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Instabridge, the Wi-Fi sharing community, scores $3M more funding for Asia expansion

Posted: 10 Apr 2018 11:30 PM PDT

Sweden’s Instabridge, the Wi-Fi sharing community and mobile app that has proved particularly popular in Brazil and Mexico, has scored $3 million in further funding — money it’s pegged for Asia expansion, starting with India.

The new round is led by Luminar Ventures (headed up by Magnus Bergman and Jacob Key), with participation from previous backers Balderton Capital, Draper Associates, Moor, and Creandum. The company had previously raised around $5 million.

Originally founded in late 2012 as a way to enable you to share your home Wi-Fi with friends on Facebook, the Stockholm-based company has since pivoted to become a broader Wi-Fi sharing community, and has found traction in developing markets where cellular data remains prohibitively expensive.

The Instabridge app lets you share the details of any Wi-Fi hotspot with other Instabridge users, and provides access to Wi-Fi hotspots shared by everyone else in the community. This has enabled it to build a crowdsourced database of Wi-Fi hotspots, in addition to a list of known public venues that have free Wi-Fi, such as McDonald's or Starbucks.

Instabridge says it plans to build on the traction it has seen in South America by targeting India’s population of over 1 billion people, of which it says only 400 million currently have internet access. This, Instabridge co-founder Niklas Agevik tells me, will include building out a team in India, and plays into the company’s new-found mission of expanding internet access in developing countries where internet services remain relatively expensive and yet access to the internet is a proven means of “reducing income inequality”.

Meanwhile, I’m told that Instabridge is now seeing 2.3 million Monthly Active Users, and is growing at a rate of 50,000 new users per day. The Instabridge database now houses the details of 2 million Wi-Fi spots.

Liberis raises £57.5M to offer finance for small businesses paid back via customer card transactions

Posted: 10 Apr 2018 11:00 PM PDT

Liberis, the London-based fintech that provides finance for small businesses, has raised £57.5 million in new funding to help support the company’s growth. The alternative finance provider makes loans against a company’s future credit and debit card sales.

The majority of the new capital being raised by Liberis is debt, which in turn will enable it to issue more loans. The facility is being provided by British Business Investments (the commercial arm of the tax payer-funded British Business Bank), Paragon Bank, and BCI Ltd.

In addition, Blenheim Chalcot has made an equity investment into Liberis. The so-called “digital venture builder” also previously backed Clearscore, the credit scoring startup recently acquired by Experian.

Providing a new financing option as a replacement for a traditional bank loan or extended overdraft — which is increasingly hard for small businesses to come by — Liberis provides funding from £1,000 to £500,000 based on a company’s projected credit and debit card sales. However, the clever part is that the loan is paid back via a pre-agreed percentage of the business' digital transactions, making it especially attractive to seasonal businesses that have very uneven sales throughout different times of the year. There isn’t a time limit placed on when a loan has to be repaid, either. Instead, the repayment schedule is directly tied to the size and pace of a small business’ card transactions.

In a call with Rob Straathof, CEO of Liberis, he conceded that this means the fintech startup is taking on more of the risk, but says the company is seeing the vast majority of loans paid back within the projected timeframe. To help manage risk and make the required sales projections, Liberis uses various data points, including transactions pulled in from a number payment platform partners such as Worldpay, and Sagepay. Similarly, it also integrates with take-out marketplace Just Eat, which gives the startup the ability to offer financing to small restaurants. The advent of Open Banking, which lets bank account holders share their transaction data via an API, will also enable Liberis to extend its reach.

Examples of small business customers given by Straathof include a local bakery that needs to invest in a new oven, a neighbourhood pub that wants to expand with a beer garden, or an online retailer that needs to incrementally restock to meet rising demand. “Our innovative product has proven particularly popular with retail and hospitality businesses where income fluctuates on a seasonal basis. New lending to small businesses by banks has been decreasing since Q4 16 and Liberis jumps into the void with our 'pay as you earn' funding solution,” he says in a statement.

To date, Liberis has helped over 7,000 small businesses, advancing £210 million in funding. However, it isn’t the only ‘pay as you earn’-styled finance provider. Amazon, of course, offers its own business financing based on Amazon Market transaction data. PayPal and Square also offer credit for retailers. Meanwhile, SME peer-to-peer lending platforms, such as Funding Circle, might also be viewed as a competitor.

Here are Mark Zuckerberg’s notes from today’s hearing

Posted: 10 Apr 2018 06:36 PM PDT

Facebook’s Mark Zuckerberg pulled off a smooth appearance in a joint Senate hearing today, dodging most questions while maintaining an adequately patient vibe through five hours of varied but mostly tame questioning.

The chief executive avoided admitting that Facebook is a publisher or a monopoly, refused to commit to any meaningful legislation and respectfully addressed lawmakers over a nearly five hour marathon testimony.

Still, he did make one rookie mistake.

Zuckerberg left his hearing notes open in front of his seat for long enough for AP Photographer Andrew Harnik to snap a high resolution shot with talking points in plain view. Twitter users and journalists scanning photos from the courtroom as they hit the wire were quick to notice, the irony of the minor privacy invasion not lost on them.

Most of the notes cover points that we heard Zuckerberg repeat during the course of the hearing, but there are a few more candid statements that didn’t come up. The notes also provide a glimpse into what lines of questioning Facebook expected. For one, they expected Congress might demand his resignation.

Below we’ve listed the subheadings on his notes in bold with any interesting bullet points pulled out. Our partial transcript retains the original emphasis from the document. Though we’ve italicized what was underlined, bold lettering is retained.

Cambridge Analytica

Compensation

Reverse lookup (scraping)

Accountability

  • Do you ever fire anyone? Yes; hold people accountable all the time; not going into specifics.
  • Resign? Founded Facebook. My decisions. I made mistakes. Big challenge, but we’ve solved problems before, going to solve this one. Already taking action.
  • No accountability for MZ? Accountable to you, to employees, to people who use FB.

Data Safety

  • I use FB every day, so does my family, invest a lot in security.

Business Model (ads)

  • Want FB to be a service that everyone can use, has to be free, can only do that with ads.
  • Let’s be clear. Facebook doesn’t sell data. You own your information. We give you controls.

???/ wellbeing

  • Time spent fell 5% Q4, pivot to MSI.

Defend Facebook

  • [If attacked: Respectfully, I reject that. Not who we are.]

Tim Cook on biz model

  • At FB, we try hard to charge you less. In fact, we’re free.
  • On data, we’re similar. When you install an app on your iPhone, you give it access to some information, just like when you login with FB.
  • Lots of stories about apps misusing Apple data, never seen Apple notifying people.
  • Important you hold everyone to the same standard.

Disturbing content

Election integrity (Russia)

Diversity

  • Silicon Valley has a problem, and Facebook is part of that problem.
  • Personally care about making progress; long way to go [3% African American, 5% Hispanics]

Competition

  • Consumer choice: consumers have lots of choices over how they spend their time.
  • Small part of ad market: advertisers have choices too – $650 billion market, we have 6%
  • Break up FB? US tech companies key asset for America; break up strengthens Chinese companies.

GDPR (Don’t say we already do what GDPR requires)

Sen. Harris puts Zuckerberg between a rock and a hard place for not disclosing data misuse

Posted: 10 Apr 2018 06:08 PM PDT

Senator Kamala Harris (D-CA) spent her portion of today’s epic-length questioning of Mark Zuckerberg getting the CEO to squeeze himself deeper and deeper between a rock and a hard place. He didn’t reveal anything particularly damning, but he also — with her help — made himself look ineffective and clueless.

