This Week in Tech 625
Leo Laporte: It's time for TWiT: This Week in Tech! We've got a great panel for you. Alex Wilhelm is in studio, visiting us from Queens. Steve Kovach, he's at Business Insider from quartz.com in Brooklyn, and we've got Mike Murphy. Big quarterly results for Twitter, Facebook, Amazon, and Google's alphabet! Who's the big winner, you might be surprised. The biggest breach of Government info in history, it came out of Sweden, and the Bitcoin fork. We'll try to explain what that all means. It's all coming up next on TWiT.
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Leo: This is TWiT, This Week in Tech, episode number 625, recorded Sunday, July 30, 2017.
Walking to the Bodega
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It's time for TWiT, This Week in Tech, the show where we cover the week's tech news. I'm sorry you weren't here earlier. This Week, we're going to get very serious with a fabulous panel, the editor in chief of the brand new crunch based news is here. Alex Wilhelm. Alex Will Wilhelm.
Alex Wilhelm: That's my new official TWiT nickname.
Leo: We'r egoing to put it in quotes.
Alex: Next time I'm on, it'll be done correctly.
Leo: Editor in chief at Crunchbase News. How's that going?
Alex: It's going good. So far, I'm not fired.
Leo: Senior correspondent from Business Insider, Steve, it's not time to buy an iPhone Kovach is also here.
Steve Kovach: How is it going?
Leo: Great. Steve is in Queens.
Steve: Yes. Long Island City, which despite the name, is actually Queens.
Leo: It's the new Brooklyn, I understand. And from Brooklyn, which is the old Queens, Mike Murphy from Quartz. Hi, Mike. Good to see you.
Mike Murphy: Hey, yeah!
Leo: First time on TWiT, you've been on the network many times on TNT. Glad to have you. This is good to have Alex here, actually all of you, because you all cover Business to some degree, because this was a very busy week for quarterly results. Facebook, alphabet/Google. I still have to say that. Don't I? If I say Alphabet, people say what's that?
Alex: I feel like in six more months we can stop saying that.
Leo: Who else announced a quarterly result?
Leo: Wow. That's three. Twitter. You had to bring up Twitter, didn't you, Mike. So Twitter had the dubious honor of being at zero growth. Is it literally they had zero new users?
Alex: It's a Net MAU flat line.
Leo: But there's a bright side, because people are using it more often daily. Daily active users went up.
Alex: Do we agree that Twitter makes more sense to be judged on a DAU basis over an MAU basis?
Leo: Twitter does. Engagement is more important than new signups.
Alex: A snap should also report MA views, but Twitter reporting DA use isn't as much a dodge is it would appear originally. It doesn't bother me that much.
Mike: It's interesting that they say that the DA use is up, but they're not going to tell you how many.
Alex: They're being coy.
Leo: So up could be five more people. It doesn't have to be... they said, up a lot. But they didn't quantify it.
Alex: Wall Street didn't buy it, as we'll see later.
Leo: The stock went down. Every time Twitter's stock goes down, which happens a lot, it puts it in play, does it mean somebody is going to buy it or is it already so tainted that nobody is even looking at it anymore?
Steve: It's gotta get way lower before someone buys it.
Leo: So it's just not low enough yet.
Alex: It's 12.5 billion? Roughly. So 15, 16, it's a lot of money.
Leo: But it's where the President announces policy. It's the new White House Briefing room.
Steve: That's the irony about Twitter, isn't it? So much news happens, this is an old analysis here, a lot of news happens on Twitter. The President literally now dictates policy on Twitter and that gets picked up by every other media organization that sees the benefit of it more so than Twitter does. That's their big problem, they have this valuable platform from a news perspective but they don't know how to take advantage of that. They're still being valued as a social media tech company when they're more of a media company.
Leo: That's the interesting thing. They're putting, when I go to the front page, I see live video streaming, they're going to do a live channel, right? On the right, it's stadium. Neli Patel is going to do a tech show, a gadget show. They're going to have their own content. How does that tie into what Twitter is? It's like a second business almost.
