Polar Plunge

Quote of the Day

This is the first time in a while I’d say it feels like borderline panic-type selling.”

Market Snapshot

• At one point, the Dow dropped 1,600 points. It's the largest one-day point drop ever.
• Financials was the worst performing S&P sector, down 5%.
• This month, the stock market has lost more than $1 trillion in value.
• Bitcoin slumped ~20%.

Waymo and Uber Driverless Trial Begins

In yesterday’s episode of Law & Order: Self-Driving SUV—during which a 10-person jury heard opening arguments in a San Francisco federal court—Waymo stood in one corner alleging trade-secrets theft and Uber in the other with the “nah-ah” defense.

The case

Last February, Waymo (owned by Alphabet) accused Uber of stealing eight proprietary designs that relate to LiDAR—a type of sensor used in driverless cars. Waymo claims its former engineer Anthony Levandowski downloaded the documents before quitting to launch his own autonomous trucking company, Otto. That he (conveniently) then sold to Uber for ~$680 million before taking a position heading Uber’s autonomous car project.

Conspiracy versus coincidence

Waymo’s opening argument: the case is “about two competitors where one competitor decided they needed to win at all costs. Losing was not an option.”

Uber struck back: “There’s not a single piece of Google proprietary information at Uber. Nothing, zero, period.”

Both sides will attempt to prove their case with 99 potential witnesses between them. On the list: Waymo CEO John Krafcik (expected to testify first), former Uber CEO Travis Kalanick, Google co-founders Larry Page and Sergey Brin, Alphabet exec David Drummond, and Uber investor Bill Gurley. Not expected: the accused thief Anthony Levandowski, despite (or perhaps because of) invoking his Fifth Amendment rights during his deposition.

The stakes

Uber has had a rough go of scandals and PR nightmares, and having to garage its self-driving project when competition has never been higher could knock it out of the race. As for Waymo? For starters, it’s seeking $1.9 billion in damages after Uber rebuffed its original ask of $1.4 billion and a public apology.

Not to mention, it risks being the company who cried IP wolf without enough evidence.

Vice Chairman of Samsung Finds "Get Out of Jail Free" Card

De facto leader of Samsung, grandson of the founder, and corporate swindler Lee Jae-yong left prison Monday after his sentence was cut from five years to a probationary sentence of two years and six months.

In South Korea, there’s time off for good behavior, and then there’s time off for being part of a chaebol—a family-controlled conglomerate that wields massive influence over the government. And in South Korea, there are a whole lot of them.

When chaebol execs aren’t being pardoned prematurely by the president, they enjoy embezzlement, tax evasion, and, in Lee Jae-yong’s case, offering over $8 million worth of bribes (and horse-riding lessons) to further cement his control of Samsung.

Jae-yong’s early release will likely infuriate South Korean activists who celebrated his conviction, in addition to Samsung execs who felt he should never have been gifted leadership in the first place. Harvard grad or not.

But they might be okay with a little more company direction. Since Jae-yong’s arrest, Samsung ousted multiple execs, smartphone shipments slowed, and China continued subsidizing chipmakers to undercut Samsung’s market share.

Lee, it's time to make amends.

SpaceX’s Falcon Heavy Is Ready for Liftoff

At 1:30 pm ET, Elon Musk’s SpaceX will attempt to launch the Falcon Heavy rocket for the first time. Its precious cargo? The iconic red Tesla Roadster. The art of the cross-promo.

You’re not going to need binoculars to see this colossus. The Falcon Heavy lives up to its name, consisting of three boosters and powered by 27 engines. With a successful launch, it’d be the most powerful rocket in use today...this from a 16-year-old company, no less.

What’s more impressive? As far as heavy-lift rockets go, the Falcon Heavy is not just powerful, it’s cheap. At $90 million, the cost per launch is dwarfed by the United Launch Alliance’s (a Boeing-Lockheed joint venture) comparable Delta IV Heavy, which costs ~$350 million.

