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Why Apple, Netflix Always Want Something New

We live in an age of entrepreneurial swashbucklers to rival any in history. That fact is easy to overlook as we become inured to the feats of heroic daring required for success in the biggest-ever new field of business opportunity, the digital economy. But just consider the evidence from recent news:

-Netflix founder Reed Hastings, who until a few years ago had never produced a movie or TV show in his life, is spending $5 billion on original programming this year and plans to spend $6 billion next year. Total company revenue last year: $6.8 billion. Hastings is spending far more on programming than HBO, for example, and more than the entire production industries of India, Mexico, and Brazil combined. It’s a giant gamble that truckloads of superior original programming will attract vast numbers of subscribers before Amazon can snag them. Investors obviously think the plan is working; the stock trades at over 500 times projected earnings. And if it doesn’t work? Merely doom.

-Apple CEO Tim Cook is reportedly rethinking plans to produce an Apple car. Of course Apple confirms none of this, but the existence of Project Titan had become well known in Silicon Valley, and it was rumored to include a staff of over 1,000, many of whom have reportedly left or been let go. Think of it – at least hundreds of millions of dollars a year over an uncertain number of years for a project that was never officially announced and that may never see the light of day. Or maybe it will. Or maybe it will morph into a self-driving car system than can be sold to carmakers and make Apple billions. Win some, lose some. So far, Apple mostly wins.

-Alphabet lost $859 million on its so-called moonshots – in one quarter. Laying fiber all over the country, developing a self-driving car, conducting medical research to defeat aging – Alphabet loses billions on these and other projects every year. Neither CEO Larry Page nor anyone else knows if any one of them will ever make a dime of profit. But in the digital domain, relying for long on even a stupendous business model – online ad sales, in Alphabet’s case – is a recipe for failure. So Page has to find the next thing, regardless of what it costs to do so.

America’s larger-than-life captains of industry – Andrew Carnegie, Cornelius Vanderbilt, Henry Ford – had nothing on today’s top entrepreneurs. And now please forgive a moment of flag waving. No place else on earth, as far as I can tell, encourages risk-taking, forgives failure, applauds innovation, and roots for the underdog like the U.S. does. It seems to be in the culture. And even now, with declinism in vogue, it’s still true, and it’s one of America’s greatest strengths. The evidence is right before our eyes.

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What We’re Reading Today

Salesforce’s fleeting interest in Twitter
Despite CEO Marc Benioff‘s reported interest in buying the social media site, as of May Twitter wasn’t even on Salesforce’s list of 14 top acquisition targets. The list, from a leaked internal Salesforce document via DCLeaks, included LinkedIn, which Satya Nadella‘s Microsoft later bought. It’s possible that Benioff’s interest then turned to Jack Dorsey‘s Twitter. Fortune

VW labor leaders deny reports of cost-cutting deal 
The report said labor leaders had agreed to cut costs by $5.5 billion to $6.6 billion by 2025. Matthias Müller‘s company needs to reduce labor costs in order to fund efforts in electric and autonomous vehicles while still managing fallout from the emission-cheating scandal. Labor talks continue. Reuters

Iraqi army closes in on Mosul
As the army moves closer to the city, reported ISIS deaths have climbed to 50, says Iraqi Lt Gen. Qassim al-Maliki. Today is the campaign’s third day. Troops must provide security for areas liberated from ISIS, which has slowed efforts. The U.S. military has provided 500 personnel to help with logistics and special operations.  CNN

Trump’s fiery military adviser
Retired Lt. Gen. Michael Flynn is a registered Democrat who has long criticized President Barack Obama‘s response to Islamic State. He’s now Donald Trump‘s top military adviser, and his advice could play an important role in tonight’s debate with Hillary Clinton, which is slated to include national security issues. Flynn has helped prepare Trump for the debate. NYT

Building a Better Leader

Glassdoor offers a new feature to see what you’re worth
Give the career website a few details of your experience and salary, and it will tell you if you’re underpaid vs. similar people in your industry. USA Today

LinkedIn’s annual diversity report shows…
…it’s outpacing other tech companies in hiring women but has struggled to employ black and Latino workers.  Fortune

Square, Thrillist, and Casper Sleep will give employees the day off…
…so they can vote on November 8. Several companies are adopting the policy, though the federal government doesn’t offer the same perk. WSJ

New Developments in Controversies

Yahoo says its users remain
After canceling a scheduled earnings call, Marissa Mayer‘s company released its numbers, showing that email activity and user visits rose in the third quarter. One interpretation is that users haven’t fled following the hack of 500 million Yahoo accounts; another is that users flocked to the site to reset passwords. Mayer is trying to placate Lowell McAdam‘s Verizon, which may seek a discount on its planned $4.8-billion acquisition of Yahoo’s Internet business because of the massive hack. Fortune

Federal inquiry into DeBlasio focuses on pay-to-play 
The federal investigation of New York City Mayor Bill de Blasio‘s fundraising efforts has zeroed in on whether he granted official favors in exchange for donations. Investigators are focusing on about a half-dozen incidents but after six months of work haven’t unearthed evidence that would lead to a criminal charge.  NYT

Official at center of ‘quid pro quo’ conversation speaks
Former FBI official Brian McCauley discussed with a State Department official a deal in which State would authorize two FBI employees in Baghdad in exchange for the FBI declassifying an email on Hillary Clinton‘s personal server that related to Benghazi. McCauley says as soon as he realized the subject of the email, the conversation ended and the deal went nowhere.  Washington Post

Up or Out

Ex-Wells Fargo CEO John Stumpf has resigned from the boards of Chevron and Target. Fortune

Starbucks has named Belinda Wong its first CEO of China. Reuters

Former American Apparel CEO Paula Schneider has taken the same role at DG Premium Brands. Fortune

Fortune Reads and Videos

Walmart teams up with IBM…
…to put pork on a blockchain. It wants to track pork production in China in order to ensure safe meat. Fortune

Apple to unveil new Macs
They will be introduced October 27, according to reports. Fortune

Youtube CEO: No timetable for profitability
Susan Wojcicki says the Alphabet-owned business is still in the investment stage. Fortune

Ally Bank hides special pennies
It has hidden 100 penny-like coins in 10 U.S. cities. If you find one, you can return it for $1,000. Fortune

Quote of the Day

“You have people out there providing your product that aren’t your employees…But you still have to put out there what your values are.”  —TaskRabbit CEO Stacy Brown-Philpot, speaking at the 2016 Fortune Most Powerful Women Summit about how to protect the company brand from poor-performing freelancers.  Fortune

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Produced by Ryan Derousseau
@ryanderous
powersheet@newsletters.fortune.com