JPMorgan, National Bank of Canada, others test debt issuance on blockchain

NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N) has tested a new blockchain platform for issuing financial instruments with the National Bank of Canada and other large firms, they said on Friday, seeking to streamline origination, settlement, interest rate payments and other processes.

FILE PHOTO: A sign outside the headquarters of JP Morgan Chase & Co in New York, U.S., September 19, 2013. REUTERS/Mike Segar/File Photo

The test on Wednesday mirrored the Canadian bank’s $150 million offering on the same day of a one-year floating-rate Yankee certificate of deposit, they said in a statement. The platform was built over more than a year using Quorum, a type of open-source blockchain that JPMorgan has developed inhouse and is in discussions to spin off.

Participants in the experiment included Goldman Sachs Asset Management, the fund management arm of Goldman Sachs Group Inc (GS.N), Pfizer Inc (PFE.N) and Legg Mason Inc’s (LM.N) Western Asset and other investors in the certificate of deposit.

Banks have poured millions of dollars to develop blockchain, the software first created to run cryptocurrency bitcoin, to streamline processes ranging from cross-border payments to securities settlement.

“Blockchain-related technologies have the potential to bring about major change in the financial services industry,” David Furlong, senior vice president of artificial intelligence, venture capital and blockchain at National Bank of Canada, said in a statement.

JPMorgan is considering spinning off Quorum because the technology has attracted significant outside interest, Umar Farooq, head of blockchain initiatives for JPMorgan’s corporate and investment bank said in an interview.

He said it was taking too much time to field requests for help from users at other companies.

Charging for assistance is not an option because software support is not the bank’s business, a person familiar with the matter said on condition of anonymity. The source was not authorized to discuss the matter publicly.

The spin-off discussions are in the early stages and the bank has received interest from financial institutions and large enterprise technology companies, Farooq added. He declined to name the companies.

JPMorgan plans to beef up the Quorum team with dozens of engineers from the bank’s other divisions who have become familiar with the technology, he said.

Blockchain is in the early stages of development in the financial industry, but JPMorgan is optimistic about its potential, Farooq said.

“We haven’t really seen a lot of really large scale things go into production yet. There are few cases where blockchain can really shine.”

Reporting by Anna Irrera; Editing by Richard Chang

Uber picks VMware's Zane Rowe as CFO: Bloomberg

(Reuters) – Uber Technologies Inc [UBER.UL] has picked VMware Inc’s (VMW.N) Zane Rowe as the top candidate for chief financial officer to lead preparations for the ride-hailing company’s initial public offering in 2019, Bloomberg reported on Wednesday.

The logo of Uber is pictured during the presentation of their new security measures in Mexico City, Mexico April 10, 2018. REUTERS/Ginnette Riquelme

The Silicon Valley startup is in advanced talks with Rowe, who is currently CFO at VMware, Bloomberg reported, citing people familiar with the matter.

An agreement has not been finalized yet and talks could still fall through, Bloomberg said citing one of the sources.

Uber’s board of directors has agreed to take the company public in 2019 and is searching for a chief financial officer to lead this effort. The position has been vacant since 2015.

VMware declined to comment. Uber was not immediately available for comment outside regular U.S. business hours.

Reporting by Subrat Patnaik in Bengaluru; Editing by Sunil Nair

Want to Learn From Someone Who Has Achieved Success? Here Are 5 Things You Can Do to Attract a Mentor

When it comes to attracting a mentor, there are a few things you can do to stand out and get the attention of someone that matters. In all my years of building successful businesses, I can tell you the mentors on my path contributed largely to my successes.

A mentor can be any person that has skill, experience, or expertise in an area that could help your career. Usually, it’s information you can’t learn in books or online, so it’s vital that you pick his or her brain to get that “intel.” However, in order to actually find that mentor, you have to ask. You have to put yourself out there, show your interest to learn, and built a rapport that builds a sound relationship. 

You’ll be surprised how responsive successful people can be–when they see a younger version of themselves hustling to make their dreams a reality. You’ll find many people are flattered that you are asking for their advice, so they will help you. And that’s what you need if you’re going to make it in the real world–help, from a lot of people.

That said, it’s important not to rely on just one person, no matter how smart they are. Having different mentors for different things is what gives you a more well-rounded view of both the world and your ambitions. I certainly haven’t forgotten all the people who helped me. My life story has been full of mentors, and many of the lessons I learned from them made their way into my book, All In. In fact, most of my mentors didn’t even know they were my mentors; they just thought they were being my friends!

