I definitely think it's a growing trend, just because guys haven't cared about fashion for so long. There are a bunch of people, the sneaker enthusiast and the fashion enthusiast, who were the self-starters of that trend, first movers. Now guys are just more fashionable now. They care about what they wear, and it's going to be a trend that lasts a long time.

Advertisement

Feloni: You were the first to market with offering this kind of online marketplace for buyers and sellers, get shoes authenticated.

Lu: We weren't exactly the first to market. Flight Club, which has been around for 13 years, started as a brick-and-mortar consignment shop in New York, and they expanded to LA. They have a huge web presence as well, and they really pioneered this industry. Thankfully, we had the opportunity to merge GOAT and Flight Club together earlier this year, to really create the largest marketplace in the world. It's really from their knowledge and tutelage that GOAT even existed, because we saw that there was a demand for this category in this industry, in terms of resale sneakers. For us, we really looked up to them. I think we have a different vision than some of the other people. We are focusing on sneakers right now. Other companies have gone and said, "Handbags, watches, things like that." For us, sneakers first; let's build the best and most recognizable sneaker company. Let's build our brand. It's because when we did GrubWithUs, one lesson that we learned was that we tried to open so many cities at once. We opened in Chicago, Dallas, Austin, LA, New York, and we didn't even get one city right before we tried to expand into all these other cities. We kind of spread ourselves so thin that we just weren't able to execute anything well. For us, we've barely scratched the surface in terms of selling sneakers. We're still a small player in the sneaker space. Our ideal vision is to be the sneaker market for everyone. So it's not just people who are buying Yeezys, but it's people who just wanna buy that pair of runners or that pair of basketball shoes to wear. We want to service the whole market, and since we've barely scratched the surface, we want to focus on sneakers before we even think about going into other categories.

Resilience above all

Feloni: What do you think the biggest challenge of your career has been?

Lu: I think one of the biggest challenges was winding down all the cream-puff shops that we had. It was not fun. We honestly owed a bunch of money, even to the city and the state. Winding down those products, we had investors that we had to, unfortunately say, "Hey, we lost all your money." Yeah, it was just a big learning lesson into the types of businesses we wanted to create in the future. We never wanted to do something where we were restricted in terms of our vision because it was just much better to set our own path. I think, even though it was a really tough lesson, again, it's one of those things, I think, Daishin and I would've done over, even though it was our most challenging thing, because we learned so much from off-roading that franchise.

Feloni: How did you pull yourself out of that?

Advertisement

Lu: It took a long, long time, just slowly repaying people. I repaid that ex I was talking about over the years, and just repaid the state, repaid a bunch of those debts. It took a while to wind out, but thankfully, like I was saying, we were young. We were able to pull ourselves out of it. I'm so glad it wasn't one of those things where you retire and then you're like, "Hey, I want to open up a coffee shop." Then you put all money into it, and it doesn't work, and you have to go back to work because of it. So thankfully we were young and could afford to repay it.

Feloni: How do you personally define success?

Lu: For me, success is really just happiness and freedom. I think with success comes those, naturally. I think as long as you have the freedom to do what you want and you're enjoying every single day, that's pretty successful.

Feloni: Yeah. What's next for you?

Lu: People ask us this a lot, you know, "Oh, are you gonna sell your company?" "What are you gonna do?" Daishin and I know that starting a startup's really hard. Getting product-market fit is so difficult. We tried for so many years to do that. As long as we're having fun, as long as we're successful, we're going to keep going. It's not like I have a better idea. I don't have a better idea, I don't want to be a middle manager somewhere, so let's just run this company, run it well, be happy about it, enjoy every single day, and just like build a big business. And that's what's next.

Advertisement

Feloni: What advice would you give to people who want to have a career like yours?

Lu: Definitely be resilient. I mean, GOAT's had extreme success, thankfully, but it took a long time to get there, and it's really easy to give up. It's really easy to burn out being a startup founder. Thankfully Daishin and I like I was saying are pretty foolish and stupid and never gave up and just kept going, but it is … it's probably very unlikely you're going to get it right on the first time. Or the second time. Or the third time. I think, you know, for us and our team, we're just executors. We, for me, my belief is, let's try something, and if it doesn't work, we can always change. I mean, yeah, it's not heart surgery, so I'm always willing to try something as long as there's a good hypothesis around it. I'm not the type of person where you do a ton of research and then you create a 50-page deck to start something. It's really … and the people who thrive on our team, our executive team, are people who just kind of get stuff done. And so it's just, "Hey, we have a hypothesis — it's grounded in some data-driven thought, it's grounded in some gut feeling. Let's try it. If it doesn't work, let's try something else." And that's why we've never given up. Just because there's always something to try. So let's just keep going.

Feloni: It seems like you've already been in a situation where the worst-case scenario came true, right?

Lu: Yeah. And so it's only up from here.

Feloni: Well thank you so much, Eddy.

Advertisement

Lu: Thanks, Rich.