Her questioning had Zuckerberg contradicting himself on a serious topic: how the decision was made in 2015 to not inform the 87 million users that their data had been improperly sold off. If he didn’t know about how that decision was made, what kind of leadership was that? But if he did know, then how could no conversation have taken place about the decision before it was made? It was one of the few times in the hearing where Zuckerberg’s prepared remarks proved wholly insufficient.

Harris, who sounded bored — as well she might be after some of the softballs that had been lobbed in Zuckerberg’s direction — began by saying that she was “concerned” by what she’d heard.

“During the course of this hearing these last four hours you’ve been asked several critical questions for which you don’t have answers,” she began.

We were also tracking the many, many times Zuckerberg declined to answer clearly or deferred with the standard “we’ll follow up.” For the record, Harris listed that Zuckerberg did not address:

  • Whether Facebook tracks users after they log out (his answer to this, “I know that people use cookies on the internet, and that people can probably correlate activity between sessions,” was a monumental eye-roller considering we know this is a crucial capability Facebook deploys.)
  • Whether Facebook can track activity across devices
  • Who is Facebook’s biggest competitor (Senator Graham pursued this with vigor)
  • Whether Facebook “may store up to 96 categories of user information” (I would be surprised if it is that few)
  • Whether he knew about Aleksandr Kogan’s terms of service or whether Kogan could sell or transfer data under them

But her main issue, aside from informing Zuckerberg that these points had not been forgotten, was to bring up the specific occurrence that in 2015, Facebook learned that the data of millions of users had been abused, and yet did not inform those users.

“A concern of mine is that you, meaning Facebook, and I’m going to assume you personally as CEO, became aware in December of 2015 that Dr Kogan and Cambridge Analytica misappropriated data from 87 million Facebook users. That’s 27 months ago,” she said. “However, a decision was made not to notify the users. So my question is did anyone at Facebook have a conversation, at the time that you became aware of this breach, have a conversation wherein the decision was made not to contact the users?”

Here Zuckerberg attempted the defense of not being able to know every conversation at Facebook “because I wasn’t in a lot of them… I mean, I’m not sure what other people discussed.”

WASHINGTON, DC – APRIL 10: Facebook co-founder, Chairman and CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC. Zuckerberg, 33, was called to testify after it was reported that 87 million Facebook users had their personal information harvested by Cambridge Analytica, a British political consulting firm linked to the Trump campaign. (Photo by Chip Somodevilla/Getty Images)

Harris did not take the bait and when Zuckerberg attempted to steer the conversation towards the known facts of how Facebook responded in 2015, she pressed on:

“Were you part of a discussion that resulted in the decision not to inform your users?”

“I don’t remember a conversation like that,” Zuckerberg responded, and attempted to expand with “for the reason why—” only to be cut off by Harris again.

“Are you aware of anyone in leadership at Facebook who was in a conversation where a decision was made not to inform your users,” she asked, “or do you believe no such conversation ever took place?”

This was an excellent move. She’d limited Zuckerberg’s options to either admitting he was unaware of conversations among leadership choosing to withhold news of this data abuse from users (unrealistic), or admitting that leadership did not have those conversations (deeply troubling). Both reflect poorly on him, his executives, and the company. Zuckerberg prudently chose to plead ignorance.

“I’m not sure whether there was a conversation about that,” he said, yet immediately hit on a prepared line. “But I can tell you about the thought process at the time, of the company, which was that in 2015 when we hard about this, we banned the developer and we demanded that they delete all the data and stop using it, and the same with Cambridge Analytica. They told us they had—”

But Harris had no intention of allowing him to run out the clock with recycled, irrelevant statements, as he had many times in the previous hours.

“I’ve heard your testimony in that regard,” she cut in before finally taking her chance to bear down on him.

“But I’m talking about notification of the users. This relates to the issue of transparency and the relationship of trust — informing the user about what you know in terms of how their personal information has been misused. When you personally became aware of this, did you or senior leadership do an inquiry to find out who at Facebook had this information, and did they not have a discussion about whether or not the users should be informed, back in December of 2015?”

Zuckerberg was faced again with a poor choice, and instead opted for a show of humbleness.

“Senator, in retrospect I think we clearly view it as a mistake that we didn’t inform people, and we did that based on false information that we thought that the case was closed and that the data had been deleted.”

Facebook CEO Mark Zuckerberg arrives to testify before a joint hearing of the US Senate Commerce, Science and Transportation Committee and Senate Judiciary Committee on Capitol Hill, April 10, 2018 in Washington, DC. (Photo: JIM WATSON/AFP/Getty Images)

Harris jumped on this admission that “we did that”: “So there was a decision made on that basis not to inform the users, is that correct?”

“That’s my understanding, yes. But in retrospect I think that was a mistake and knowing what we know now we should have handled a lot of things here differently,” he continued, abjectly.

Harris politely dismissed this sad act (“And I appreciate that point”) and returned to business for one last question on this: “Do you know when that decision was made not to inform the users?”

“I don’t,” Zuckerberg said simply.

So to sum up: in 2015, it became clear to Facebook and certainly to senior leadership that the data of 87 million people had been sold against the company’s terms. Whether or not to inform those users seems like a fundamental question, yet Zuckerberg claimed to have no recollection of any discussion thereof. That hardly seems possible — especially since he later said that they had in fact had that discussion, and that the decision was made on bad information. But he doesn’t remember when this discussion, which he does or doesn’t remember, did or didn’t take place!

While this poor showing likely doesn’t rise to the level of falsity, this blatant dissimulation by Zuckerberg results in him coming off looking like a liar and a sap. For a hearing where the Senators themselves were often the ones making fools of themselves, it was nice to see the shoe on the other foot. I look forward to Senator Harris’s continuing attentions — her parting shot was telling Zuckerberg and everyone else how subpar their answers to her 50 (!) written questions from a previous hearing were. Here’s hoping she gets answers.

You can watch the full video below (courtesy of ABC):

A peace plan to end the wireless wars

Posted: 10 Apr 2018 05:30 PM PDT

No one would have predicted that the three of us would ever find ourselves on the same side of the corporate patent wars, let alone speak with one voice about how to end them.

That's because one of us is the patent chief at a global smartphone maker (and an influential critic of patent licensing abuses); another is the former licensing chief at Apple and current chief executive of a non-practicing entity (NPE) patent licensing company that has been a target of criticism from product manufacturers; while the third is president of a patent pool operator, who has criticized companies on both sides of the patent wars for their gamesmanship, lack of transparency, and litigiousness.

We have come together because we see that patent owners and product makers have become trapped in an endless cycle of demands, counter-demands, and unproductive litigation. Unless we find a way out of this conflict, we will almost certainly see a repeat of yesterday's costly and wasteful smartphone wars in tomorrow's wireless connected car sector.

Product makers accuse patent owners of threatening lawsuits and using the expense of the legal process in order to demand extortionate royalties for their patent rights. For their part, patent owners say product makers refuse to pay fair compensation for the patented wireless, audio, and video features that give their products value as communication and entertainment devices.

The truth is, both sides have a point. That's because patent owners and product makers are caught in a classic "prisoner's dilemma," in which the lack of transparency and fair ground rules in patent licensing lead companies on each side of a patent dispute to try to game the other. This only ensures that both sides suffer a negative outcome in outrageously-expensive litigation.