Alex: It doesn't help it with me. I don't go to Twitter for video.
Leo: Now I go to Twitter for a feed of news, information. Not video, but of textual information, links. Somebody wrote a tweet to me the other day, that said ironically I was a big RSS fan for years. I'm still an RSS fan. That Twitter is what killed RSS. Right? Twitter became their feed.
Alex: Twitter also became the new comment section for online articles. Everyone needs to discuss... we all go on Twitter to talk about the stuff. We don't leave comments behind, we put them into the conversation. That doesn't mean Twitter is good from a financial perspective, the revenue is down. They dropped 13, 14 points after that. Tough day for the blue bird!
Leo: It's funny, I come and go on Twitter at times. I hate it. Their free speech policy creates a problem for them in terms of content, and yet I would hate to not have it. You guys agree? I bet all four of you visit Twitter daily.
Steve: I'm glued to it all day. That's not necessarily a good thing.
Leo: You're causing a problem.
Steve: I'm looking at it right now as we talk.
Alex: At least that's honest. I just got those 43 inch dell monitors at the office, and I have Tweet deck now. This epically huge display.
Leo: Tweet deck hygiene. What do you have? What are your tweet deck columns. I have home mentions, messages, and Donald Trump.
Alex: That's the least hygienic I've ever seen. Germs all over your feed.
Steve: You need the activity column, that's the best column you can add on Twitter. You can learn a lot about people, it shows you what people you follow or are faving, and a whole bunch of who they follow.
Leo: It scrolls fast too. Vacuum sealed my memory foam mattress with a mattress bag and packaging tape... I'm so glad I saw that tweet.
Alex: Was that a Trump tweet?
Leo: I have a problem with Twitter in general. I feel like I'm having a stroke when I read it. You have to spend so much time parsing it, but you guys live on Twitter.
Steve: It's like looking at the matrix.
Leo: It's just like that. Data coming down like rain! Mike, you keep tweet deck open, Steve, you keep tweet deck open, Alex?
Alex: I use Tweeten.
Leo: What is that?
Alex: It's @tweeten on Twitter. It's a Tweet deck variant that you can run on Mac and Windows 10. It is a tweet deck rip. This is the best tool that I found. It's a little more memory intensive than old tweet deck desktop was, and I run a lot of columns, but I think it's the best way to go about it.
Mike: I used it too, but it's kind of janky I found. I even added them, but the screen keeps flashing and I feel like I'm going to have a stroke. We're looking into it, and that was a month ago, so I went back to tweet deck.
Alex: I am on their slack group, their slack channel.
Leo: Shame. Now you have to get naked and walk through the streets of Westeros.
Alex: That's why Kovach is here.
Leo: OK. By the way, episode three of Game of Thrones, we only got three more episodes.
Steve: I think it's seven episodes.
Leo: Good. Four. One month, we have to wait again.
Alex: Is there another season coming?
Leo: They split it in half. I hate it when they do that. Anyway, back to tweet deck...
Alex: This has been what's on Leo's mind?
Leo: This is what happens when you look at Twitter all the time. You become discursive.
Alex: I'll close it. Watch this, it's gone.
Leo: You just reduced it behind that other window. You gentlemen are addicts.
Alex: It makes us better at our jobs. If you are on Twitter that much you can't fall too far behind.
Leo: That's interesting, isn't it? If Twitter did not exist, we would have to invent it. So why not Facebook? Facebook is not a newsfeed now. It's changed.
Mike: It's too algorithmic. I have in the last week tried to go back several times in the last week tried to go back and turn it into a most recent messages from your friends, and it keeps going back to the top whatever they think is the most important stuff, which is three days old. You can't use that in any news capacity.
Leo: I feel manipulated. This is Zuckerberg's platform. That's why I'm worried about him running for President. It's basically a nob under his desk, become President, he tweeks that, the feed changes, and everybody loves Zuck, and he's got the votes and it's over. Isn't that really the risk of Facebook?