So, how do you find a mentor, especially the right mentor, and build a relationship with them that lasts a lifetime?

1. Nurture your own education, first.

I have always been a go-getter. Even as a kid, I never waited for the answer to come to me–I went out to find it myself. I studied on my own. I read books. And I sought out people I could learn from directly, who could answer the questions I had from direct experience. As I got older, I did everything I could to remain curious about how things worked, and to keep asking questions to feed my own learning. 

This is something I have since passed down to my employees, both former and current, and it’s something I would like to pass along to you. Don’t wait for the answer to come to you. Don’t wait for someone pull you aside and say, “I’m going to teach you how things get done.” Don’t wait for anyone else’s approval. 

Go out there and find it yourself. That level of hunger, curiosity, and persistence will speak volumes about the type of person you are, and more than enough people will present themselves as potential mentors willing to help.

They were once just like you.

2. Look for the mentor that can teach you what you want to know.

Not all mentors are created equal.

Finding the right mentor is all about understanding what it is you want to learn. You already know what you want to do with your business, right? So look at the marketplace, and target some players in your business area that you aspire to be like. Is there someone in your network who’s doing what you want to be doing one day? If so, reach out to them. You don’t have to walk up and say, “Will you be my mentor?”–just establish a relationship and ask for advice.

This is what most people misunderstand about mentorship. It almost always starts with a single question, and then grows organically from there. It’s not about someone pulling you aside and saying, “I want to mentor you.” It’s about you asking the right questions, at the right times, and proving that you’re willing to learn–over and over again.

If you’re lucky, the person you’re asking will continue to provide you with answers.

3. Be willing to be wrong.

One of the most valuable kinds of mentors you can attract is the one that will tell you when your idea needs improving, or you should reassess the likelihood of your business meeting your goals. 

I have met a lot of entrepreneurs who get emotionally attached to an idea and think it’s better than it really is. I’ve also met a lot of small business owners who have grand plans, and think they’re capable of more than they really are. 

I offer the same advice to you. However, in order to find people you can learn from who are going to tell it to you like it is, you have to be open to hearing that sort of feedback. You have to be willing to be wrong, and that’s okay.

4. When someone presents themselves as your mentor, trust them.

Finding a mentor is a fortunate thing. It’s something I never took for granted, and neither should you.

What drives mentors to teach is seeing their principles passed along to the next person. They get fulfillment out of seeing things put into practice. Nothing encourages a mentor to teach more than a student that takes what they learn, applies it, and then comes back for more.

It was always apparent who took advantage of those resources and who didn’t. You want to be the type of person who devours knowledge and makes the most of every opportunity to learn. That’s what makes you stand out, and that’s what makes a mentor figure take notice.

5. Stay humble.

What’s that old saying? “There’s a thin line between love and hate?” Well, there’s a thin line between thinking too big and thinking too small. You have to thread that needle. To do that, you want to aim high but stay grounded. Believe in yourself, but talk to people further along than you. Have confidants who will shoot straight with you! And whatever you do, don’t drive blind, because we all know where a wing-and-a-prayer strategy will get you in the business world, into bankruptcy court.

I’m not telling you to not reach for the stars. But even the most successful people have mentors, and people they turn to for advice and insight. When you make it big, find a mentor for dealing with success. In 1995, after I sold half of my first company I needed someone to help me understand dealing with money and family and turned to Lewis Katz, a lawyer who went into business and got so wealthy he and a few of his partners owned the New Jersey Nets, the New Jersey Devils, and the New York Yankees. I asked, “Lew, you’ve been wealthy for a long time. Will you help me understand how you deal with money and family?” Lew gave me some great advice. And he won’t be the last mentor I have.

Always keep yourself open to continuing to learn. The journey never ends.

Facebook says users must accept targeted ads even under new EU law

MENLO PARK, Calif. (Reuters) – Facebook Inc (FB.O) said on Tuesday it would continue requiring people to accept targeted ads as a condition of using its service, a stance that may help keep its business model largely intact despite a new European Union privacy law.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File Photo

The EU law, which takes effect next month, promises the biggest shakeup in online privacy since the birth of the internet. Companies face fines if they collect or use personal information without permission.