"Fortnite: Battle Royale" creators launched the game's first non-competitive mode this week, only to have the influx of players crash the entire game for several hours, forcing them to take the new mode offline indefinitely.

When Epic Games first announced they would be introducing "Playground Mode" early this week, fans and streamers went wild. Essentially serving as the game's practice arena, "Playground" would be a limited-time sandbox-style mode that allows players to take a break from the fast-paced battle-royale formula by roaming through the island with up to three of their friends, without any opponents to shoot at or hide from.

The mode was initially launched Wednesday morning with the game's regular weekly update, but was taken offline by developers at Epic Games shortly afterwards, along with all other Fortnite modes, when the influx of players caused a crash in the game's matchmaking software. While the usual servers were back up and running within a few hours, Playground mode has yet to be restored.

Representatives from the company described the unexpected mishap on Twitter and Reddit Thursday, saying, "So many of you rushed in to create and play that our matchmaking service fell over. We've since separated the Playground matchmaker from the one that affects the default modes and made large improvements to assist with the number of players."

Advertisement

Since taking the mode offline, Epic Games has been giving regular updates on their official Twitter account, a reddit thread, and their website, but have offered no prediction for when the mode will be brought back online.

On Friday, Epic posted a tweet saying the mode was still being tested, and that they would be releasing it "as soon as possible."

A handful of streamers and YouTubers were able to record their Playground sessions before the mode was taken offline, so at least we can all watch other people have fun while we wait.

Here's the official trailer for Playground Mode:

Avro Life Science co-founders Keean Sarani and Shak Lakhani

It's been a month since Europe passed tough new privacy rules, and Facebook isn't breaking a sweat.

Analysts are predicting that GDPR (General Data Protection Regulation), the EU's new rules on how companies can handle European data, won't have any meaningful impact on Facebook's bottom line — but it might mask bigger dangers on the horizon.

Brian Wieser, an analyst at Pivotal Research Group, warned in a recent research note that investors may be getting "too complacent" over the risks to Facebook. But there's a growing sentiment that Facebook isn't properly compliant with the law, and this could come back to bite them.

"We think investors are too complacent on this matter, and probably will become more so when 2Q18 results are reported with no apparent negative impact from GDPR," he wrote. "What we think will happen is that at some point in the months ahead, regulators in some markets will attempt to take actions which will illustrate the potential financial consequences of violations of the law."

Advertisement

"While those actions will likely take years to work their ways through the courts and probably won't cause Google or Facebook to change their behaviors, they probably will spook marketers who have generally taken too casual an approach to GDPR to date. This would be the sort of event that would cause a meaningful change in the trajectory of growth in spending within the region."

In other words: Regulators are likely going to try their luck against Facebook, and when that happens, expect marketers — the drivers of Facebook's revenues — to freak out. (Facebook has previously said it is fully compliant with GDPR.)

Deutsche Bank analysts have previously warned of similar risks. While privacy activists are already lining up to sue the likes of Facebook and Google over GDPR right now, in the investment bank's opinion the greater risk is national governments and regulators taking direct action.

"While we do not opine on the likelihood of these [activist] lawsuits being successful we believe the sheer volume of lawsuits could be cause for concern, and if nothing else, a distraction for FB and other tech companies alike (e.g. Google)," the analysts wrote. "We would be far more alarmed by regulators directly litigating" — citing a report on how UK regulator the ICO is growing its staff by 40% over three years to enforce the new legislation.

Companies found to violate GDPR don't just get a slap on the wrist — regulators have serious teeth to punish non-compliance. Organisations can be fined 4% of their global annual revenue (i.e. not just revenues generated in Europe) or €20 million ($24 million), whichever is higher.

"Fortnite: Battle Royale" creators have confirmed that something big is going to take place on the island on Saturday, June 30 at 1:30 p.m. EST, probably having to do with the huge missile embedded into the side of the mountain just northeast of Snobby Shores, which many fans theorize will change the game forever.

On Friday, an in-game message confirmed fan theories about a one-time-only event taking place in the game, and that players will have to be logged in at the scheduled time to see it happen.

This means that players who log on even moments after the event probably wouldn't be able to see it happen.

This will be the first time Epic Games will incorporate a real-time game event that couldn't be seen by players after its initial introduction. For comparison, as Patricia Hernandez of The Verge points out, the meteor shower that marked the end of Season 3 began days before the actual season ended and could be seen for weeks afterward, allowing many more fans to experience the cosmic event first-hand.

Advertisement

Ahead of the announcement, developers added several in-game hints and Easter eggs that have been hinting toward the launch. Naturally, players and fan-blogs were eager to piece together the clues.

The first hint was found inside the villain's lair. A hologram had appeared suddenly, above what looked like a control panel.

A few days later, a countdown started displaying on many of the TVs across the island, revealing that something was going to happen Saturday at exactly 1:30 p.m. EST. Here's one fan's recording of his countdown sighting:

Since then, an alarm has started blaring near the lair, seemingly confirming that a launch is imminent. Here's a video posted by a fan blog that captured the sound: