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AT&T (T) has caught the eye of many income-oriented investors throughout 2018 because of its share price weakness. We have been long the stock as long-term investors and have been pounding the table due to the market’s irrational treatment of this company for a year now. We said that AT&T is cheap at these levels in the low $ 30s and that we think the Time Warner Acquisition will be a major boon for the company long term. In this regard, I personally have recently added a position recently. With all of this in mind, we thought it made sense to update on AT&T, which is yielding 6.5% after its recent sell-off.
The fact that the AT&T’s dividend yield is now more than double the interest rate on the U.S. 30-year bond seems to point towards the fact that the market believes AT&T’s yield is unsustainable. In short, we disagree. In this piece, we will examine the income-oriented metrics surrounding AT&T’s yield, as well as the value proposition that the shares present to investors at today’s beaten down levels. To us, the market’s current treatment of AT&T is irrational. T’s relative strength index has fallen well into oversold territory, and this treatment of the stock may be creating an attractive long-term opportunity for income-oriented investors.
We feel compelled to write this bullish report about AT&T because this is a company that so many love to hate, and honestly, we don’t see why. To a certain extent, we think AT&T has been politicized, either subconsciously or not, because of the current administration’s attacks on CNN and AT&T’s new ownership of that network via Time Warner. In this day and age, it seems that everything is overly politicized in this country. We think it is too bad. But, regardless of whether or not you watch CNN and enjoy the content it provides, the network continues to be profitable, which is what matters most for AT&T. Instead of focusing on sentiment-driven things like political opinions, we think investors are much better served focusing on T’s cash flows, its underlying fundamentals, and the valuation that its shares present.
With this in mind, we want to highlight the fact that due to its current weakness, AT&T is now trading at valuations not seen since the trough of the Great Recession. As you can see on the F.A.S.T. Graph below, AT&T is currently trading for less than 8.8x Trailing 12 Months (‘TTM’) earnings, which is below the level that the stock hit in the spring of 2009!
Source: F.A.S.T. Graphs
We can’t rationalize that. Sure, AT&T has an enormous debt load which we will touch on, but as far as corporate outlook goes, we are not sure why the market is placing the same premium on shares today as it did when some believed that the modern financial system could potentially collapse.
On a forward looking basis, T is even cheaper. This is another reason that we believe the stock is being irrationally discounted. Analysts aren’t expecting to see a ton of EPS growth in 2019 and 2020, but they are expecting growth. This stock is being priced as if it’s going into a significant earnings recession, and that’s not the picture that the 30 Wall Street analysts who cover the company are painting. Right now, the average EPS estimate for 2019 is $ 3.61. The consensus EPS estimate for 2020 is $ 3.67. This means that the stock is trading for just 8.3x 2019 estimates and 8.17x 2020 estimates!
Recent Earnings Report
AT&T just reported its 3rd quarter results. During the earnings report and accompanying conference call, AT&T management reiterated full year EPS guidance of $ 3.50. That was slightly below the market’s expectation of $ 3.53; however, it still represents a strong, double-digit growth over 2017’s $ 3.05 figure. At this point, we think it is fair to note that not only did AT&T’s EPS increase by double digits during Q3, but sales, cash from operations, and free cash flows did as well. This $ 3.50 EPS guidance is well above the company’s $ 2.00 annual dividend, representing a payout ratio of 57% (or a dividend coverage of 174%).
Management also reiterated full year free cash flow (or FCF) guidance of ~$ 21b. This is well above the $ 17.6b of FCF that T generated in 2017. This figure is also well above T’s dividend responsibilities. In the recently reported Q3, T’s free cash flow dividend payout ratio was 56.1%. It’s worth mentioning that this ratio is lower than the 54.2% a year ago. That’s because T’s dividend related expenses growth outpaced free cash flow growth during the quarter. This large bump in both figures y/y is due to the Time Warner acquisition.
Continued Growth Moving Forward
Moving forward, we think it is likely that this trend reverses. We suspect that AT&T will increase its quarterly dividend by the normal $ 0.01/share when it announces the December dividend which should only increase the dividend expense in the low single digits while we think it’s possible that free cash flow growth at a mid-high single digit clip as AT&T further integrates Time Warner’s assets into its distribution model.
A Dividend Aristocrat
Speaking of T’s $ 0.01 dividend increase, now’s the time to mention that we’re talking about a dividend aristocrat here. AT&T has increased its dividend for 34 consecutive years! The nice thing about adding reliable dividend growth to a high-dividend yield is that investors not only receive the passive income that they’re looking for, but the purchasing power of that income stream is protected from inflation. This is why we prefer owning equities to bonds when looking for passive income. Sure, bonds offer more security, but they don’t offer protection from the erosion caused by inflation over time.