Unlike in the real property business, in intellectual property (IP) licensing there is little or no independent appraisal of the assets (i.e., patents) or transparency as to how prices are determined. And because most patent license agreements are confidential, there is little or no information or "comps" on what others have paid for similar patent rights. Nor are there any widely-accepted ground rules for what constitutes fair negotiating practices between buyers and sellers.

This is especially true in regards to standards-essential wireless patents, which are supposed to be licensed on fair, reasonable, and non-discriminatory (FRAND) terms. But what's fair or reasonable about the fact that an impossibly-large number of LTE (4G) cellular patents — more than 60,000, in fact — have been declared "standards essential" without any independent evaluation of those patents whatsoever?

That's right, those 60,000-plus patents have all been self-declared "standards-essential" by companies each seeking their own commercial advantage. What you've got is a wireless gold rush — with plenty of fool's gold posing as real gold.

So the three of us, working with industry leaders on both sides of the patent owner vs. product maker divide, have developed a three-pronged plan for ending the wireless patent wars and creating a more productive and less litigious patent licensing sector.

First, whittle down this ridiculous mountain of self-interested wireless patent claims to the fewer than 2,000 patent families that most experts believe are truly essential to smartphone handset makers. We can do this by excluding duplicative patents, expired patents, patents not in force in major economic markets, and patents for base station, infrastructure, and other innovations not relevant to handset makers. Independent, neutral evaluators will then confirm each patent's relevance to the LTE standard for handsets.

Second, base royalty prices not on the subjectively-argued value of each individual patent examined in a vacuum, but on the objective value of the entire stack of LTE patents in a phone. A recent court judgment valued that LTE stack at roughly $20 for a smartphone with an average selling price of $324, but with greater price transparency from both sides, the market itself will likely set a rational price for the LTE stack. Royalties can then be paid to patent owners roughly proportionate to each patent owner's percentage share of the total LTE patent stack.

And third, ensure greater transparency by promoting collective licensing solutions such as patent pools that openly publish their pricing frameworks and offer consistent terms to all licensees. Given the "prisoner's dilemma" dynamics in patent licensing today, it is unrealistic to expect any one patent owner to unilaterally forego potential business advantage by revealing its pricing strategies. But collective licensing approaches such as patent pools reduce the risks of transparency for everyone.

As the IP journal Intellectual Asset Management recently noted, "There's a growing sense that a collective approach to licensing could help solve some of the problems of the industry which, in sectors like mobile, has been scarred by long-running and costly disputes between patent owners and potential licensees."

Our "peace plan" would eliminate many of the incentives and opportunities for gamesmanship in wireless patent licensing. And most importantly, it would help patent owners and product makers avoid a repeat of yesterday's costly smartphone wars in tomorrow's connected car, autonomous vehicle, and Internet of Things (IoT) industries.

It's time for a new realignment in the industry — one in which the conflict is no longer between product maker and patent owner, but between those who license patents on a fair and transparent basis, and those who do not.

Zuckerberg’s boring testimony is a big win for Facebook

Posted: 10 Apr 2018 05:04 PM PDT

Mark Zuckerberg ran his apology scripts, trotted out his lists of policy fixes and generally dulled the Senate into submission. And that constitutes success for Facebook.

Zuckerberg testified before the joint Senate judiciary and commerce committee today, capitalizing on the lack of knowledge of the politicians and their surface-level questions. Half the time, Zuckerberg got to simply paraphrase blog posts and statements he’d already released. Much of the other half, he merely explained how basic Facebook functionality works.

The senators hadn’t done their homework, but he had. All that training with D.C. image consultants paid off.

Facebook CEO Mark Zuckerberg arrives to testify before a joint hearing of the US Senate Commerce, Science and Transportation Committee and Senate Judiciary Committee on Capitol Hill, April 10, 2018 in Washington, DC. (Photo: JIM WATSON/AFP/Getty Images)

Sidestepping any gotcha questions or meme-worthy sound bites, Zuckerberg’s repetitive answers gave the impression that there’s little left to uncover, whether or not that’s true. He made a convincing argument that Facebook is atoning for its sins, is cognizant of its responsibility and has a concrete plan in place to improve data privacy.

With just five minutes per senator, and them each with a queue of questions to get through, few focused on the tougher queries, and even fewer had time for follow-ups to dig for real answers.

Did Facebook cover up the Cambridge Analytica scandal or decide against adding privacy protections earlier to protect its developer platform? Is it a breach of trust for Zuckerberg and other executives to have deleted their Facebook messages out of recipients’ inboxes? How has Facebook used a lack of data portability to inhibit the rise of competitors? Why doesn’t Instagram let users export their data the way they can from Facebook?

The public didn’t get answers to any of those questions today. Just Mark’s steady voice regurgitating Facebook’s talking points. Investors rewarded Facebook for its monotony with a 4.5 percent share price boost.

That’s not to say today’s hearing wasn’t effective. It’s just that the impact was felt before Zuckerberg waded through a hundred photographers to take his seat in the Senate office.

Facebook knew this day was coming, and worked to build Zuckerberg a fortress of facts he could point to no matter what he got asked:

  • Was Facebook asleep at the wheel during the 2016 election? Yesterday it revealed it had deleted the accounts of Russian GRU intelligence operatives in June 2016.
  • How will Facebook prevent this from happening again? Last week it announced plans to require identity and location verification for any political advertiser or popular Facebook Page, and significantly restricted its developer platform.
  • Is Facebook taking this seriously? Zuckerberg wrote in his prepared testimony for today that Facebook is doubling its security and content moderation team from 10,000 to 20,000, and that “protecting our community is more important than maximizing our profits.”
  • Is Facebook sorry? “We didn't take a broad enough view of what our responsibility is and that was a huge mistake. That was my mistake,” Zuckerberg has said, over and over.

Facebook may never have made such sweeping changes and apologies had it not had today and tomorrow’s testimony on the horizon. But this defensive strategy also led to few meaningful disclosures, to the detriment of the understanding of the public and the Senate — and to the benefit of Facebook.

WASHINGTON, DC – APRIL 10: Facebook co-founder, Chairman and CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC. Zuckerberg, 33, was called to testify after it was reported that 87 million Facebook users had their personal information harvested by Cambridge Analytica, a British political consulting firm linked to the Trump campaign. (Photo by Chip Somodevilla/Getty Images)

We did learn that Facebook is working with Special Counsel Robert Mueller on his investigation into election interference. We learned that Zuckerberg thinks it was a mistake not to suspend the advertising account of Cambridge Analytica when Facebook learned it had bought user data from Dr. Aleksandr Kogan. And we learned that the senate will “haul in” Cambridge Analytica for a future hearing about data privacy.

None of those are earth-shaking.

Perhaps the only fireworks during the testimony came when Senator Ted Cruz laid into Zuckerberg over the Gizmodo report citing that Facebook’s trending topics curators suppressed conservative news trends. Cruz badgered Zuckerberg about whether he believes Facebook is politically neutral, whether Facebook has ever taken down Pages from liberal groups like Planned Parenthood or MoveOn.org, if he knows the political leanings of Facebook’s content moderators and whether Facebook fired Oculus co-founder Palmer Luckey over his [radical conservative] political views.

Zuckerberg maintained that he and Facebook are neutral, but that last question was the only one of the day that seemed to visibly perturb him. “That is a specific personnel matter than seems like it would be inappropriate…” Zuckerberg said before Cruz interrupted, pushing the CEO to exasperatedly respond, “Well then I can confirm that it was not because of a political view.” It should be noted that Cruz has received numerous campaign donations from Luckey.

