Today’s theme is the breathtaking, exhilarating audacity of our most fearless entrepreneurs – in the news of the past 24 hours.
-Apple yesterday reported the third-highest quarterly profit ever earned by a non-government-sponsored company. The first- and second-highest quarterly profits were also reported by – guess who – Apple. All those quarterly profit figures were around $18 billion, and all were driven overwhelmingly by the iPhone. Recall that when Steve Jobs introduced the iPhone in 2007, Microsoft CEO Steve Ballmer ridiculed it, yet it turned out to be arguably the most transformative IT device of the past decade. Only in the past year have sales slowed down, and that’s largely because the market is nearly saturated. Now we’ll see if Jobs’s chosen successor, Tim Cook, can produce another such blockbuster, though it’s hard to imagine what it might be. (Regarding those profit records: Fannie Mae, a government-sponsored entity, reported a higher quarterly profit in 2013 because of a bizarre accounting adjustment; as far as I’m concerned, that doesn’t count.)
-Amazon will build its first air cargo hub, suggesting it intends to enter yet another new business. The company said last year it would lease 40 cargo planes, and it has a network of 4,000 semi trailers, but building a hub at a cost of $1.5 billion is a far bigger step. The long-term plan is to deliver not just its own packages but also those of consumers and other companies, says the Wall Street Journal, citing unnamed sources. The hub will be in northern Kentucky, a prime location logistically, which is why Amazon already has 11 fulfillment centers in the area. Founder Jeff Bezos’s ambition seems entirely unconstrained, and we’d be foolish to think he has stopped expanding Amazon; foolish also to think we can imagine what he’ll do next.
–Elon Musk has actually started digging his tunnel. After hinting at this seemingly crazed plan in a series of tweets, the CEO of Tesla and SpaceX started digging last weekend at SpaceX headquarters in Hawthorne, California. Turns out he is not, for the moment, digging a tunnel to Los Angeles airport, as he has said he’d like to, but merely burrowing under Crenshaw Boulevard to SpaceX’s employee parking facility on the other side. His larger strategy is “to figure out what it takes to improve tunneling speed by, I think, somewhere between 500 and 1,000 percent,” he said Sunday. “We have no idea what we’re doing—I want to be clear about that.” As for how this will all turn out, who knows? But how can you not love it?
This is entrepreneurialism at its greatest, in one day’s news. The Rockefellers, Carnegies, and Fords of a century ago had nothing on today’s generation. Let’s celebrate their stories and do all we can to keep this spirit strong.
The new Fortune Unfiltered podcast features Scott O’Neil, CEO of the Philadelphia 76ers professional basketball team, the New Jersey Devils professional hockey team, and the Prudential Center arena in Newark, New Jersey. Listen to the full episode https://itunes.apple.com/us/podcast/fortune-unfiltered-aaron-task/id1135636641?mt=2/listen#/ps/I3c74wdipy2osrynfayuij5v7jm to hear about his passion for sports, the importance of having a vision, and how he makes time to coach his daughter’s basketball team.
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What We’re Reading Today
Tim Cook hints at possible Apple acquisition
On Apple’s earnings call, Cook was asked about the possibility of tax cuts on repatriated funds; Apple holds $232 billion overseas. He responded that Apple is always considering acquisitions, and no deal would be too big. Speculation has long centered on media, where Cook says Apple has only dipped its “toe in the water.” Fortune
BMW will move forward on Mexican plant
Despite President Trump’s warnings of a border tax, BMW says it will continue to invest in Mexico. CEO Harald Krueger added that the company will maintain production at its Spartanburg, South Carolina, plant, which exports 70% of its output. Reuters
Chinese billionaire abducted from Hong Kong hotel
Xiao Jianhua has reportedly been moved to mainland China and is in police custody. Any Chinese police involvement in the abduction would violate Hong Kong’s constitution. It’s believed Xiao is assisting in a graft investigation. Though born in China, he’s a Canadian citizen. Guardian
Wells Fargo can’t pay severance to laid-off workers
When a federal regulator imposed restrictions on certain Wells Fargo pay packages related to the fake-accounts scandal, it inadvertently prohibited the bank from paying severance to some 400 employees laid off for other reasons. Tim Sloan‘s company has asked the Office of the Comptroller of the Currency for permission to pay the employees and is awaiting a response. NYT
Building Better Leaders
Former Google exec explains why companies should speak out…
…against President Trump‘s immigration orders. Laszlo Bock, a former Romanian refugee who became Google’s HR chief, says all companies should encourage the U.S. to welcome immigrants, who bring innovation and creativity. Fast Company
It’s completely normal to face a career setback
How you react will determine your success. Look inward to find causes and solutions, says Nimble Storage CEO Suresh Vasudevan. Fortune
The number of new startups…
…achieving unicorn status dropped to 25 last year, a 68% fall from 2015. TechCrunch
Decisions and Criticisms
Neil Gorsuch’s leanings
Conservatives see President Trump‘s nomination of Gorsuch to replace the late Justice Antonin Scalia on the Supreme Court as an ideal selection. He’s considered slightly more conservative than Scalia but wouldn’t likely be the court’s most conservative member, and he’s a constitutional originalist. Democrats are expected to fight the nomination, partly because Republicans refused even to consider President Obama‘s nominee, Merrick Garland. Los Angeles Times
State Department protest has 1,000 signatures
The State Department sent the formal protest against the immigration ban to the White House. Signed by about 1,000 diplomats and officials, it’s believed to be the largest such formal protest by State; the second-largest had 51 signatories. White House press secretary Sean Spicer previously said State officials could “either get with the program or they can go.” WSJ
Ray Dalio questions Trump’s economic moves
Head of the world’s largest hedge fund, Bridgewater Associates, Dalio said President Trump‘s populist agenda could do more harm than his pro-business policies would do good. It’s a switch in tone from November, when Dalio felt Trump’s impact would be “broadly positive.” Fortune
Fortune Reads and Videos
Apple is considering legal action…
…against President Trump‘s immigration ban. Amazon had said it’s also exploring legal options. Fortune
In becoming a citizen of New Zealand, Peter Thiel says…
…”I am happy to say categorically that I have found no other country that aligns more with my view of the future than New Zealand,” according to his citizenship application. Fortune
Repealing Obamacare could lead to the loss…
…of 1.2 million jobs by 2019, says a new study by the Economic Policy Institute. Fortune
U.S. bacon reserves hit a 50-year low
Demand for frozen pork belly, which often becomes bacon, vastly outstrips supply, sparking a 20% price increase. Fortune
Quote of the Day
“We are now in a period of time when how this balance tilts will be more important to the economy, markets, and our well-beings than normally dominant drivers such as central bank policies…While there is a lot of potential to improve fiscal policies and make beneficial structural reforms, there is also a significant risk that his populist policies could hurt the world economy (and worse).” — Bridgewater Associates founder Ray Dalio and co-Chief Investment Officer Bob Prince, in a note to clients discussing President Trump’s policies. Fortune