This long history of increases is yet another reason why we believe that AT&T’s dividend is safe. Shareholders, both institutional and retail, rely on AT&T for income. They have had for decades. The company knows this. And therefore, it knows well that any dividend cut would lose the faith that it has built up with the income-oriented market and cause significant damage to the stock price.
No CEO wants to be the one in charge when a multi-decade dividend growth streak is at hand. Sure, this is all speculative and isn’t back up by concrete figures, but we are fairly certain that AT&T CEO Randall Stephenson would do whatever it takes, even if that meant selling off assets, to preserve the sanctity of T’s illustrious dividend (in the Q3 conference call slide show, AT&T management notes that non-core asset sales and capital market considerations are potential options, should free cash flow not cover debt requirements, yet they made no mention of cutting the dividend).
A Closer Look at the Debt
Thankfully, the CEO shouldn’t have to come to those drastic measures as to cut the dividend. The primary threat that many see when it comes to T’s yield is the company’s enormous debt load. At the end of Q3, T reported a total debt load of $ 183.4 billion and a net debt load of $ 174.7 billion. This is a worrisome figure, without a doubt. However, roughly 90% of the company’s debt is fixed rate, meaning that the company is protected from rising rates. Furthermore, as management noted in the recent conference call, rising rates are actually somewhat bullish for the company (so long as they rise at a slow and steady rate) because rising rates decrease the company’s pension liability, which serves as a bit of a hedge against the trouble that rising rates may have on the non-fixed portion of T’s debt portfolio.
Right now, T’s net debt to pro forma adjusted EBIDTA ratio is 2.85x. The company plans to pay down debt in the short term to reduce this figure to 2.5x by the end of 2019. Management expressed confidence that they’re on schedule to do this in the recent quarterly report. They also noted that they plan on returning it to normal historical leverage ratios by 2022.
Looking at AT&T’s debt maturities, we see that the company will need to retire $ 73b of debt during the next 5 years. That seems like an enormous amount, but it’s important to realize that this company is on schedule to produce $ 21b in free cash flow in 2018, and by 2023, it’s possible for that figure to be nearly $ 30b/year.
So, as long as T’s free cash flow growth outpaces the company’s dividend growth, it seems very likely that T will be able to both continue to provide investors with a reliably growing dividend and reduce the debt on schedule. The company currently receives a BBB credit rating from Standard & Poor’s. While this isn’t exactly stellar, it is investment grade, which will help them to receive competitive rates should they have to roll over any maturities moving forward.
An Unjustified Selloff
If debt doesn’t appear to represent a dire threat, then what other reason might have caused the stock to sell off nearly 22% year to date?
In a large part, it appears to be because of the company’s exposure to the media business. AT&T has chosen to go down the path of integrating media/entertainment assets into its existing distribution system. Some (like us) view this as a bullish divergence by management. The content that T can provide with its distribution network differentiates it from its competition.
We’re living in a digital age now. The 5G revolution appears to be just around the corner which will totally disrupt the traditional media landscape. High quality streaming content will be easily accessible once the 5G infrastructure is put in place. This, alongside the rise of the “internet of things”, should create immense demand for data from the providers. We believe that this demand will commoditize data over time. As the world becomes more dependent on broadband, I can foresee a time when these providers will be regulated like the utilities are with electricity. In this situation, having a diversified revenue model and access to alternative growth markets will lead to valuation premiums. AT&T should have this with its media/entertainment content as well as the advertising platform that it is developing alongside the Time Warner assets.
In the short term, we suspect that T’s exposure to media could continue to act as a headwind. The markets hate uncertainty, and the cord cutting phenomena is creating quite a bit of that in the media landscape. However, once that process plays itself out, we suspect that the leaders left on the playing field will be those who have the strongest content portfolios. Historically, we’ve seen consolidation happen in the entertainment industry, and I don’t think that’s going to change. Scale is important when selling advertisements and, ultimately, the brands with the largest eyeball appeal will win out.
T is well on its way to becoming one of those successful giants with the Time Warner assets, which include CNN, TNT, TBS, the Warner Bros studios, and one of the most successful over the top platforms in existence: Home Box Office (‘HBO’). With Time Warner, AT&T now has exposure to a nice variety of programmed and live television, including extensive sports rights (especially with the NBA, which is probably the hottest sports league in America with regard to growth), and major film productions. Very few media names can compete with T’s portfolio at the moment, and we expect to see it continuing to build out that portfolio over time with excess cash flows (once debt is reduced to normal levels in the medium term).