Alex: He may be the most powerful person on the planet that doesn't have nukes.
Leo: He doesn't need nukes because of Facebook.
Alex: I think Zuck may be the most powerful person because he can control opinions.
Leo: Forget ICBMS, he needs Facebook. Let's talk about Facebook's results. They had a very good quarter.
Mike: When have they had a bad quarter?
Steve: They haven't. They've beaten every time since they went public.
Leo: You mean beat the journalists' expectations. You would think the analysts would update their expectations so they wouldn't get beat. Apple always sandbags and beats expectations by lowering expectations.
Steve: They said years ago they were going to stop doing that. You see the gap narrowing between...
Leo: They don't get beat as much. But the analysts get beat with Facebook. Do you think Facebook is doing the same thing? Or just analysts can't believe how successful they are?
Mike: They've said for the last year that there is going to come a point in 2017 where they're not going to be able to make as much as they have. They're going to run out of people on the Internet, especially with a good enough connection. They keep saying the earnings are going to drop at some point. They post their best quarter ever by a country mile.
Leo: 47% growth in advertising revenue, year over year. That's unbelievable. 45% growth in total revenue. Costs went up a third. Why?
Alex: Facebook has hired as many people as they can find. The hiring boon that is going on that has created a talent war between the five biggest tech companies continues. Especially in the bay area. It's also very bad in Seattle. But it's concentrated here.
Leo: Running out of people in many respects. I don't look at it the same way you do, you're more financial focused because of crunch base, to me the one number I look at is net income. Do they make money? Maybe just a normal person thinks about that. They made money. Their net income is up 70%. They almost doubled their profits, that's incredible!
Alex: Facebook had a billion dollars in trailing profits before they went public.
Leo: Their operating margin is almost 50%. That means for every dollar they make, they keep 47 cents.
Alex: That's why they're worth so much money. They're worth hundreds of billions of dollars, and it's probably fair. The question becomes, when the revenue does decelerate enough to become material, how does the company approach shareholder wealth, and do they start doing dividends?
Leo: Who cares about that? Shareholders care about that. That's all shareholders ever want. That's what's killing Apple is shareholders saying pay me.
Alex: Can you convince me as to why?
Leo: Yes because they have 200 billion dollars in the bank, and they won't spend it, except to buy back shares. They're borrowing against it to buy back shares, but they're borrowing to buy back shares. That's purely shareholder interest, that's not in the interest of Apple. Apple should take that money and spend it and find a new business, because they're running out of people who are going to buy iPhones and that's their only business at this point. The Wall Street Journal article this week was very interesting. There was stuff buried in there that may show trouble in the spaceship paradise, but first I want to keep going with Facebook. Effective tax rate. I always look at this again. I'm not an analyst. 13%. What do you pay for your tax? I pay almost half in taxes. 13%. Nice work if you can get it. 1.32 billion daily active users.
Alex: That's the number that caught me. That's an insane stat. 1/5 of the planet every day looks on Facebook?
Leo: Let's think about it. Probably a billion of those spend a half hour on Facebook. A long time.
Alex: Kovach, how much time per day do you spend on Facebook?
Steve: A few minutes.
Leo: Me neither. That's interesting how much we use Twitter. Mike. Do you spend more than a minute or two on Facebook a day?
Leo: You made an excellent point that Facebook's algorithmic feed means you're seeing something... Facebook must have noticed I was talking about this national review article, because they put it right on the top. That's scary. There's Iain Thomson. Mark Cantor, he put a fake news story up this morning, so I'm going to unfollow him.
Alex: You're scrolling. Do you care about any of this? Look at that late Sunday...
Leo: Look how much real estate my friend Ray used with this meaningless post. And then go back and look at Tweet deck and how much richness there is on the page. If you're looking for information density. Is that what we're looking for?
Alex: Personally, yes.
Mike: It's a hard argument. We're journalists and we want as much information as possible in the most efficient way, but if you're my Mom on Facebook and hanging out looking at old photos of what me and my sister are doing, you don't necessarily want to jam it with stuff.