This was the only time Zuckerberg seemed flapped, because he knows the stakes of the public perception of Facebook’s political leanings. Zuckerberg, many Facebook employees and Facebook’s home state of California are all known to lean left. But if the company itself is seen that way, conservative users could flee, shattering Facebook’s network effect. Yet again, Zuckerberg nimbly avoided getting cornered here, and was aided by the bell signaling the end of Cruz’s time. He never noticeably raised his voice, lashed back at the senators or got off message.

By the conclusion of the five hours of questioning, the senators themselves were admitting they hadn’t watched the day’s full testimony. Viewers at home had likely returned to their lives. Even the press corps’ eyes were glazing over. But Zuckerberg was prepared for the marathon. He maintained pace through the finish line. And he made it clear why marathons aren’t TV spectator sports.

The question is no longer what revelations would come from Mr. Zuckerberg going to Washington. Tomorrow’s testimony is likely to go similarly. It’s whether Facebook can coherently execute on the data privacy promises it made leading up to today. This will be a “never-ending battle” as Zuckerberg said, dragging out over many years. And again, that’s in Facebook’s interest. Because in the meantime, everyone’s going back to scrolling their feeds.

How to understand the financial levers in your business

Posted: 10 Apr 2018 04:30 PM PDT

How can an electric scooter ride-sharing company like Bird possibly make money?

If you live in a select number of cities in the U.S., it's hard not to see electric scooters appearing on sidewalks all over the place. Electric scooter ride-sharing services are also remarkably cheap: $1 to start a ride and another $0.15 per minute after that. But electric scooters aren't cheap, and the logistics of a shared network are off-the-charts complicated.

As someone working in venture capital for hardware startups, the above question is obviously rather prescient.

How does a company like this possibly make money?

Here’s a closer look at the basic unit economics of Bird, the electric scooter ride-sharing company based in Santa Monica, Calif. There’ll be a super simple model and test scenarios that show how critical it is to understand and manipulate the key levers of any startup  —  in fact, it can determine whether a business sinks or swims.

Building a Scooter

Two young people in love, gazing adoringly at a pair of electric kick-scooters. Because that's totally a normal thing to be doing. 

It looks like Bird is using the Mi Electric Scooter as the base of their platform. The Mi's recommended retail price is $499, but it's probably fair to assume that Bird gets a bulk discount and can buy the scooters at around $300 apiece.

On top of the base cost of the scooters, Bird needs modules to turn the scooters into sharing economy units. That doesn't have to cost a lot of money. A Particle 3G asset tracker in a box, plus some custom code to deal with the scooter's power management, is all that's needed, so let's call that $80 per unit. That takes the total cost per finished scooter to $380; plus, we'll toss in $20 for final assembly.

My back-of-the-envelope calculation puts Bird's road-ready scooter at $400 per unit.

Deploying a scooter

Scooter startup Scoot operates electric scooters that are more like motorcycles than electrified Razer kick-scooters. 

One of the biggest problems electric scooter companies must solve is distributed charging. Scoot solved this problem by building a massive network of charging stations, distributed around San Francisco — a big infrastructure push, but necessary, given the robust profile of the scooters. Unlike Scoot's wheels, which need to be returned to a charging station for charging, Bird scooters can be easily picked up and taken inside a user's apartment or office, creating an instant and nearly infinite distributed charging network called "available wall sockets."

This completely changes the charging game in Bird's favor, so much so that Bird offers people $5 per charged scooter. This creates an elegant user experience and is a sign that it's a key lever in their financial model.

A tale of two financial models

A lot of assumptions go into building a financial model. This one came together over a few beers on the weekend and is an example of the kind of "quick and dirty" math all founders should do as they pressure test ideas. You can follow along in this spreadsheet, and if you want to experiment with the numbers, you can duplicate the sheet and plug in your own numbers.

For both models, we'll assume the following:

We'll be playing with the average lifetime of a scooter, the average number of rides customers take per day, and some metrics around charging, to see how that effects gross margin.

Model 1: Uh-oh, this looks like trouble.

For the first model, let's look at these dynamics:

  • Average lifetime rides per scooter — 300
  • Average rides per scooter per day — 5
  • Average ride length — 20 minutes
  • Percent of consumer charges: 50%

If those assumptions are right, it takes 220 rides (or 44 days) to reach break-even on the scooter itself.

After 400 rides (when a scooter is written off), the company has generated $147 of profit, at a relatively meagre 10.3% profit margin.

Suffice to say: That doesn't look like a particularly sustainable business.

Model 2: A more optimistic outlook

However, you don't have to change the assumptions much for it to be a much more attractive business.

What if Bird was able to extend the life of a given scooter, decrease the average ride length but increase the average rides per day, and push more of the charging burden to consumers?

Let's look at these dynamics:

  • Average lifetime rides per scooter — 500
  • Average rides per scooter per day — 7
  • Average ride length — 20 minutes
  • Percent of customer charges — 75%
A very different story. Note here that Bird did not reduce the hard costs of charging a scooter (it's still $5 for a consumer to charge and $20 for Bird to charge), but they did find a way to encourage customers to charge for them, reducing the overall charging cost.

Changing these four variables means that it only takes 165 rides (24 days) to break even, and the lifetime profit of a scooter is $813 — or a gross margin of 41%.

Financial models 1 and 2 side by side, for ease of comparing. 

So, do these unit economics make sense?

Investors certainly seem to think so. In February, Bird raised a $15m Series A, and only a month later, the company raised a $100m Series B. A company like Bird would be struggling to raise money on a 10.3% profit margin (as in Model 1), but if the numbers under the hood are closer to Model 2, it's easy to understand how Bird starts to look like a rather attractive business.

Isolate variables to find your levers

In the case of Bird, you might be surprised to learn that three levers dramatically affect the finance model: average ride length, cost of charging, and usable life per scooter. Isolate variables and play with the numbers to figure out which ones are key levers.

Taking Model 2 above as a starting point, let's explore by manipulating one set of variables at the time:

Ride length

Ride length has some impact on gross margin, but not as much as you'd think.

Usable life / Longevity

The durability of the scooters has quite a bit of impact, especially if the scooters fail early.

Cost of charging

The cost to charge a scooter has a huge impact on margins, so perhaps that's a good place to focus.

Pulling the levers: SuperScooters

Once you know your levers, it's fun to pull them a bit. If we were to optimize Bird to be as profitable as possible, it might be tempting to try to influence people to ride longer. But how? People's commutes are probably relatively fixed, and you're unlikely to be able to get them to change their commuting route. As we saw in an earlier example, though, the cost of charging has a huge impact on the overall business. What if we could find a better way to solve that?

Model 3 — SuperScooters

Say there was a different scooter available on the market— a SuperScooter —  with a swappable battery pack that clocks in at a hefty $1,000 MSRP.

The scooter has a higher up-front cost, but it's more robust. Instead of a 500-ride lifespan, it has a 1,000-ride lifespan. The replaceable battery pack enables the Bird Service Crew to quickly replace scooter batteries out of charging racks in the back of the vans they're already driving around town to redistribute scooters.

Let's say that reduces Bird's "recharging" cost to $3 per scooter per day, even cheaper than the consumer charge in Models 1 and 2, totally eliminating the need for consumers to charge the scooters at all.

In addition, let's say Bird invents their own asset tracker that they can build for $30 per unit, rather than $80 off the shelf, and their manufacturer agrees to install it at the factory, taking the $20 in-house final assembly cost to zero.