Media names are very attractive now. This is in large part due to what we call the Wall-E thesis, which is based upon the future reality depicted in the Disney animated film where it got its namesake where humans essentially sit around all day, get fat, and consume content while robots take care of them. We don’t think it will necessarily play out exactly like that, but as 5G ushers in increased automation, human society will become ever more efficient. This should lead to more free time for individuals, and that should result in increased demand for entertaining content that will fill a lot of this void. We want to own the companies who will benefit from this trend. The vast majority of them are low yielders like Walt Disney (DIS) or Comcast (CMCSA), but for those seeking high-dividend opportunities, AT&T is one of the best options out there.
So, in conclusion, we think AT&T offers investors an intriguing opportunity in the high-yield space. The company is yielding 6.5%, offers a safe dividend with a 174% dividend coverage, a long history of dividend growth, showing that the company has a culture of generosity towards its shareholders, and a dirt cheap valuation. It’s rare that a single investment checks all of these boxes. The debt is the major downside to AT&T at the moment, but as discussed, management appears to have a plan to reduce it, and the company’s massive cash flows support this plan. Any equity investment comes with risk. No dividend in the market is inherently safe; they’re all at risk of being cut. However, companies like AT&T don’t become dividend aristocrats on accident and when looking for reliable high yield, we have been willing to bet a portion of our savings on this wonderful company. The recent pullback creates a unique entry point for conservative dividend investors; A high quality 6.5% yield selling on the cheap.
A note about diversification: To achieve an overall yield of 9%-10% and optimal level of diversification, we recommend a maximum allocation of 2%-3% of the portfolio to individual high-yield stocks like AT&T, and a maximum of 5% allocation to high-yield exchange traded products (such as ETFs, ETNs and CEFs). For investors who depend on the income, diversification usually results in more stable dividends, mitigates downside risk, and reduces the overall volatility of your portfolio.
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Disclosure: I am/we are long T.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
1. Take a second look at recruiting, hiring and training.
Micromanaging often has a root in bringing someone into the company who wasn’t the best fit in terms of culture or skills. That can cause the worker to clash with you or have trouble following protocols or policies, which in turn might make you feel like you have to watch the employee like a hawk. Review how you describe positions and what you require of your recruiters to see if you can’t find more ideal candidates. Once you’ve hired, make sure that workers have access to resources they need to learn and complete the tasks you expect.
2. Keep your schedule full.
The idea here isn’t to work yourself into the ground. Rather, it’s to keep yourself just busy enough that you’re less tempted to constantly watch over everyone. Try to schedule activities with others for accountability and network expansion, and get yourself out of the office when it’s practical.
3. Take a 360 picture of your life and do more self-care.
While some individuals naturally are a little more prone to micromanaging because of their personalities, you might also do it if you feel like there are other areas of your life that you can’t control. In this case, micromanaging employees can be a way of trying to find balance and cope with personal stress. Consider making some lifestyle changes that can put you back in the driver’s seat outside of the office, and talk with people you trust about what you find challenging.
4. Improve your own skills and creativity.
Micromanaging can be a way to live vicariously–if you don’t feel like you have specific competencies or capabilities, you might want to control the people who do so you can feel connected to those positive traits and take credit for their outcomes. Take classes or find other opportunities to affirm your own talents. Always ask yourself whether your requirements satisfy you or whether they satisfy the interests of the business.
5. Improve your communication.
Good communication between you and your employees reassures you that the workers are progressing as you wanted, which alleviates the worry that can prompt you to micromanage. It also builds rapport and trust, which can make you more confident that the workers will follow your directions even when you’re not looking over their shoulders. Schedule regular check-ins and establish an open-door policy so your team knows they can come to you. Make sure your operational routines and protocols discourage siloing and allow time for interaction. Lastly, outline clear goals and constraints for each project so there isn’t any confusion as you delegate.
6. Get more data.
Just like a lack of control in personal areas of your life can make you tighten your grip on workers, a lack of data can make you scared that you’re missing something or will lose out. Instead of keeping tabs on how workers spend every minute, stay focused on the bigger picture. Get other facts and figures that can reassure you that you’re on target, or that can give you better insights about what your employees can and can’t control. Use that data to evaluate team and company goals and adjust processes or resources on a regular basis.
7. Let workers call you out.
Address the elephant in the room and tell your team outright that you’re trying to be better and eliminate the micromanaging habit. Ask them to let you know when they need some breathing space so you can learn about their needs and what typically triggers you to be most watchful. Most employees will be impressed at your willingness to address the fault and just need some reassurance that they won’t be punished for pointing out what you’re doing.
I started my “portable” computer life with a 22-pound KayPro II in 1982. Since then, I’ve used IBM and Lenovo ThinkPads, Compaq luggables, Nec Ultralites, Dell XPS 13s, the list goes on and on. These days, my laptop of choice is the Google Pixelbook.
At a starting price of $ 999, this is not a Chromebook for everyone. But, if you want to make the most not just from Chrome OS, but from Android and Linux as well, it’s your Chromebook.