Facebook Deputy Chief Privacy Officer Rob Sherman said the social network would begin seeking Europeans’ permission this week for a variety of ways Facebook uses their data, but he said that opting out of targeted marketing altogether would not be possible.

“Facebook is an advertising-supported service,” Sherman said in a briefing with reporters at Facebook’s headquarters.

FILE PHOTO: Facebook CEO Mark Zuckerberg testifies before a House Energy and Commerce Committee hearing regarding the company’s use and protection of user data on Capitol Hill in Washington, DC, U.S., April 11, 2018. REUTERS/Aaron P. Bernstein/File Photo

Facebook users will be able to limit the kinds of data that advertisers use to target their pitches, he added, but “all ads on Facebook are targeted to some extent, and that’s true for offline advertising, as well.”

Facebook, the world’s largest social media network, will use what are known as “permission screens” – pages filled with text that require pressing a button to advance – to notify and obtain approval.

The screens will show up on the Facebook website and smartphone app in Europe this week and globally in the coming months, Sherman said.

The screens will not give Facebook users the option to hit “decline.” Instead, they will guide users to either “accept and continue” or “manage data setting,” according to copies the company showed reporters on Tuesday.

“People can choose to not be on Facebook if they want,” Sherman said.

Regulators, investors and privacy advocates are closely watching how Facebook plans to comply with the EU law, not only because Facebook has been embroiled in a privacy scandal but also because other companies may follow its lead in trying to limit the impact of opt-outs.

Last month, Facebook disclosed that the personal information of millions of users, mostly in the United States, had wrongly ended up in the hands of political consultancy Cambridge Analytica, leading to U.S. congressional hearings and worldwide scrutiny of Facebook’s commitment to privacy.

Facebook Chief Financial Officer David Wehner warned in February the company could see a drop-off in usage due to the EU law, known as the General Data Protection Regulation (GDPR).

Reporting by David Ingram; Editing by Greg Mitchell and Lisa Shumaker

Why Crypto Is Being Sold as a Solution for Lower Real Estate Commissions

The real estate industry is known for its volatility. One market may be on its way up as another may be crashing to the ground. While real estate professionals and investors alike are used to navigating the ever-shifting ground beneath their feet, there’s a new real estate tech shake-up headed for the industry: cryptocurrency.

To get a better sense of the burgeoning relationship between real estate and decentralized protocols, I connected with co-founder Matthew Herrick at Deedcoin, an organization aiming to tokenize real estate transactions and, subsequently, reduce real estate commissions down to 1%. Our conversation touched on Deedcoin’s unique solution, as well as ways in which the industry as a whole is ripe for cryptocurrency-powered progress.

How do you think cryptocurrency can help people save money on real estate agent fees?

Herrick: Institutions have grown so large over time that some have neglected innovation. Meanwhile, the public has not yet had the technology to provide competitive options without corporate support.

Through decentralized ledgers, a group of people can join together and become a formidable alternative. Deedcoin is this crowd force of the real estate industry. We tokenize commission percentages and therefore giving the public the free market choice of what those should cost.

Homeowners can pay 1% commission through the Deedcoin Network, because we solve the marketing expenditure and customer acquisition problems for agents. Property sellers can utilize 50 Deedcoin to reduce the agent commission from 6% to as low as 1%. Buyers can use 20 Deedcoin to receive 2% of the purchase price back on any home.

Why did you peg Deedcoin’s initial launch price at $1.50 per token?

Herrick: Deedcoin are originally sold at launch for $1.50, but the whole idea of Deedcoin is to let the free market set the value of the solution. Using 50 Deedcoin lets buyers save 5% of their homes value.

For an average home of $240,000, this equates to $12,000 kept in an owner’s pocket while still receiving the same quality service through a local agent. We divided the ideal launch budget by the amount of token for establishing a wide user base through the launch and it came incredibly close to $1.50.

How much money did you raise for your initial coin offering?

Herrick: Deedcoin has been marketing to the public for just over 90 days and has sold just short of $1 million in DEED so far.

We have been southpaw in the way we have launched our project. Many ideas are coming to the token sale with an idea on a napkin called a whitepaper. The team and I think this is a major issue with the blockchain world.

We began in early 2017 in development, filing pending patents, building a platform, and recruiting a national broker network. Because we wanted to prove the concept before asking for money, Deed was a secret to the outside world until January 2018. We felt it was important to keep things quiet while we established the solution to avoid anyone with more funding beating us to market.