Leo: Most people probably like pictures, right? I go to tweet deck, it's a lot of text. Donald did one picture the other day, I was blown away. He imbedded a video. He even used the video emoij. I was like, Donald.
Alex: It's Dan. He's a social media guy.
Leo: So Dan has RealDonaldTrump as well as POTUS? I guess so.
Alex: I think Trump dictates a lot of these. I don't think he sits down in front of Tweet deck on his own computer and types out a message on his laptop.
Leo: Are you sure covfefe?
Mike: The ones that have grammar errors, or are misspelled or have weird spacing that doesn't make sense, those are our President.
Leo: He uses an iPhone to post the most recent one. Probably not him, that's Dan. He has an iPhone now? He's back to the iPhone?
Steve: He has an iPhone with one app and that app is Twitter.
Leo: So they got rid of the Galaxy?
Alex: Are you saying Android isn't secure?
Leo: It's more secure than it used to be. These are all iPhone now. My old trick of looking at what the platform was is no longer good. Back to Facebook. Mobile advertising revenue, remember when we were wondering if they can go from desktop revenue in advertising to that very difficult mobile advertising? 87% of their revenue is mobile advertising. They cracked that nut. Holy cow. You were saying one of the expenditures was people, went up 43%. You know when Apple goes up they're hiring people at the store. When Amazon goes up, they're putting pickers in the fulfillment centers.
Alex: And they crossed 2 billion monthly active users, which is insane.
Steve: You're not talking about video. Video is their next big growth opportunity, at least that's how they view it. They think they can scrape some of those ad dollars away from television so they're doing those original shows and partnering with other media companies to do short form original programming. So that's going to be an interesting experiment to watch next quarter.
Leo: Total TV ad by in the US, 100 billion? It's a lot. I'm trying to find it.
Alex: It's 113 billion as of 2013. I made that up. Don't look at me like that.
Leo: Chat room will find it for me. Chatroom, a little research? How much was spent in the United States on Television ads this year? I know it was in that ballpark. It's a lot of money, of course people are looking at TV. People are looking at new ways to advertise. What Facebook said, we're going to spend a hundred million, as much as three million a minute. They're all short form. Is that right, Steve?
Steve: They're going to go long form and have 30 minute, hour long shows as well.
Leo: They'll be episodic, serialized fictional stuff?
Steve: That's what it sounds like, yeah. Just like Apple is noodling around with doing that and Amazon is doing it. Snapchat is experimenting with doing reality TV. It's all these platforms seem to have learned that if they dump enough money into content they can get some hits.
Leo: But you can screw it up. Apple has screwed it up.
Alex: Are you saying Planet of the apps isn't good?
Steve: They hired two fancy Hollywood dudes who are going to turn that around, so Planet of the apps was terrible, but that doesn't mean moving forward they're not taking it more seriously.
Mike: If that's what you thought, you're big strategy is going into video and Apple is one of the largest companies in the world, that was what you came up with, you think the average person is going to watch, there's a systemic issue int here that you're that tone deaf to what people actually care about. It seems strange.
Steve: You're talking about Planet of the apps or watchamacallit?
Mike: They realize they're so hilariously bad at producing content...
Leo: Remember the mission for Apple video is different than the mission for Facebook or Twitter video. The mission for Apple video is to up subscriptions to Apple music period, right? But Facebook wants ad revenue. Apple is not looking at ad revenue. Facebook wants to create something, by the way we've got the numbers, thank you chatroom. America's ad spend, in 2016... PDO came up with an interesting number. Digital ads spent was almost the same. That surprised me a lot. It's reasonable for Facebook to say there's no reason why we can't get at least half of that 70 billion right now, right?
Alex: They need to have a revenue source, so if they can tap into Aviva, but it's going to be a much more expensive revenue industry than the stuff we talked about. They're not going to have odd margins for ten minutes of content.