There are often discounts for the Pixelbook. You can also get a 10-percent discount on the Pixelbook if you’re a student.
At a minimum the Pixelbook comes with a 1.2GHz 7th gen Intel Core 7Y57 processor, 256GB of SSD storage, and 8GB of RAM. Unlike the others, the Pixelbook comes not with a 100GB free Google Drive storage for two years, but 1TB of free storage for two years. That’s a value of almost $ 240 alone.
The Pixelbook also has Google Assistant, built-in. You can get to it via its own dedicated button on the Pixelbook’s keyboard or by simply saying “OK Google.” It’s context sensitive, so it will open with search results for what you already have on screen.
This luxury-model Chromebook comes with a pair of USB-C ports. One of these, however, is used to power the system up. For Wi-Fi, it uses 802.11ac.
With a battery life of about 10 hours, it won’t last long as some of the others, but then you can do a lot more with it. On my high-end model, I’ve had over 100 tabs open, while running Android and Linux applications.
You sure wouldn’t want to give this Pixelbook to an elementary student, but an advanced high-school or college student would be another matter. The Pixelbook is meant for power users and developers, if that describes your daughter or son, then get them this one. You’ll be glad you did.
Google is always modifying its apps and devices with upgrades and new features. The pace of change is so relentless that trying to keep track can be overwhelming. In case you missed them, here are some of the best new features Google introduced during July.
Site Isolation for the Chrome browser
Site Isolation a major security update for the Chrome browser that protects users from malicious websites that steal sensitive data like passwords and encryption keys. Site Isolation puts content from a website’s domain in a sandboxed process that is prevented from sharing memory with other domains. Malicious websites and threats like Spectre can’t steal what they can’t access.
Site Isolation can increase memory overhead by 10 to 13% in some cases. This change produced a flurry of misleading headlines implying the memory increase is some kind of major problem. It isn’t. The increased memory demands are only likely to result in a performance decline for some users in some circumstances. If you’re a Windows user, it’s a simple matter to find out if Chrome is stressing your system memory with the Task Manager. If it is, easy solutions range from closing some tabs to using any one of a number of Chrome extensions that put background tabs to sleep.
Site Isolation is currently operating in Chrome for Windows, Chrome OS, Mac and Linux. Google estimates that 99% of Chrome users on these operating systems are protected. More information about Site Isolation can be found here.
Chrome 68 arrives
Site Isolation wasn’t July’s only security enhancement for the Chrome browser. Warning labels were attached to unsafe websites and users were protected from malicious redirects in Chrome 68 which rolled out several days ago.
While most websites have migrated from the unsafe HTTP network protocol to the much safer HTTPS, some haven’t. Data is sent in clear text over HTTP which means anyone who intercepts it can read it. This is not good if, for example, you enter your credit card information when you buy something online. HTTPS is a secure version of HTTP. Communication between the website and the browser is encrypted and if it is intercepted, it can’t be read without the encryption key.
Chrome 68 adds a “Not secure” warning label in the URL bar at the top of the page on websites that still use HTTP. If you see the label, be aware that any communication with the website is easily stolen.
A website redirect sends the user to a different website or pops up a new window when the user opens a page. Redirects have many legitimate uses, but they are also commonly employed to pop up annoying ads or surreptitiously send users to malicious websites. Chrome 68 interferes with redirects that are frequently used for malicious purposes by opening a window that gives the user the option of moving to the new website or staying where they are.
More information about Chrome 68 can be found here.
Google Maps adds personal recommendations and neighborhood tracking
Google Maps now surfaces information tuned to your tastes and interests with a redesigned Explore tab and a new For You tab. For You also lets you keep track of what’s going on in the neighborhoods where you hang out. Here’s what’s new.
- The Explore tab gives eating and drinking recommendations for any location you choose. Recommendations can be filtered by type of food.
- If you’re trying out the places on a trending list, Maps will keep track of the ones you’ve visited and the ones you haven’t.
- Explore also surfaces upcoming events and activities that can be filtered for the kind of thing that interest you in an area of your choosing.
- Restaurants and bars have a numerical rating that reflects Google’s best guess about whether you’ll enjoy the place. The ratings are ennabled on Android but not iOS and location sharing has to be turned on.
- For You lets you track establishments and neighborhoods. It’s a great way to find out if a new place that caters to your interests has opened in your neighborhood or if something about one of your favorite places has changed.
The revamped Explore tab is available for Android and iOS worldwide. For You is only available for Android in the US, UK, Canada, Australia and Japan.
Visual Snapshot brings personalization to the Assistant
Maps wasn’t the only app that received enhanced personalization features in July. Visual Snapshot brings the defunct Google Now’s summary of information that helps you navigating through your day to the Assistant.