By implementing the changes above, you end up with $2,467 profit per scooter, break-even at 34 days, and a gross margin of 62%. In other words: If such a scooter were available, it'd be a no-brainer: You'd want to replace the entire fleet as quickly as you could.

Comparing all three models shows that optimizing for longer scooter usable life and cheaper charging costs (Model 3) would have an extraordinary impact on the gross margin per scooter deployed. 

Build your model. Know your levers.

Obviously, I have grossly simplified the financial model here — if you were to model out the entire business of Bird, you would need to look at customer acquisition costs, customer lifetime value, churn, R&D costs of the elusive SuperScooter, and so on and so forth. Models get complicated quickly, but they also allow you to explore the impacts of changes you might make before you make them, which is invaluable.

Whatever your business, build a business model that includes all of your assumptions — and build the model so you can pressure-test variables and find your levers. Once you've identified them, build MVPs to test those assumptions in more detail. It's really important to experiment early and get some good data on what works (and what doesn't), before you start ramping up and pouring lots of money into marketing and execution. Some changes can have exponential effects — for better or for worse.


Zuckerberg tells Congress Facebook is not listening to you through your phone

Posted: 10 Apr 2018 04:22 PM PDT

Facebook CEO Mark Zuckerberg officially shot down the conspiracy theory that the social network has some way of keeping tabs on its users by tapping into the mics on people’s smartphones. During Zuckerberg’s testimony before the Senate this afternoon, Senator Gary Peters had asked the CEO if the social network is mining audio from mobile devices — something his constituents have been asking him about, he said.

Zuckerberg denied this sort of audio data collection was taking place.

The fact that so many people believe that Facebook is “listening” to their private conversations is representative of how mistrustful users have grown of the company and its data privacy practices, the Senator noted.

“I think it’s safe to say very simply that Facebook is losing the trust of an awful lot of Americans as a result of this incident,” said Peters, tying his constituents’ questions about mobile data mining to their outrage over the Cambridge Analytica scandal.

Questions about Facebook’s mobile data collection practices aren’t anything new, however.

In fact, Facebook went on record back in 2016 to state — full stop — that it does not use your phone’s microphone to inform ads or News Feed stories.

Despite this, it’s something that keeps coming up, time and again. The Wall Street Journal even ran an explainer video about the conspiracy last month. And yet none of the reporting seems to quash the rumor.

People simply refuse to believe it’s not happening. They’ll tell you of very specific times when something they swear they only uttered aloud quickly appeared in their Facebook News Feed.

Perhaps their inability to believe Facebook on the matter is more of an indication of how precise — and downright creepy — Facebook’s ad targeting capabilities have become over the years.

Peters took the opportunity today to ask Zuckerberg this question straight on today, during Zuckerberg’s testimony.

“Something that I’ve been hearing a lot from folks who have been coming up to me and talking about a kind of experience they’ve had where they’re having a conversation with friends — not on the phone, just talking. And then they see ads popping up fairly quickly on their Facebook,” Peters explained. “So I’ve heard constituents fear that Facebook is mining audio from their mobile devices for the purposes of ad targeting — which I think speaks to the lack of trust that we’re seeing here.”

He then asked Zuckerberg to state if this is something Facebook did.

“Yes or no: Does Facebook use audio obtained from mobile devices to enrich personal information about its users?,” Peters asked.

Zuckerberg responded simply: “No.”

The CEO then added that his answer meant “no” in terms of the conspiracy theory that keeps getting passed around, but noted that the social network does allow users to record videos, which have an audio component. That was a bit of an unnecessary clarification, though, given that the question was about surreptitious recording, not something users were explicitly recording media to share.

“Hopefully that will dispel a lot of what I’ve been hearing,” Peters said, after hearing Zuckerberg’s response.

We wouldn’t be too sure.

There have been a number of lengthy explanations of the technical limitations regarding a project of this scale, which have also pointed out how easy it would be to detect this practice, if it were true. But there are still those people out there who believe things to be true because they feel true.

And at the end of the day, the fact that this conspiracy refuses to die says something about how Facebook users view the company: as a stalker that creeps on their privacy, and then can’t be believed when it tells you, “no, trust me, we don’t do that.”

Sen. Kennedy to Mark Zuckerberg: ‘Your user agreement sucks’

Posted: 10 Apr 2018 04:14 PM PDT

As Mark Zuckerberg’s Facebook testimony stretches on, a rough exchange with Senator John Neely Kennedy of Louisiana produced some of the day’s more memorable sound bites.

“Mr. Zuckerberg, I come in peace. I don't want to vote to have to regulate Facebook, but by God I will,” Sen. Kennedy began his short exchange. “In fact, a lot of that depends on you. I'm a little disappointed in this hearing today, I just don't feel like we're connecting.”

From there Kennedy railed against Zuckerberg for how Facebook communicated its user data policies with users of the product.

“Your user agreement sucks,” the Republican senator went on. “The purpose of that user agreement is to cover Facebook's rear end, it's not to inform your users about their rights. Now you know that, and I know that. I'm going to suggest to you that you go back home and rewrite it.”

From here on, the exchange with an understandably tired Zuckerberg was a little rough. Kennedy’s knowledge of the Facebook product seemed to be a bit limited and Zuckerberg’s  inability to respond with something not beginning with “Senator, we already…” didn’t help.

The testimony continues…

Cambridge Analytica may have accessed some Facebook users’ messages

Posted: 10 Apr 2018 03:34 PM PDT

The app permissions that led to 87 million Facebook users’ data being harvested and sold to Cambridge Analytica may have also allowed access to those users’ inboxes, the company confirmed today. This wasn’t achieved by any underhanded means, exactly, but people might not have realized that they were granting permission to read and record their private messages as well as more public data like location and interests.

That messages may have been collected by CA was revealed first by Facebook itself as part of its warning issued to the 87 million users in question. “A small number of people who logged into ‘This Is Your Digital Life’ also shared their own News Feed, timeline, posts and messages which may have included posts and messages from you,” reads the warning.

Access to messages had not been previously disclosed. And, of course, if someone affected had chatted with you, then your messages would also have been collected.

The permission used to do this was called “read_mailbox,” though it would have been put in more everyday terms when a user was agreeing to it. The dialog box would have said something along the lines of, “This app will be able to access your wall posts, friend list, contacts, messages…” in bullet points.

This Is Your Digital Life, the app created by researcher Aleksandr Kogan, which served as the harvester for all this data, requested “read_mailbox” privileges for some period and, as Facebook tells Wired, a total of 1,500 people granted that permission.

It’s unclear why the number is so low if hundreds of thousands agreed to the terms, but the app may only have requested messaging access for a brief period — stopping, perhaps, upon finding that people balked at granting it.

Still, even if only 1,500 people had their messages collected directly, the number of people whose messages were indirectly collected could be orders of magnitude higher. After all, look at your inbox, if you have one — there are likely dozens of conversations, perhaps with hundreds of people. So that 1,500 could balloon to 150,000 real fast.

I’ve asked Facebook for clarification on how the 1,500 number was determined and what the number of secondary affected users is.

Apple is making a show based on Isaac Asimov’s ‘Foundation’ books

Posted: 10 Apr 2018 03:27 PM PDT

Okay, Apple, now you’ve got my attention.

Not content with landing an Amazing Stories reboot from Steven Spielberg, multiple series from Reese Witherspoon, a space opera from Ron Moore and much more for its upcoming original TV initiative (which might launch next March), Apple is also developing a series based on Isaac Asimov’s Foundation books.