Steve: That's why they partner with other media companies, so they can do a revenue share, and it's relatively cheap. A lot of the cost goes to those media companies.
Leo: Who has done the best of this? Is it Netflix?
Steve: Netflix is the best, but Amazon is pretty good too.
Leo: Netflix has made the most money from its investment. But Amazon is building something a lot bigger. Again, their motivation is to build prime.
Alex: It's not clear to me, because they have a drive, the prime margins down on a significant basis.
Leo: It would unless it increases the number of prime users a lot. Here's the key with Prime, everybody who signs up with Prime ends up being a good Amazon customer. That's the theory. I only say that because it's true for me. I buy something on Amazon almost every day now.
Alex: What are you guys buying? Go to the bodega. You live in Long Island City.
Leo: I bought batteries, I have batteries coming today. I needed double A batteries. That was on Friday, they're coming today.
Alex: That's not interesting. Go to the store.
Leo: That's an interesting point. Where Amazon makes money is in saving me money. Time cannot... let me tell you something, young man. You can make more money, you could get better looking, maybe. But you cannot get more time. You've got a limited amount of time. I think Gary Vanderchuck told me that.
Alex: I don't disagree with it, but if I don't walk to the store to buy those batteries, I will spend it in from a screen or a book. For me it gets me out of the house.
Mike: It's not good time that your'e saving.
Alex: I like going to Wallgreens for batteries and deodorant and toilet paper, and wet wipes.
Leo: For you it's so you can get fresh air and a walk.
Alex: And support the local economy! The bodega near my house is owned by a family.
Leo: It's a political statement for you.
Alex: I don't think Amazon should be given my entire custom as a consumer.
Leo: Somebody is saying in the chatroom that Amazon made nothing on the sale of physical goods. But this is very deceptive. I'm telling our listeners. Amazon totally controls how much money it makes in a given quarter. I always say Jeff has a dial in his office that he can turn, and I think I'll make a hundred million this quarter. This is why Amazon is such a success today from day one. Investors hated this, they take everything they make and they plow it into infrastructure. If you look at Jeff's letter, they bought more planes, they built more fulfillment centers. They don't make money on physical goods because they're plowing profits so they can make more money later.
Steve: That's exactly right. It's the day one mentality that he talks about.
Leo: He always says you don't want to be day two in a company. You want to be the first day.
Alex: Which sounds exhausting! Sounds like you never get a lunch break. Guys we have a convert on the show.
Leo: I'm terrified about Amazon. First of all, Bezos is brilliant. Probably the smartest guy in the bunch, briefly the richest man in the world. For one minute. Maybe the smartest guy in the bunch. I include Zuckerberg and Elon in the bunch. Satya, everybody else. the more you see his strategy unfold, the more you realize he's been thinking this all along. Ben Thomson of Stratechery says the true goal of Amazon is to get a piece of every financial transaction on the planet. That's a good business, if you can get it.
Alex: Ben Thomson is way smarter than I am. So I'll trust him on that.
Leo: How do you do that? You want more prime customers, because that's how you get a piece of their transactions. Whether you make money on it today is irrelevant. You want to own them. Now here's a question. If you were a prime member, what's the turn rate on Prime. Do people quit? Amazon doesn't say.
Steve: They just say the average prime member spends whatever times more per year than the normal person on Amazon. That's the only solid thing we get.
Leo: We can use our friends.
Mike: It's a one off cause. It's recurring, you don't remember on March 22. You don't remember it. It rolls around again, you look at your credit card statement, you're like, damn, I got billed again. You might complain about it and ask for a refund, but the services that might be lost like their video service, you might like their transparent show. There might be enough little things like that that might be making the money Amazon could make the way Netflix is more popular on video, overall it's enough to make people think I'll spend another 99 dollars on this this year.
Alex: I think especially when you add the low cost college subs, with 39 bucks to get you on board, then you leave college, you're not going to once you've had free shipping for four year.s It's an amazingly good hook.