Visual Snapshot adds reminders, weather and traffic reports, events on your schedule and more to the Assistant app. It can interact with both Google and third-party apps to corral information from a variety of sources into one convenient location. Visual Snapshot is accessed through an icon that looks like a radiant inbox in the upper right corner of the Assistant app. Tap the icon to see what the Assistant can tell you about the rest of your day.
Google Earth adds a measurement tool
How long is the route you take when you walk your dog? How many acres is your property? What’s the difference between the straight-line distance from your home to your job and the route you actually take to get to work? You can answer all of these questions with Google Earth’s new measurement tool.
Place an anchor on any two points and Google earth will return the distance between them. You can drop a string of anchors on corners and along curves to measure route distances. Enclose a space and Google Earth gives you both the perimeter and the area.
Google Earth’s new measurement tool is available on the web and Android with support for iOS promised sometime in the future.
Waze added to the Android Auto app
Waze was added to Android Auto for in-car displays last July and now it’s finally available for the Android Auto app on phones. Whether you’re using Android Auto on a head unit or a phone, Waze lets you
- Launch navigation by tapping on a pre-programmed destination or by saying “OK Google” to wake up the Assistant.
- Get video and audio alerts about upcoming problems and find alternate routes on a large map.
- Access your personalized Waze experience and view your ETA panel.
- Report accidents, road hazards or traffic jams through a visual report menu.
Waze for Android Auto is available for Android 5.0 (Lollipop) and up and is optimized for use with a car dock.
“OK Google” no longer needed before every interaction with a Home device
Google rolled out Continued Conversation in late June but it’s such a huge improvement in ease of use for the company’s Home devices that I had to include it here. With Continued Conversation you don’t have to repeat the wake-up phrase before every subsequent command or query once you’ve begun an interaction with the Assistant in Home. The Assistant has an eight-second window during which it will respond to another input without hearing the wake-up phrase. If it doesn’t hear a command or query after eight seconds, it shuts down. The Assistant will also shut down if you say “Thank you” when you’re finished. Talking to the Assistant in Home feels much more like having a conversation than it did before.
Continued Conversation is toggled off by default. You can turn it on through either the Home or Assistant apps on a smartphone, tablet or Chromebook. More information about continued Conversation can be found here.
These seven new features were the most useful for me, but Google added a lot more during July and you may discover something different that makes your life easier or more enjoyable. Take a look at these articles for more of the new features Google added to it’s apps and devices in late June and July.
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
In today’s America, we tend to feel gray areas are a touch passé.
You’re either right or you’re wrong. And if you can’t see which you are, then you’re two slices short of a sandwich.
How, though, can you even begin to persuade someone who’s mistaken — or even worse, vehemently disagrees with you?
A new study makes a curious suggestion, one that won’t please everyone.
The study, conducted by Brendan Nyhan of Dartmouth College and Jason Reifler of the University of Exeter, is entitled The roles of information deficits and identity threat in the prevalence of misperceptions.
They’re very polite about the fountains of knowledge pouring into today’s humans.
“Why do so many Americans hold misperceptions?” the researchers ask.
To which I reply: “Why do many Americans now put mis in front of pleasant words, instead of calling them that they really are? Lying has become misspeaking? Oh, I don’t think it has.”
Nyhan and Reifler come to a startling, even painful conclusion: “In three experiments, we find that providing information in graphical form reduces misperceptions. A third study shows that this effect is greater than for equivalent textual information.”
Yes, if you want to persuade your half-cut, halfwitted neighbor or colleague about the parlous state of the world and the dangers of fascism/socialism/democracy/self-help books, your best bet is to show them a chart.
Worse, it seems that a chart is better than even text. Goodness, is that where I’ve been going wrong all my life?
I can, though, already see Jeff Bezos’s eyes rolling into the back of his head and emerging with a very red hue.
As the Amazon CEO explained in his latest letter to shareowners: “We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of ‘study hall.'”
So no slides or charts and graphics for Bezos. All he wants is a short story. Could he, perhaps, misperceive the benefits of charts?
Still, charts surely can’t be so effective, otherwise everyone would have tried them.
Moreover, it’s not as if you can create a chart to describe every false belief. How, for example, do you create a chart for a CEO who simply thinks his touch and feel is always right?
Nyhan and Reifler explain that a considerable reason why people hold on to false information is purely psychological. It confirms their world view.
“On high-profile issues, many of the misinformed are likely to have already encountered and rejected correct information that was discomforting to their self-concept or worldview,” they say.
Yes, but it’s not as if that nice man on CNN with his Election Night charts has ever persuaded many people, is it?
Expect, though, the rising stars in many companies now rushing to create charts in order to show that they’re right and their brain-manacled bosses are wrong.
Expect, too, that American politics will now be revolutionized with the presentation of definitive charts of right and wrong.
You think I’m wrong about that?