Deadline reports that the project from Skydance Television is “in development for straight-to-series consideration,” with David S. Goyer and Josh Friedman attached as showrunners. Goyer is best-known for comic book adaptations like Blade, Man of Steel and Batman v. Superman: Dawn of Justice, while Friedman was the creator of Terminator: The Sarah Connor Chronicles.

The Foundation stories depict the fall of a massive galactic empire, and the efforts of a small group of scientists to preserve knowledge and restore civilization. They were first published in Astounding Science Fiction in the 1940s, then collected into three books in the ’50s. (At the 1966 World Science Fiction Convention, the series beat out Lord of the Rings to win the Hugo Award for Best All-Time Series.)

Asimov (a legendary science fiction and science writer, as well as an occasional computer pitchman) returned to the series near the end of his career, and while the later books are not as well-loved by fans, they also won him awards and landed him on The New York Times bestseller list for the first time.

If you want to read thousands more words about why the books mean a lot to me, be my guest. But when it comes to a TV adaptation, two points seem salient: One, the books take place over hundreds of years, with a constantly rotating cast of characters, and two, they consist almost entirely of conversation, with just a few brief scenes of action.

That may be why previous attempts to adapt Foundation — including an effort at HBO by Goyer’s Dark Knight co-writer Jonathan Nolan — have failed. If this one pans out, I suspect we’ll see some pretty big changes.

A revamped version of Spotify’s free service is reportedly in the works

Posted: 10 Apr 2018 02:48 PM PDT

Spotify's got something big up its sleeve, that much we know for sure. The music streaming service has a big event in the works for April 24 in New York — though it hasn't really offered up anything useful beyond that. A revamped version of the company's free tier could certainly make sense for the event.

A new report from Bloomberg suggests that such a thing is on the way, as the company looks to make big moves after going public. According to the piece, the new version of the app will make it easier for users to use the ad-supported service on mobile devices. There's not a lot of information beyond that, however — including how Spotify would continue to differentiate a paid tier in order to keep premium subscribers on-board.

Of course, the free offering is one of the key elements differentiating the service from competition like Apple Music. It hasn't been the most popular feature among record labels and artists, for obvious reasons, but it's helped Spotify maintain a healthy lead in the category. Last month, Apple Music announced that it was continuing to grow at a healthy rate, with 38 million subscribers.

That number is dwarfed, however, by Spotify's 71 million subscribers — and doubly so by its total 159 million users. Clearly the multi-tiered strategy has been a winning one for the Swedish music service, and recommitting to free would demonstrate that the service is still interested in the other 88 million.

We reached out to Spotify, but received a “no comment” on the matter. Same for another recent story suggesting that the company is planning to release a standalone in-car player, which surfaced as users began to receive offers for a new piece of Spotify hardware designed to bring the music service to older model cars.

Mark Zuckerberg: “We do not sell data to advertisers”

Posted: 10 Apr 2018 02:42 PM PDT

While many of us in the tech world are familiar with Facebook’s business model, there is a common misconception among people that Facebook collects information about you and then sells that information to advertisers.

Zuckerberg wants everyone (especially the U.S. Senate) to know that’s not the case, and has laid forth the most simple example to explain it.

During his testimony, the Facebook CEO clarified to Senator John Cornyn that Facebook does not sell data.

There is a very common misconception that we sell data to advertisers, and we do not sell data to advertisers. What we allow is for advertisers to tell us who they want to reach and then we do the placement. So, if an advertiser comes to us and says, ‘Alright, I’m a ski shop and I want to sell skis to women,’ then we might have some sense because people shared skiing related content or said they were interested in that. They shared whether they’re a woman. And then we can show the ads to the right people without that data ever changing hands and going to the advertiser. That’s a very fundamental part of how our model works and something that is often misunderstood.

While, again, this may seem straightforward to many of us, Zuckerberg found himself having to explain more than once that Facebook does not sell data during his Senate testimony.

Theranos reportedly lays off most of its remaining employees as it tries to avoid bankruptcy

Posted: 10 Apr 2018 02:07 PM PDT

The death spiral of blood-testing startup Theranos just became even more real today for the bulk of its remaining employees. The Wall Street Journal reports that the company has laid off the majority of its staff as part of a “last-ditch effort” to save cash and avoid bankruptcy.

The layoffs have taken the staff from 125 to less than two dozen, the report says. CEO Elizabeth Holmes announced the layoffs to staff at an all-hands meeting today in the company’s Newark, Calif. offices.

This spartan crew has been whittled down following round after round of layoffs as customers and regulators have wised up to the lies that the company has been publicly sharing. After once maxing out at nearly 800 employees in late 2016, the company now stands as a skeleton of its former self, though for the company’s leadership this represents an inevitability that is the least of their problems.

Last month, Holmes settled with the SEC over fraud charges, paying a $500,000 penalty, returning 18.9 million shares that she attained during the period of fraud and relinquishing her voting control of Theranos. Holmes was also barred from serving as an officer or director of a public company for 10 years as part of the settlement.

Holmes and fellow exec Sunny Balwani are both still under criminal investigation by the U.S. attorney’s office in SF, the report says. Balwani is also still being sued by the SEC in federal court in California.

Though the company has been facing a downward spiral for quite some time, the company did manage to somehow secure $100 million in debt financing from Fortress Investment Group this past December, though it reportedly was only able to access that full amount if it met certain product and operational milestones, which it has not done, according to the report.

The company was once valued at $9 billion.

The entire Myst series will be re-released for Windows 10

Posted: 10 Apr 2018 02:02 PM PDT

Myst holds a special place in the hearts of many. Released in 1993, it was unlike any video game most had seen at the time — and yet, its DNA lingers in countless games released today. It was also the game that made tens of thousands of kids beg their parents for a CD drive.

With the game’s 25th anniversary just months away, Myst has found itself in a place no one could have predicted in ’93: Kickstarter.

The game’s original developers, Cyan, have managed to get the rights to all seven games in the Myst universe, and have turned to Kickstarter to re-release it as one big box set. After launching this morning with a target of raising $247,500 dollars, it’s already smashed through its goal and is currently sitting a bit shy of $500,000.

The games included in the set:

  • Myst: Masterpiece edition
  • Riven: The sequel to Myst
  • Myst 3: Exile
  • Myst 4: Revelation
  • Myst 5: End of Ages
  • Uru: Complete Chronicles
  • realMyst: Masterpiece (the 3D Myst re-make released in 2000)

$49 gets you digital copies of each game, while $99 gets you DVD copies in a box built to look like a Myst book. Tiers above that include a bunch of real-world goodies, from a recreation of Gehn’s in-game pen/inkwell to original, hand-drawn concept art.

Oh, and they built a friggin’ Linking book, complete with a 800×480 LCD screen that plays video fly-throughs of the game’s environments when the book is opened. (For the unfamiliar: in the Myst universe, “Linking books” transport those that touch the book to a far-off destination.)

They’ve updated the games to work on “modern systems,, but there’s a bit of a good news/bad news situation there. The good news: it’ll work on Windows 10. The bad news: most of the games won’t work on MacOS. That’s a bit of a drag, given that the series started its life on the Mac — but Cyan says getting everything running on the Mac would take resources they “just don’t have.” Cyan notes that while they’ll continue to sell the updated games once the Kickstarter is over, the special box set is a Kickstarter-only deal.

As arstechnica points out, much of the Myst series is already available for Windows 10 — only Myst III and IV had never been updated for compatibility, as the rights were held by a different publisher. But this Kickstarter brings it all together for a whole new generation, with some real-world treats thrown in for the longtime fans.

