Face books a date with D.C.

QUOTE OF THE DAY

It’s not about taking a bunch of dollar bills and spreading them around.”

A SoftBank exec on its investment in ride-hailing. More on that to come.

Market Snapshot

  • The Dow posted its biggest one-week gain of the year.
  • U.K’s FTSE fell 1.1%; Japan’s Nikkei ended up 0.5%.
  • Oil finished the week up 5.1%.
  • Bitcoin fell over $1,000 last week.


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Face Books a Date with Washington

No one can avoid Washington’s grip…not even you, Mark Zuckerberg. Facebook is anxiously waiting by the phone for the bipartisan Senate Intelligence Committee to question it about Russian activity on its site during last year’s election.

Last week, Facebook identified 500 “inauthentic accounts” that paid for nearly $100,000 worth of ads to influence the 2016 presidential election.

And while this offense will likely earn a slap on the wrist, it points to the increasingly hostile, once cozy relationship between Silicon Valley and Washington.

It was only last October…

…when Zuck and other Valley vets were kickin’ it in the White House backyard for “South by South Lawn”—one of the many events that brought Silicon Valley and Washington together.

But in the past year alone, scrutiny over big tech firms has ramped up, with Senator Mark Warner suggesting it’s like the “Wild, Wild, West [out there].” Here’s what D.C. is concerned about:

  • User data privacy. Rep. Marsha Blackburn is seeking increased privacy for users by restricting what personal information tech giants are able to access.
  • Sex-trafficking and other third-party posts. Internet companies have nearly full immunity from lawsuits originating from harmful third-party posts on their sites. A group of 25 senators is actively fighting this.
  • Antitrust. The president himself has questioned Amazon’s all-encompassing consumer playpen. And the E.U. has shown astonishing success putting a cap on powerful tech giants.
But the Valley isn’t rolling over and playing dead

That’s not its style. Lobbying spending at big tech firms is lighting up faster than Equifax’s customer service lines.

In 2010, the Big Four were each spending no more than ~$1.5 million per year. Now…

  • Apple is spending $3.5 million+.
  • Facebook is spending $5 million+.
  • Amazon is spending $5.5 million+.
  • Google is spending nearly $10 million.

It’s likely not all of that money goes towards covering their backs, but with the Valley’s ever-growing sphere of influence, you better believe Washington will throw more checks and balances its way.

SoftBank Wants a Piece of Uber

SoftBank is eyeing a $10 billion investment in Uber, along with VC firm Dragoneer and Didi, the Chinese ride-hailing leader.

The deal’s been brewing for several months, but now that newly-hired CEO Dara Khosrowshahi’s on the job, it just got real. The Japanese tech firm is reportedly interested in a sizeable 17-22% stake, but it’ll need to close some daylight at the negotiating table. Uber shareholders will want to sell at the current $68 billion valuation, while SoftBank’s preliminary offer valued the company at $45 billion.

The mastermind behind the deal? CEO Masayoshi Son—he’s that guy who’s always bringing up AI and robot takeovers when you’re just trying to talk football. His $93 billion Vision Fund has invested in mobile payments, semiconductors, robotics…and yes, other ride-hailing companies (the three largest ones in Asia).

This news comes on the heels of Alphabet’s potential $1 billion investment in Lyft. Ride-hailing…so hot right now.

SoFi, So Long

SoFi CEO Mike Cagney immediately stepped down following lingering reports that he engaged in and permitted a toxic workplace environment. The announcement came as a surprise, considering earlier this week the fintech startup (valued at over $4 billion) announced Cagney would be staying until the end of the year.

But SoFi felt it needed to rip off the BandAid. Several weeks ago, it opened an outside probe into claims of sexual harassment at its Silicon Valley office. But a little more digging reveals that inappropriate behavior toward female employees had been going on as early as 2012. It’s clear that sexual misconduct was a pervasive problem at SoFi, as it has been for so many other tech companies in the Valley.

In the interim, newly-appointed board chair and initial investor Tom Hutton will take the reigns with the tall task of rebuilding the online lender’s culture.

Apple Took a Bite out of Cookies…

…and advertising agencies took a bite out of Apple.

The world’s largest ad trade groups (like the Interactive Advertising Bureau and the American Advertising Federation) wrote a letter blasting Apple for its new cookie-blocking technology.

“Cookies” allow ad agencies to track online consumer behavior, which they turn into personalized ad campaigns.

But Safari’s new “Intelligent Tracking Prevention” update would limit access to consumer data and effectively “sabotage the economic model for the internet.” Ad spend on digital campaigns hit ~$72 billion in 2016, but ad agencies might be less inclined to pay if they’re getting less bang for their buck.

Nothing a strongly-worded letter can’t fix…right?

Wrong. Apple and other tech companies appear set in their ways. Sure, that lawnmower you desperately needed popped up on your newsfeed at an alarmingly fast rate, but was it worth a bad user experience and giving up your data privacy? Apple and Ted Cruz say no.

What Else Is Happening…

  • Women’s shoe retailer Aerosoles filed for chapter 11 bankruptcy.
  • Rovio, the maker of Angry Birds, set its IPO price at $1 billion.
  • Hurricane Harvey caused a drop in U.S. industrial production and retail sales in August.
  • Toys “R” Us could file for Chapter 11 in the next few weeks.
Economic Calendar

  • Friday       Earnings: No Events
  •                  Economic Events: Retail Sales (-), Industrial Production (-), Business Inventories (+), Consumer Sentiment (-), Baker-Hughes Rig Count (+)

  • Monday     Earnings: No Events
  •                     Economic Events: Housing Market Index

  • Tuesday    Earnings: Adobe, Bed Bath & Beyond, FedEx
  •                   Economic Events: Import and Export Prices

  • Wednesday    Earnings: General Mills
  •                         Economic Events: MBA Mortgage Applications, Existing Home Sales, FOMC Forecasts, Petroleum Status

  • Thursday   Earnings: YogaWorks
  •                    Economic Events: Jobless Claims, House Price Index, Consumer Comfort, Fed Balance Sheet

  • Friday       Earnings: No Events
  •                  Economic Events: PMI, Baker-Hughes Rig Count

From the Crew

Austin—Understanding Crypto

It seems like cryptocurrency is all anyone is talking about these days. But how much do you actually know? Visual Capitalist broke down “The Crypto Universe” into a great infographic so you can learn more about the major six currencies.

Neal—Q&A

Ever have that burning question that Google can’t answer sufficiently? Try Quora. It’s a popular forum where anyone can propose a thought-provoking question about whatever, and thousands of other people take a shot at answering it. The best responses shoot to the top. We’ve all found it to be a great learning tool.

Quora: what is the most unusual way to get rich?

Michael—Flying in Style

There’s a long week ahead and you look like you could use some motivation. One lucky photographer got a look inside some of the private airplanes of the richest people in the world.

Come fly with the ultra-elite

The Breakroom
Question of the Day

The average age of a group of 10 students was 20. The average age increased by two years when two new students joined the group. What is the average age of the two new students who joined the group?

(Give up?)

Rank by Net Worth

Wang Jianlin, Alice Walton, Jeff Bezos, Elon Musk.

(What do you think?)

Stat of the Day

$5 billion–That’s the size of the livestreaming industry in China. One of the top hosts makes up to $11 million a year.

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