As regulation increases, I wonder, is Deedcoin SEC compliant? What about Know Your Customer (KYC) and Anti-Money Laundering (AML)?

Herrick: Yes, we are SEC compliant. Compliance has been a top priority for Deedcoin since our inception.

Unlike many token sales, Deedcoin is for a large percentage of the population. To be specific, anyone who lives inside a home should own at least 50 Deedcoin to protect their equity when they go to sell.

Due to our wide user base, it was crucial to work within SEC guidelines and sell to U.S. people who are homeowners in our initial footprint. To remain compliant, we developed the concept with our own funding to launch the network, making it a usable product.

Very early in our process, we secured Thompson Bukher LLP out of Manhattan to guide us through every regulation available. We have spent so much time on the phone with attorney Tim Bukher specifically, our teams have become friends. Additionally, for our SAFT sales, we filed a 506D exemption to let the SEC know what we are doing and have a CIK number.

For AML and KYC, all users are screened on registration against the Reuters International database for various factors including watch lists and the politically exposed. The solutions are too great in this technology to let a war with regulation prevent innovation. We believe that working within the guidelines allows the industry to grow and regulation to evolve structurally to provide consumer safety with stifling innovation.

Hyperloop Transportation Technologies Begins Work on Test Track in France

Hyperloop Transportation Technologies, an independent company working to build the high-speed transportation system first envisioned by Elon Musk, has announced the beginning of construction on a test track in Toulouse, France. The company released a video showing the arrival of the first components of the system, a series of huge tubes.

Those tubes, according to the concept laid out by Musk in 2013, will form a sealed vacuum, through which a passenger pod would be sent at speeds of as much as 700 miles per hour. Hyperloop Transportation Technologies, also known as HyperloopTT, says its full-scale passenger capsule is nearing completion.

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Progress towards fulfilling Musk’s vision has been rocky — not entirely surprising given the scale of the challenge. Musk initially said he would not be directly involved in pursuing the idea, but SpaceX later organized student design competitions and built a Hyperloop test track. More recently, Musk and his tunnel-building Boring Company have become even more involved, including gaining a permit for a possible future Hyperloop station in Washington, D.C.

Hyperloop Transportation Technologies is one of two prominent independent companies pushing the concept forward. The other, Hyperloop One, got off to an early lead, attracting headline talent and becoming part of Richard Branson’s Virgin group. Hyperloop One completed a test track in Nevada in April 2017, even while grappling with major internal conflict.

That means HTT’s test track would be the third to be completed worldwide. Though it’s running behind the competition in some ways, HyperloopTT has remained relevant in part by focusing on development deals outside of the U.S., including in Europe and South Korea.

UK could launch retaliatory cyber attack on Russia if infrastructure targeted: Sunday Times

LONDON (Reuters) – Britain would consider launching a cyber attack against Russia in retaliation if Russia targeted British national infrastructure, the Sunday Times reported, citing unnamed security sources.

A Russian flag is seen on the laptop screen in front of a computer screen on which cyber code is displayed, in this illustration picture taken March 2, 2018. REUTERS/Kacper Pempel/Illustration

Britain’s relations with Russia are at a historic low, after it blamed Russia for a nerve agent attack on former Russian spy Sergei Skripal and his daughter in England, prompting mass expulsions of diplomats.

Russia has denied involvement, and on Saturday also condemned strikes against Syria by Western powers, which Britain took part in.

Cyber security has become a focal point of the strained relations. On Thursday, a British spy chief said that his GCHQ agency would “continue to expose Russia’s unacceptable cyber behaviour”, adding there would be increasing demand for its cyber expertise.

The Sunday Times also said that British spy officials had been preparing for Russia-backed hackers to release embarrassing information on politicians and other high-profile people since the attack on the Skripals.

Reporting by Alistair Smout; editing by Jonathan Oatis

My Oh My, 4 Strong Buys

As my newsletter subscribers know, I provide readers with a more detailed playbook than just BUY/HOLD/SELL picks. Oftentimes investors need more clarity as it relates to messaging, so I provide a few more granular recommendations, such as STRONG BUY, SPECULATIVE BUY, and TRIM. Here’s my definition of STRONG BUY:

“Strong Buy means that I am recommending a high-quality REIT that is trading at a wider margin of safety. Recognizing principal preservation is critical, my recommendation is telegraphing readers that the company is a blue chip on sale.”