‘You don’t think you have a monopoly?’ Read Sen. Graham’s delightful grilling of Zuckerberg

Posted: 10 Apr 2018 01:57 PM PDT

Today’s testimony by Mark Zuckerberg in front of a Senate joint committee was often boring or redundant with previous statements. But there was an exchange near the two-hour mark that was pleasantly refreshing: Senator Lindsey Graham (R-SC) doggedly pursuing a common-sense answer from Zuckerberg on the question of whether it had any real competition.

Graham doesn’t let Zuckerberg employ his spin on the admittedly complex question of what Facebook’s competitors are. Demanding a simpler answer by employing a folksy car-buying metaphor, he makes it clear that at least from one perspective, Facebook is more or less without a real competitor — with the possible exception of Instagram, which it of course opted to buy for a fortune rather than allow it to exist as a credible rival.

The Senator also makes it clear that he doesn’t think Facebook should be allowed to self-regulate — but his invitation to Zuckerberg to collaborate on rules sure sounds like he wants the company to have a say in how it should or should not be bound by law.

I’ve transcribed the exchange below:

Graham: Who’s your biggest competitor?
Zuckerberg: Senator, we have a lot of competitors.
Graham: Who’s your biggest?
Zuckerberg: Mmm… I think the categories of… do you want just one? I’m not sure I can give one. But can I give a bunch?
Graham: Mmhm.
Zuckerberg: So there are three categories I would focus on. One are [sic] the other tech platforms, so Google, Apple, Amazon, Microsoft, we overlap with them in different ways.
Graham: Do they do, do they provide the same service that you provide?
Zuckerberg: Um, in different ways, different parts of it yes.
Graham: Let me put it this way. If I buy a Ford and it doesn’t work well and I don’t like it, I can buy a Chevy. If I’m upset with Facebook, what’s the equivalent product that I can go sign up for?
Zuckerberg: Ah well, the second category that I was going to talk about was…
Graham: I’m not talking about categories. I’m talking about is there real competition you face. Because car companies face a lot of competition. If they make a defective car, it gets out in the world, people stop buying that car, they buy another one. Is there an alternative to Facebook in the private sector?
Zuckerberg: Yes Senator, the average American uses 8 different apps…
Graham: OK.
Zuckerberg: …to communicate with their friends and stay in touch with people, ranging from text to email.
Graham: OK, which is the same service that you provide.
Zuckerberg: Well, we provide a number of different services.
Graham: Is Twitter the same as what you do?
Zuckerberg: It overlaps with a portion of what we do.
Graham: You don’t think you have a monopoly?
Zuckerberg: (long pause) Ah, it certainly doesn’t feel like that to me! (laughter)
Graham: OK, so it doesn’t. So, Instagram. You bought Instagram. Why did you buy Instagram?
Zuckerberg: Because they were very talented app developers who were making good use of our platform and understood our values.
Graham: It was a good business decision. My point is that one way to regulate a company is through competition, through government regulation. Here’s the question that all of us got to answer. What do we tell our constituents, given what’s happened here, why we should let you self-regulate? What would you tell people in South Carolina, that given all the things we’ve just discovered here, it’s a good idea for us to rely on you to regulate your own business practices?
Zuckerberg: Well Senator, my position is not that there should be no regulation. I think the internet is increasing in…
Graham: Mmkay. You’d embrace regulation?
Zuckerberg: I think the real question as the internet becomes more important in people’s lives, is what is the right regulation, not whether there should be regulation.
Graham: But you as a company welcome regulation?
Zuckerberg: I think if it’s the right regulation then yes.
Graham: Do you think the Europeans have it right?
Zuckerberg: Ah, I think that they get… things right.
Graham: Have you ever submitted… (laughter) That’s true. So would you work with us in terms of what regulations you think are necessary in your industry?
Zuckerberg: Absolutely.
Graham: OK, would you submit to us and propose regulations?
Zuckerberg: Yes and I’ll have my team follow up with you so that way we can have this discussion across the different categories where I think this discussion needs to happen.
Graham: Looking forward to it.

While it’s admittedly not the toughest questioning, it does baldly address the simple idea that Graham and others consider Facebook effectively a monopoly and intend to craft regulations or legislation to remedy what they perceive as a regulatory gap.

Palmer Luckey, political martyr?

Posted: 10 Apr 2018 01:55 PM PDT

In the middle of testimony over Facebook’s privacy scandal, Sen. Ted Cruz of Texas took a moment to grill Mark Zuckerberg over his company’s political loyalties.

In the course of a testy exchange between Sen. Cruz and Zuckerberg, the senator brought up the dismissal of Palmer Luckey, the controversial founder of virtual reality tech development pioneer, Oculus .

It was part of Cruz’s broader questioning about whether or not Facebook is biased in the ways it moderates the posts and accounts of members — and in its staffing policies.

Here’s the exchange:

Cruz: Do you know the political orientation of those 15 to 20,000 people engaged in content review?

Zuckerberg: No senator, we do not generally ask people about their political orientation when they're joining the company.

Cruz: So, as CEO Have you ever made hiring or firing decisions based on political positions or what candidates they supported?

Zuckerberg: No.

Cruz: Why was Palmer Luckey fired?

Zuckerberg: That is a specific personnel matter that seems like it would be inappropriate to speak to here.

Cruz: You just made a specific representation that you didn't make decisions based on political views, is that accurate?

Zuckerberg: I can commit that it was not because of a political view.

Luckey left Facebook last March, after reports surfaced that he was a member of a pro-Trump troll farm called Nimble America.

Luckey's departure follows a lengthy period of absence from public view brought about by a Daily Beast piece revealing his involvement and funding of a pro-Trump troll group called Nimble America. News of his support came during a time when very few figures in Silicon Valley were publicly showing support for candidate Trump, the most notable being Peter Thiel, an early investor in Facebook who started the VC firm Founders Fund, which backed Oculus, as well.

Though Luckey initially denied funding the group, he ultimately took to social media to apologize in the midst of an upheaval that had many developers threatening to leave the platform. His last public statement (on Facebook, of course) was a mixture of regret and defense, reading, in part, "I am deeply sorry that my actions are negatively impacting the perception of Oculus and its partners. The recent news stories about me do not accurately represent my views… my actions were my own and do not represent Oculus. I'm sorry for the impact my actions are having on the community."

Sen. Cruz could have had another reason in bringing up Luckey during Zuckerberg’s testimony. The virtual reality entrepreneur has donated some very real dollars to the senator’s coffers (as Buzzfeed reporter Ryan Mac noted).

Facebook share price climbs as Zuckerberg gets grilled by the Senate

Posted: 10 Apr 2018 01:54 PM PDT

Shareholders seemed to have incredibly low expectations of Facebook CEO Mark Zuckerberg’s ability to handle a Senate testimony, because Facebook stock climbed 4.5 percent Tuesday with the bulk of the gains coming during his televised testimony.

Though the markets closed nearly an hour ago, Zuckerberg is still being peppered by Senators in an hours-long testimony session where the group is aiming to hear more from the company’s CEO and founder about data protection in the wake of the Cambridge Analytica controversy.

While there have been tough questions from several senators, rhetoric regarding government regulation of internet companies like Facebook was not overly pronounced in opening statements, though several Senators did directly address it in their questioning.

While Zuckerberg’s apology tour of the Capitol building seems to have largely been devoted to rehashing the major changes they’ve announced in recent days and weeks, he did reveal that the number of Facebook accounts with ties to Russian Intelligence could be in the “tens of thousands,” an admission that greatly exceeds the several hundred that Facebook had previously disclosed.