Send me a chart to show me why.
My dad, who would be mortified if he knew I was doing this, has been my greatest inspiration in business. Thanks to his disdain for any sort of self-aggrandizement, I’m doing this behind his back (sorry, dad).
If I’ve had any success in business, it’s because my dad lived his life according to the doctrine of entrepreneurship and I got to watch from the sidelines. He was living proof that you’re not confined to the hand you’ve been dealt and you can determine your own outcomes in this life.
Over the years, my dad’s shared countless bits of wisdom with me that we endearingly refer to as, “The Marty Lecture Series.” Today, in honor of Father’s Day, I’d like to share some of my personal favorite “Lecture Series” quotes with you.
When You Lose, Don’t Lose The Lesson
My dad never took “no” as no. “No” was always a starting point for negotiation. Where others saw obstacles or setbacks, my dad saw (and still sees) opportunity.
Every time I came home with a perceived failure, he’d reframe it with how it taught me something or made me stronger.
It was infuriating as a 14-year-old who relished in self-pity and just wanted a “normal parent” who would indulge her, but it’s been invaluable as an entrepreneur. It’s impossible to be derailed by failure when you’re forced to find a lesson.
Sometimes You Gotta Be Ok With “Good ‘Nuff”
I was complaining about a mediocre grade on something when my dad spit this quote at me for the first time. Irate, I thought he meant you should settle for less than you deserve or are capable. It took me years before I realized what he meant was “done is better than perfect.”
He was teaching me how to ship.
Patience and Shuffle the Cards
In a world where my contemporaries are obsessed with quick Instagram-worthy wins, my dad always shared this quote from Cervantes. He was never impressed with status, fame, or fancy things. Perhaps it was the Texan in him, but he was never influenced by those who projected the illusion of success.
He was impressed with people who had passion, determination, and (most importantly) the wherewithal to endure the setbacks that come at you as you go down the road less traveled. People who played the long game.
Any day I felt like everything was over, the world was collapsing, and I should quit (aka: every other day in business), he’d remind me today was one of many.
This is a long game. You gotta have patience and shuffle the cards.
Some Days Just Need to Be Over
This one is a crowd favorite, especially in a culture obsessed with self-improvement and maximizing everything. Some days, you gotta accept that you can’t win.
Don’t dwell on it. Accept your losses, go for a run, do something else productive, but don’t waste your time beating yourself up over a crap day.
Some days just need to be over.
You Gotta Fight Em In The Streets
This one is my favorite.
To my dad, there’s nothing more respectable than someone who is “fightin’ em in the streets.” In other words, there is no substitute for doing the work. The tireless work that no one sees, the stuff people won’t thank you for, the things no one will recognize or know you did. All the “not sexy” parts of entrepreneurship.
This mentality also inspired the name of my virtual co-working space, The Arena. The Arena is a metaphor for “fighting in the streets.” It’s where you show up and do your best. Win, lose, or draw, you show up. You fight. You do your best.
My dad always said he’d never judge me for losing. He’d judge me for not having tried.
To my dad and all the other entrepreneurial father’s out there, Happy Father’s Day.
Good morning, Cyber Saturday readers.
A month ago I was milling about a hotel room in New Orleans, procrastinating my prep for on-stage sessions at a tech conference, when I received a startling iMessage. “It’s Alan Murray,” the note said, referring to my boss’ boss’ boss.
Not in the habit of having Mr. Murray text my phone, I sat up straighter. “Please post your latest story here,” he wrote, including a link to a site purporting to be related to Microsoft 365, replete with Microsoft’s official corporate logo and everything. In the header of the iMessage thread, Apple’s virtual assistant Siri offered a suggestion: “Maybe: Alan Murray.”
The sight made me stagger, if momentarily. Then I remembered: A week or so earlier I had granted a cybersecurity startup, Wandera, permission to demonstrate a phishing attack on me. They called it, “Call Me Maybe.”
Alan Murray had not messaged me. The culprit was James Mack, a wily sales engineer at Wandera. When Mack rang me from a phone number that Siri presented as “Maybe: Bob Marley,” all doubt subsided. Jig, up.
There are two ways to pull off this social engineering trick, Mack told me. The first involves an attacker sending someone a spoofed email from a fake or impersonated account, like “Acme Financial.” This note must include a phone number; say, in the signature of the email. If the target responds—even with an automatic, out-of-office reply—then that contact should appear as “Maybe: Acme Financial” whenever the fraudster texts or calls.
The subterfuge is even simpler via text messaging. If an unknown entity identifies itself as Some Proper Noun in an iMessage, then the iPhone’s suggested contacts feature should show the entity as “Maybe: [Whoever].” Attackers can use this disguise to their advantage when phishing for sensitive information. The next step: either call a target to supposedly “confirm account details,” or send along a phishing link. If a victim takes the bait, the swindler is in.