One of the key valuation differences between a regular BUY and STRONG BUY is that the company must have enhanced price appreciation catalysts that support annual Total Returns of 25% or higher (over the next two years). Around two years ago, I had just two or three STRONG BUYs recommended, but now I have eleven.

Keep in mind, a STRONG BUY does not necessarily suggest that shares in these REITs will immediately rebound. Sometimes catalysts could be driven by macro-economic forces (such as tax reform) or headwinds, that could take quarters to play out.

Regardless, my “stepped-up” BUY recommendation is based on fundamental analysis in which I believe there is a good chance that the particular stock will outperform the regular BUY basket. In this article, I will explain my rational for recommending 4 (of 11) STRONG BUYs… and I will cover all 11 in the upcoming edition of my newsletter.


My, Oh, My, 4 Strong Buys

Kimco Realty (KIM) is a shopping center REIT that I am very confident produces a sufficient margin of safety. The company is down over 20% YTD and is trading at more than a 25% discount to what I consider to be their fair value (current price: 14.31, Fair Value: 26).

Not only is KIM trading at a significant discount to its fair value, but it also has a solid balance sheet (BBB+ rated), is well diversified, has a top-quality management team, and has an extremely attractive dividend (that is well-covered). All of these characteristics make for a strong REIT that I expect to provide enhanced shareholder value.

Kimco has recently restructured some of its debt in order to create a safe debt maturity schedule with an average time to maturity of over 10 years. That, on top of a $2 billion unused line of credit, makes for a safe and manageable debt structure into the future.

Kimco has a well-diversified portfolio of shopping centers across the nation from California to New York to Florida. They have a total of 4000 tenants with balanced lease expirations to create a higher margin of safety. On top of that, 4 out of Kimco’s 5 top tenants are still rated investment grade by Moody’s.

Kimco’s management team is top notch and is more capable of creating alpha than a majority of other management teams. The REIT was able to increase occupancy and rental spreads even in a time of severe scrutiny towards brick and mortar retail.

Kimco was one of a few brick and mortar retail REITs that managed to increase their FFO per share between 2016 and 2017, showing the skill of the management compared to other shopping center REITs. As far as the company’s dividend, it has not seen this high of a yield since pre-2008.

With consistent FFO growth and a well-covered dividend, the Kimco dividend is strong and in no worry of being cut. For these reasons, Kimco is a Strong Buy with a wide margin of safety. As the FAST Graph below indicates, KIM investors could see shares return by over 25% annually over the next 2-3 years. See my latest article HERE.

Tanger Factory Outlet Centers (SKT) is one of my favorite REITs for several reasons: (1) they have a solid management team led by veteran CEO, Steve Tanger, (2) they have had consistent dividend payments and growth since their inception (just announced a dividend increase yesterday), and (3) they maintain a fortress balance sheet (BBB+).

We will start with the management: Tanger’s management has shown its ability to provide a margin of safety by maintaining an over 95% occupancy rate over the last several years. Meanwhile, the company has maintained strict financial discipline by pre-leasing all of its new projects with a minimum 60% pre-leasing rate.

Tanger’s ability to grow and maintain a safe dividend is one of their most attractive features. Even in a tumultuous time for brick and mortar retailers, the company has managed to continue growing their dividend.

Right now, Tanger has a dividend yield of just over 6%, and although that is not the highest in the retail sector, it is the safest and most likely to grow. Even if Tanger hits hard times and sees a decrease in FFO, it can still continue to increase its dividend because it has a low payout ratio compared to many REITs.

Now on to Tanger’s strongest feature, their fortress balance sheet.

Tanger maintains a credit rating of BBB+ from S&P, making it one of the highest rated brick and mortar retail REITs. This allows them to get cheap debt over a longer maturity schedule, creating true alpha for shareholders. Until the development cycle returns, I don’t expect Tanger to produce enhanced FFO growth, but I am confident the company can manage through the cycle as it has for over two decades.

We maintain Tanger as a Strong Buy, and as viewed below, we expect shares to return around 25% annually through 2020. The continued dividend bumps serve as a catalyst that should drive the growth of the shares, and allow investors to sleep well at night. See my latest article HERE.

Simon Property Group (SPG) is the big boy REIT on campus, both in size and their ability to provide outsized returns for investors. The mall giant can use its low cost of debt (A-rated) and prudent capital allocation discipline to continue to produce steady and reliable earnings and dividend growth.