Facebook’s gains Tuesday brought the company’s share price to close above $165, a number it has not closed above in nearly three weeks. Facebook is still far below the $185 share price it was above before Cambridge Analytica reports were shared from a number of publications in mid-March.

 

Zuckerberg urges privacy carve outs to compete with China

Posted: 10 Apr 2018 01:48 PM PDT

Facebook’s founder said last month that the company is open to being regulated. But today he got asked by the US senate what sort of legislative changes he would (and wouldn’t) like to see as a fix for the problems that the Cambridge Analytica data scandal has revealed.

Zuckerberg’s response on this — and on another question about his view on European privacy regulations — showed in the greatest detail yet how he’s hoping data handling and privacy rules evolve in the US, including a direct call for regulatory carve outs to — as he couched it — avoid the US falling behind Chinese competitors.

Laying out “a few principles” that he said he believes would be “useful to discuss and potentially codify into law”, Zuckerberg first advocated for having “a simple and practical set of ways that you explain what you’re doing with data”, revealing an appetite to offload the problem of tricky privacy disclosures via a handy universal standard that can apply to all players.

“It’s hard to say that people fully understand something when it’s only written out in a long legal document,” he added. “This stuff needs to be implemented in a way where people can actually understand it.”

He then talked up the notion of “giving people complete control” over the content they share — claiming this is “the most important principle for Facebook”.

“Every piece of content that you share on Facebook, you own and you have complete control over who sees it and how you share it — and you can remove it at any time,” he said, without mentioning how far from that principle the company has been at earlier times in its history.

“I think that that control is something that’s important — and I think should apply to every service,” he continued, making a not-so-subtle plea for no other platforms to be able to leak data like Facebook’s platform historically has (and thus to close any competitive loopholes that might open up as a result of Facebook tightening the screw on developer access to data now in the face of a major scandal).

His final and most controversial point in response to the legislative changes question was about what he dubbed “enabling innovation”.

“Some of these use cases that are very sensitive, like face recognition for example,” he said carefully. “And I think that there’s a balance that’s extremely important to strike here where you obtain special consent for sensitive features like facial recognition. But don’t — but that we still need to make it so that American companies can innovate in those areas.

“Or else we’re going to fall behind Chinese competitors and others around the world who have different regimes for different, new features like that.”

Zuckerberg did not say which Chinese competitors he was thinking of specifically. But earlier this week ecommerce giant Alibaba announced another major investment in a facial recognition software business, leading a $600M Series C round in Hong Kong-based SenseTime — as one possible rival example.

A little later in the session, Zuckerberg was also directly asked whether European privacy regulations should be applied in the US. And here again he showed more of his hand — once again refusing to confirm if Facebook will implement “the exact same regulation” for North American users, as some consumer groups have been calling for it to.

“Regardless of whether we implement the exact same regulation — I would guess it would be somewhat different because we have somewhat different sensibilities in the US, as do other countries — we’re committed to rolling out the controls and the affirmative consent, and the special controls around sensitive types of technologies like face recognition that are required in GDPR, we’re doing that around the world,” he reiterated.

“So I think it’s certainly worth discussing whether we should have something similar in the US but what I would like to say today is that we’re going to go forward and implement that [the same controls and affirmative consent] regardless of what the regulatory outcome is.”

Given that’s now the third refusal by Facebook to confirm GDPR will apply universally, it looks pretty clear that users in North American will get some degree of second tier privacy vs international users — unless or until US lawmakers forcibly raise standards on the company and the industry as a whole.

That is perhaps to be expected. But it’s still a tricky PR message for Facebook to be having to deliver in the midst of a major data scandal — hence Zuckerberg’s attempt to reframe it as a matter of domestic vs foreign “sensibilities”.

Whether North American Facebook users buy into his repackaging of coach class privacy standards vs the rest of the world as just a little local flavor remains to be seen.

In Senate hearing, Zuckerberg faces blame over violence in Myanmar

Posted: 10 Apr 2018 01:44 PM PDT

While the recent Cambridge Analytica data privacy scandal is the main focus for American lawmakers questioning Facebook’s Mark Zuckerberg today, the company’s record beyond the U.S. raises even more alarms.

During the hearing, Vermont Senator Patrick Leahy brought up the company’s role in the ongoing ethnic violence in Myanmar, citing one incident where death threats against a Muslim journalist did not violate the platform’s rules. In Myanmar, journalists are regularly arrested and even killed for reporting on the government’s activities.

“Six months ago I asked your general counsel about Facebook’s role as a breeding ground for hate speech against Rohingya refugees,” Leahy said. “Recently, U.N. investigators blamed Facebook for playing a role in inciting the possible genocide in Myanmar, and there has been genocide there.”

Using screenshots mounted on a poster, the Senator cited a specific threat calling for the death of Muslim journalists in the country:

That threat went straight through your detection systems. It spread very quickly and it took attempt after attempt after attempt and the involvement of civil society groups to get you to remove it. Why couldn’t it be removed within 24 hours?

Screenshot from C-Span

Leahy interrupted Zuckerberg when he began to opine about the country’s tragedy. “We all agree it’s terrible,” Leahy said, pressing the Facebook founder for substantive answers.

Zuckerberg cited the language barrier as one of the main obstacles to proper moderation of hate speech and calls for violence.

“Hate speech is very language specific. It’s hard to do it without people who speak the local language and we need to ramp up our effort there dramatically,” Zuckerberg said.

He mentioned the company’s plan to hire “dozens” of Burmese language content reviewers as the first part of a three-pronged approach in Myanmar, also noting a partnership with civil society groups to identify hate figures in the country rather than focusing on removing individual pieces of content.

Third, Zuckerberg stated that Facebook is “standing up a product team to do specific product changes in Myanmar” and other countries with similar situations, though he did not delve into the specifics of those changes.

Leahy’s line of questioning about Facebook’s influence in Myanmar is not speculative. In March, United Nations investigators concluded that disinformation campaigns facilitated by Facebook have played a “determining role” in inciting violence against the country’s Rohingya Muslim minority ethnic group.

As Marzuki Darusman, chairman of the U.N. independent international fact-finding mission on Myanmar, stated those findings:

[Social media] has …substantively contributed to the level of acrimony and dissension and conflict, if you will, within the public. Hate speech is certainly of course a part of that. As far as the Myanmar situation is concerned, social media is Facebook, and Facebook is social media.

On April 5, a group of six NGOs working in the country addressed a critical letter to Zuckerberg, citing “issues that have been rife on Facebook in Myanmar for more than four years now,” criticizing the company for crediting its own systems with catching violent messages when in fact it had been these organizations doing the moderation work. When Zuckerberg responded to that letter just a day before he appeared before Congress, the NGO group dismissed his apology as “grossly insufficient.” It’s unlikely that they’ll be pleased with his lackluster testimony on the issue.

Last October, Facebook told TechCrunch that it works with NGOs and the local community in Myanmar to communicate its policies there, though its efforts seemed fairly toothless. At the time, the focus of that initiative was to “empower people in Myanmar to share positive messages online,” and one component offered local education on fake news. But by October of last year, incitements to violence on Facebook were already being connected to real-world acts against the country’s Rohingya population — a group facing systemic violence that’s widely regarded as a genocide.

For Facebook users in Myanmar, a country in which the platform is synonymous with the internet itself, the stakes couldn’t be higher. With the NGOs Facebook relies on in the Southeast Asian country deeply dissatisfied, it’s clear that words alone will no longer suffice.