The tactic apparently does not work with certain phrases, like “bank” or “credit union.” However, other terms, like “Wells Fargo,” “Acme Financial,” the names of various dead celebrities—or my topmost boss—have worked in Wandera’s tests, Mack said. Wandera reported the problem as a security issue to Apple on April 25th. Apple sent a preliminary response a week later, and a few days after that said it did not consider the issue to be a “security vulnerability,” and that it had reclassified the bug as a software issue “to help get it resolved.”
What’s alarming about the ploy is how little effort it takes to pull off. “We didn’t do anything crazy here like jailbreak a phone or a Hollywood style attack—we’re not hacking into cell towers,” said Dan Cuddeford, Wandera’s director of engineering. “But it’s something that your layman hacker or social engineer might be able to do.”
To Cuddeford, the research exposes two bigger issues. The first is that Apple doesn’t reveal enough about how its software works. “This is a huge black box system,” he said. “Unless you work for Apple, no one knows how or why Siri does what it does.”
The second concern is more philosophical. “We’re not Elon Musk saying AI is about to take over the world, but it’s one example of how AI itself is not being evil, but can be abused by someone with malicious intent,” Cuddeford said. As we continue to let machines guide our lives, we should be sure we’re aware how they’re making decisions.
Have a great weekend—and watch out for imposters.
Maybe: Robert Hackett
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’sdaily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
OnePlus is an odd duck in the smartphone business. It tends to make one phone at a time with a simple and clear goal: to pack all the latest trends and tech into an Android phone that costs about $ 500. It doesn’t waste time developing a ton of custom features, like LG’s crazy AI-powered camera, nor does it make any effort to woo U.S. wireless carriers. If you want a OnePlus phone, you have to buy it unlocked, directly from OnePlus. For as offbeat as it seems, the strategy appears to be working.
The 2017 OnePlus 5T sold out faster than anticipated and now OnePlus is back a mere six months later with its successor. If you obsessively follow smartphone trends, you can probably guess the OnePlus 6’s new features: A longer screen with a notch cutout up top, glass on the back, Android 8 Oreo, and a top-shelf Qualcomm Snapdragon 845 processor.
The OnePlus 6 holds no major surprises, and that’s exactly how OnePlus likes it.
Gestures and Glass
Metal frame. Gorilla Glass back with curved edges. If you’ve held a top-tier smartphone in the last year, you can imagine exactly what the OnePlus 6 feels like.
The 6 is roughly the same size as the 5T, with a taller 6.28-inch 1080p AMOLED screen (spoiler warning: it looks great in spite of its HD resolution) that stretches from the bottom (almost) all the way up to the tippy top. Unlike LG’s G7, OnePlus makes no major effort to hide its notch. It’s only 3/4 of an inch across, which makes it less distracting than Apple’s iconic (or, depending on how you feel, infamous) iPhone X notch, which is so wide that there’s little room for anything else along the top edge.
The fingerprint sensor sits a bit lower on the back of the phone, but I noticed that it seemed less capable than before. It’s still speedy at unlocking, but one of my favorite features on the 5T was the ability to swipe the fingerprint sensor to pull down the notification tray. The 6 cannot do that. Luckily you can still swipe down from anywhere on the home screen to open notifications, or swipe up to pull out the app drawer. These are simple features that make life with a large-screened phone way more enjoyable. I can only hope that OnePlus adds this functionality with a software update.
OnePlus’s mute switch is now on the right side of the phone, letting you easily switch to vibrate and silent modes, much like the toggle on the side of every iPhone. The built-in audio jack is also a godsend if you love music. You get the versatility of USB-C and a 3.5mm headphone jack, so you can jam out while you charge the device.
The slick glass back may give you trouble, though. It’s more slippery than some Android phones, which has led to a few slip-ups where I had to catch the phone before it hit the ground. It also attracts fingerprints and converts them into a gross, gunky patina at an alarming rate. To my surprise, OnePlus includes a semi-transparent plastic case with each OnePlus 6, which makes it a bit easier to grip, and should offer some protection. If you’re paranoid, this Dretal case should buy you even more peace of mind.
The screen protector that comes preinstalled on the OnePlus 6 should also help the phone stay protected. That is, as long as you don’t accidentally tear it off like I did. Oops.
Snappy and Speedy
OnePlus doesn’t mess with Android Oreo much with its variant it calls OxygenOS. My unit got the latest security patch (hopefully the first of many), and the experience is nearly identical to a Google Pixel 2—currently our favorite Android phone because of its camera and thanks to feature and security updates direct from Google.