Financial muscle and scale are Simon’s true differentiators, and by utilizing low-cost capital and global diversification, the company has been able to defend from the e-commerce enemy, Amazon (NASDAQ:AMZN). While many retail REITs are reporting not too modest FFO growth, Simon continues to validate its wide moat status by increasing their dividend, with the most recent bump coming in at a 5% bump.

While the weaker mall REITs (namely CBL & Associates (NYSE:CBL) and Washington Prime Group (NYSE:WPG)) continue to struggle with capital allocation (and dividend cuts), Simon has positioned itself well by creating robust value creation through re-development and ground-up development.

Simon offers investors a very compelling opportunity to own shares in trophy assets – the company owns primarily “A” malls, which have higher sales productivity and are in better locations than the B and C malls. The long-term outlook for the A malls is favorable and Simon’s fortress balance should allow the company to continue to generate steady and reliable dividend.

Simon is yielding 5.0% with a P/FFO (13.4x) well below normal levels (18x), that suggests the company is cheap. As the lower-quality Mall REITs continue to suffer, we believe that Simon will become the clear winner in the sector. See my latest article HERE.

Physicians Realty Trust (DOC), and medical office REITs (or MOBs) in general, have become attractive investments.

Specifically, DOC also has a solid dividend of 6.2%, which is extremely attractive once you consider the high credit quality tenants. The company owns 14 million square feet that is 96.6% leased, with over 50% of that space leased directly to investment grade rated healthcare systems and their subsidiaries.

During 2017, the weighted average age of DOC’s building improved from 20 years to 18 years and the average size of facilities increased from 44,000 feet to 50,000 feet.

DOC has very few debt obligations in the near term because in December of 2017, they paid off the remainder of their short-term debt (it termed out its short-term debt with the 10-year publicly-traded bonds in December 2017 and now has substantial liquidity). The company’s debt to total capitalization in Q4-17 was 31% and the company’s net debt to adjusted EBITDA was 5.7x.

I am especially glad to see DOC continue to reduce its Payout Ratio, signaling that a dividend increase could be soon (late 2018 or early 2019). The payout ratio was 100% in 2014 and is in the low 80s now.

Back in March, we updated DOC from a BUY to a STRONG BUY, expecting the company could see juicy returns of 25% annually in the short term (12-24 months). See my latest article HERE.

To view all 11 STRONG BUY picks CLICK HERE.

Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendations. That also applies to his grammar. Please excuse any typos, and be assured that he will do his best to correct any errors, if they are overlooked.

Finally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinking. If you have not followed him, please take five seconds and click his name above (top of the page).


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.

Photographing the Lights of America's Prisons—and the Lives Inside

Light is a symbol for life, as any night traveler knows. A warm glow up ahead means there’s a town full of people, with a gas station or possibly a McDonald’s where you can stretch your legs, use the john, maybe buy a Coke.

The lights in Stephen Tourlentes’ Of Lengths and Measures also represent life. Though here, there’s no friendly pit stop. Instead they beam from correctional facilities, the prisoners hidden from view behind miles of razor wire, cinder blocks, and electric fencing. It’s life many would prefer not think about.

“The prison system makes people invisible,” Tourlentes says. “It takes them, relocates them, makes them go away from the rest of us. But this light always spills back out onto the landscape.”

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More than 1.5 million people are incarcerated in 1,800 prisons in the United States. That’s roughly 700 times the number of prisoners as in 1970. Harsh sentencing laws in the 1980s helped fuel this growth, leading to the construction of hundreds of correctional facilities and the establishment of the private-prison industry—often an economic boon to the struggling towns that received them.

That was certainly the case with Galesburg, the Illinois town where Tourlentes grew up. It had largely opposed the construction of the Hill Correctional Center until the mid-’80s, when two major sources of employment—a boat engine factory and the Galesburg State Research Hospital, which Tourlentes’ father directed—shut down. “We needed those 400 jobs,” then-mayor Fred Kimble told a reporter.

Tourlentes photographed the Hill Correctional Center while visiting his hometown in 1996. “The light given off by the prison had changed the landscape I had been familiar with,” he says. He hadn’t planned on documenting other prisons, but something about that first image haunted him. He started reading up on mass incarceration and the racial and social inequities it exposes. “It kept coming back to me, bothering me, sort of saying, ‘Pay attention to this,'” he says. “I became obsessed.”