If all goes well (a big if—even Musk is prepping for failure), the launch could usher in an era of private-sector companies, like SpaceX and Jeff Bezos’ Blue Origin, carrying bulky satellites and telescopes into Earth’s orbit.

But for an afternoon, at least, the Earth will revolve around Musk.

Anatomy of a Bitcoin Rout

It’s not as fun to talk crypto when things are bleak, but we’ve got to do it anyway: Bitcoin fell below $7,000 for the first time since November. Remember, in December the digital token came this close to hitting $20,000.

Feeling lost? Confused? Here are some factors pushing Bitcoin down and to the right

Banks halt purchases: On Friday, credit-card issuers Citigroup, Bank of America, and JPMorgan banned customers from using the banks’ cards to buy cryptocurrency.

Lax security: Last month, hackers stole $530 million worth of NEM coins from Japanese exchange Coincheck (just one of many hacks).

Increased regulation: From India to the U.S. to one of crypto’s epicenters, South Korea, lawmakers are looking at ways to limit fraud and protect investors. For example, at 10 am today the Senate Banking Committee will hold a hearing on crypto oversight with the SEC and CFTC.

What Else Is Happening…

• Broadcom (-3.13%) has upped its bid for Qualcomm (-6.57%) to $121 billion.
• Soho House is considering an IPO that would make the members-only club a lot less exclusive.
• Lululemon (-1.54%) CEO Laurent Potdevin resigned following allegations of unspecified misconduct.
• Average pay rose by more than 3% in at least half of U.S. states last year.

Economic Calendar

• Monday     Earnings: Booz Allen (+), Sysco (+)

                    Economic Events: ISM Non-Mfg Index (+)

• Tuesday    Earnings: Allergan, BP, Chipotle, Dunkin’ Brands, GM, Snap, Walt Disney

                  Economic Events: International Trade

• Wednesday    Earnings: Hasbro, Tesla, 21st Century Fox, Yelp

                        Economic Events: Consumer Credit

• Thursday   Earnings: Activision Blizzard, CVS, Expedia, GrubHub, Twitter, Yum!

                   Economic Events: Chain Store Sales

• Friday       Earnings: No Events

                 Economic Events: Wholesale Trade

Venture This: Vertical Farming

Berlin-based Infarm, the vertical farming startup that uses pods in grocery stores and restaurants to grow fresh produce for consumers to pick right off the shelf (or the garden), just raised $25 million in Series A funding.

Here’s what we like

Scalability—each farming pod is managed via a central control system to keep lighting, temperature, and nutrients at optimal levels. This will allow Infarm to keep a smaller team, while expanding the business.

Appeal—it’s hard for a consumer to pass up fresh produce, grown right before his eyes, for a vegetable in the “what even is this?” pile.

Here’s what’s got us caught up

Partnerships— getting your foot in the grocery store isn’t easy. Infarm has locked in partnerships with supermarkets in Germany. Can it do the same across Europe?

Cost—is it possible to compete with large farming operations’ economies of scale? Getting Infarm’s produce cost down could present some challenges.

Now it’s up to you: would you invest in Infarm? Yes or No.

Either way, you might have to wait for that tomato you’ve been craving—Infarm is focused on European expansion for now.

The Breakroom

Question of the Day

A man pushes his car to a hotel, pays the owner of the hotel and pushes his car away. What was he doing?

(Answer located at the bottom of newsletter)

Business Trivia

What Buddhist kingdom introduced the "Gross National Happiness" as a way to balance the Gross National Product?

Nepal, Sri Lanka, Bhutan, Thailand

(Answer located at the bottom of newsletter)

Stat of the Day

98%—How much value the Venezuelan bolivar has lost against the dollar in the past year. In December, a carton of 30 eggs cost 247,500 bolivars, courtesy of hyperinflation.

Breakroom Answers

Question of the Day: Playing a game of Monopoly.

Business Trivia: Bhutan