The OnePlus 6 is particularly snappy. Apps and menus seem to open even faster than the LG G7, another 2018 phone with a Snapdragon 845 chip. OnePlus explained that this added quickness is because it prioritizes what parts of an app it needs to load, increasing speeds by about 10 percent. It also made small efforts to increase performance in games and can boost network speed of those games by slowing down any apps sucking up data in the background.
Battery life is about 1.5 days—nothing dramatic but also no worse than most high-end phones. There’s no wireless charging, but the custom USB-C charger does juice up the phone very quickly by offloading some charging management to the included fast charger.
A Capable Cam
Photo quality continues to slowly improve with each new OnePlus. The 16-megapixel main rear camera has a bigger sensor this time around, and does an adequate job under most conditions, even if it still struggles in low light sometimes. The background-blurring portrait mode seems to be more reliable, but it’s still not uncommon for the phone to accidentally blur part of a foreground object.
There’s a super slow-mo mode now (netting you 480 fps at 720p), and added optical image stabilization for video, which can record in 4K at 60 frames per second.
The 16-megapixel selfie cam takes a sufficient selfie that’s noticeably less washed out in bright light, but I’m still bothered by the odd way it saves them mirrored (backward) by default. You can fix this by swiping up from the bottom of the camera app and hitting the settings button that’s hiding in the corner.
I’d be remiss if I didn’t mention the convenient Face Unlock feature. It’s quick and works well enough that I hardly notice it, though I worry about security since it’s not nearly as robust as a Galaxy S9 or an iPhone X in that regard. Hopefully there aren’t a lot of phone thieves out there with 3D-printed copies of my face. If there are, I might be in trouble. Then again, maybe not.
On the whole, the camera is good relative to the cost of the phone, but it’s nowhere near the quality of the Pixel 2.
A Bargain Without the Bin
I might not love its fragile glass construction or its middle-of-the-road camera, but let me make it abundantly clear: the OnePlus 6 is a kickass Android phone and the best unlocked device you can buy for around $ 500. The only big caveat worth highlighting is carrier compatibility. The OnePlus 6 still only works on AT&T, T-Mobile, U.S. Cellular, and others that use similar networks. Even though it technically has the right bands, it won’t run on CDMA carriers like Sprint or Verizon.
OnePlus sells two unlocked versions of the 6: a $ 529 model with 6GB RAM and 64GB of file and photo storage and a $ 579 upgrade with 8GB RAM and 128GB of storage. If you have a lot of photos or apps, get the 128GB version. There is no way to expand the phone’s memory, so once you’re out of storage space, you’ll have to start micromanaging your memory, which isn’t fun. For most folks, 64GB should be enough, but check the capacity of your current device just to be sure.
If you want the best of the best, you can purchase Android phones that edge out the OnePlus 6 in one regard or another, but it’s hard to beat a phone that’s as powerful as a Galaxy S9, yet nearly $ 200 cheaper. OnePlus continues to offer stellar value here, making the OnePlus 6 a true bargain.
Having spent the past 10 years relentlessly studying psychology, self-improvement, and entrepreneurship, there are many people who have inspired and influenced my thinking.
However, over the past 3 years, I’ve come across two thinkers who stick out. Not just in their thinking, but their overall approach to life and business.
Naturally, both of these entrepreneurs are highly aligned, synergistic, and yet very different.
These two entrepreneurs are Dan Sullivan and Joe Polish. Dan is the founder of Strategic Coach, which is considered by many to be the #1 entrepreneurial coaching program in the world. Joe is the founder of Genius Network, GeniusX, and Genius Recovery. Genius Network is considered the #1 entrepreneurial mastermind group in the world.
“Always make your future bigger than your past.”―Dan Sullivan
“Who, not how.”―Dan Sullivan
“As an entrepreneur, you’ve removed yourself from the restrictions and limitations of other people’s systems. Still, it’s amazing how many of us strive to meet others’ expectations and demands – or set up rigid, impossible ideals for ourselves.”―Dan Sullivan
“Over scheduled entrepreneurs can’t transform.”―Dan Sullivan
“For a company to achieve 10x, it doesn’t need you managing – it needs self-managing.”―Dan Sullivan
“Life gives to the giver and takes from the taker.”―Joe Polish
“Wherever there is anxiety, there is opportunity. Transform bad news into good news, and leverage that with marketing.”―Joe Polish
“Any problem in the world can be solved with the right Genius Network.”―Joe Polish
“Opposite of addiction is connection.”―Joe Polish
“Be willing to destroy anything that isn’t excellent.”―Joe Polish
This stark, minimalist device is a hybrid between an analog watch and a smart one. It looks like an elegant fashion accessory, but connects to the Nokia Health app on your phone to show stats like your heart rate, steps, and distance traveled. It’s simple and slim, with a velvety silicone band, and can transition from surfing to a wedding brunch without skipping a beat. And, at $ 180, it is one of the most affordable fitness trackers out there.