That obsession fueled an extended, ongoing road trip. For two decades, Tourlentes traveled thousands of miles across 48 states by rental car with nothing but a marked-up atlas and the crackle of college radio for company. He’s visited more than 100 prisons—including notorious facilities like San Quentin State Prison in California, the federal supermax prison in Florence, Colorado, and Sing Sing Prison in New York—always arriving at night to gawk at the glow.

Tourlentes doesn’t step foot inside the prisons—other photographers have already covered that ground. Instead, he keeps his distance, shooting long exposures—anywhere from three to 20 minutes—with a large format camera from nearby roads, fields, and cul-de-sacs. His camera has a way of rousing suspicion and, though he’s rarely on government land, police still occasionally ask him to leave. “When I see them coming, if I can at least get the exposure started, I can sometimes stall them and explain what I’m doing while the picture is being made,” he says.

The perspective is powerful because it draws attention to the space prisons occupy on the peripheries of society. The bright wash of security lights amplifies their presence, bearing witness to the life locked away inside.

Landing a Massive Account May Put Your Company Out of Business

I was in the first 24 months of my first startup, a B2B services business. My team and I had been pursuing a contract at one of the highest-profile early stage companies in the United States, and to our amazement we actually won the deal.

Our revenues tripled overnight, and it put our company on the map.  As excited as we were to win the business, had I known then what I was about to experience I would have managed things very, very differently.

Winning this deal nearly became a death sentence for my business.  Here’s why:

Servicing the account consumed all of our resources.

Winning this deal was akin to the dog catching the car: we latched on to the bumper and quickly realized that we had zero control over what would happen next.

I knew that this account would require us to marshal most of our resources – cash, time and people – to deliver on our promises. Quickly we realized just how understaffed we were in order to meet expectations, and pulled nearly everyone into the mix; we more than doubled the company’s headcount within 60 days of the program going live.

Our cash funded the headcount growth, our new hires consumed all of our management time, and our inability to do anything but service this customer prevented us from developing the systems and processes that would have made the model replicable.  Our lack of bandwidth also prevented us from winning any new business, which became problematic down the road.

This customer knew they were our biggest account by far, and they took full advantage of that dynamic. Every meeting request, every late night phone call, every weekend email barrage — we couldn’t say no.  

Customer concentration put our balance sheet under immense stress.

I didn’t have the bandwidth to service new business, and I didn’t have the cash flow to expand the sales team to add more business. In fact, the last thing I wanted at the time was another account to service. This was flawed thinking, as I came to find out soon enough.

Our customer’s business was growing exponentially, and our relationship with them grew in lockstep. It was exhilarating, but it was during this time that I learned a priceless lesson about hyper-growth: it’s a cash furnace.

Our billings with the customer doubled, we doubled our headcount, and our payroll would also double. The payroll debits hit every two weeks, but our customer’s checks came every 60 days.  Before I knew it, I was tapped out on a $1 million line of credit (personally guaranteed, of course) just to float our customer’s growing receivables.  They weren’t aging more than 60 days, but they were growing so rapidly that my credit line couldn’t keep up.  I nearly grew myself out of business.

Losing the business was catastrophic.

I received the call two years into the relationship at the contract renewal: this company was bringing these operations in-house. There was no hint that this result was going to happen. Over forty percent of my revenue evaporated overnight.

We hadn’t done the work to diversify the business (we were cash poor, after all) so I had nowhere to put all of these now-idled people. In one of the toughest days of my entrepreneurial career, I had to send 20 amazing individuals packing on little notice.  It was one of those soul-crushing moments that hardens you as an entrepreneur.

About those receivables: the customer’s interest in paying us in a timely fashion for services already billed dropped precipitously after the cancellation. I spent the next six months fighting off the bank while I worked to get this now former customer to pay their outstanding invoices. On more than one occasion, I tapped personal savings (including a 401(k) loan) to make payroll. It was a decidedly not-fun experience.

Looking back on this entire episode, the mistakes that I made are glaringly obvious. Seeing only massive revenue gains, I failed to anticipate the negative impact on our operations.  We didn’t add new customers, because we didn’t have the cash flow or bandwidth. I was naive about setting a customer credit policy.

Sometimes, landing the whale can be the worst thing possible for your business.  In this case, the worst thing for my last company became the best hard-knock education as an entrepreneur that I’ve ever received.