Leo: Let's look at the... That's the 10Q. I'm not smart enough to read that. Let's look at their results. Third annual prime day, their biggest global shopping event for Amazon, even though I think we all know it's not a very good deal. Prime day doesn't offer particularly good deals, you know that, right?
Alex: I don't shop on fake shopping holidays.
Leo: Hundreds of thousands of small businesses and entrepreneurs participated. Biggest event for Amazon, devices worldwide sales for echo, fire tablets, the Echo dot the number one seller, they got it down to 35 bucks. That was a good deal. They sold a bunch of TVs. Amazon has the best review, the big sick. Johnny and Emily V Gordon's wonderful movie, 98% on Rotten tomatoes. 16 Emmy nominations. It's interesting how they run the successes of Amazon studios is up there with the highlights of their earnings. This is important to them.
Alex: Way before AWS revenue or other expansion revenue...
Leo: Is that because this is the sexy?
Mike: It's the highlight section, right? Also it looks good. That's what investors are going to want to see. Not only are they massively impressive logistics business, they also know how to make a bunch of Emmy winning shows. It's insane.
Leo: So to get back to that question, Amazon or Netflix? Who is the big winner in house production?
Mike: I think it's got to be Amazon right now. I don't know if you all have noticed this, but they're starting to take a strange approach to original content. They may have 7 or 8 great shows. Everyone wants to see the new season of Stranger Things, but then they're putting out a lot more completely cynical plays. Like a show that's just for teenage high school drama kids, and another one that's the same show but maybe the genders are flipped. It seems like a lot more trying and seeing, but it seems like there's a lot more not great content on there now, compared to Amazon.
Leo: Isn't that what happened at HBO? They have big blockbusters and they have a lot of secondary not so much watched stuff? It's hard to make consistently good stuff. I don't know if that's a problem at Netflix.
Alex: That's why Facebook will never be able to do it; it requires taste, and Facebook has none.
Leo: Apple has shown they don't have the chops. You can't hire your way to it.
Alex: Can you? You can try.
Leo: One note, I'll throw this in, this is from the Information, remember that AT&T is trying to buy Time Warner. We almost forgot. That's about to happen because nobody is going to stop it. And as that purchase goes through, remember who owns Time Warner; HBO. Remember that AT&T is very unlikely to want to spend money on original production at HBO. Not to mention they have 120 billion in debt.
Alex: AT&T is 120 billion in debt?
Leo: Yeah. And they agreed to massive dividends. Paying back the shareholders can kill you.
Alex: If you do it stupidly.
Leo: They have these obligations, and they're going to spend 85 billion on Time Warner.
Alex: How much money do they have left?
Leo: This may be the last Game of Thrones. I'm just saying. The interesting article saying, will AT&T throttle HBO? Let's take a break. We're not done with financials, but there's a lot more to talk about. Defcon was this week. Lots of security issues. The country of Sweden has now released public information of every one of its citizens, in case you wanted to know, you can find out and I'll tell you what happened there. Probably the worst Government data breach in history, certainly the most appalling data breach in history. Lots more to talk about. Our guests, great to have you, Steve Kovach is here. From Business Insider. He's a senior correspondent there. It's good to get you back on.
Steve: It's been a couple months. It's good to be back.
Leo: What are those album covers on the wall?
Steve: Doobie brothers, Cat Stevens, The Empire Strikes Back, Hotel California. Those are all my father's old records. They even have his name from when he was in college so his roommate didn't steal them.
Leo: That's different. That's music I might have listened to, but I was hoping for better from you, Steve. It's Dad Rock. Who's a Dad here? Also with us, I think it's his first time on the big round table, we're glad to have Mike Murphy here from Quartz. I love Quartz. Can I say I love Quartz? I remember when gz.com launched, it was a big deal.
Mike: It's an awkward website name. Saying that over the phone to sources, hey, send me an email at firstname.lastname@example.org. It's too short.
Leo: It's like when I worked for ZD TV, the Spaghettinetworks. They quickly changed the name to Tech TV. Are you a pasta network? What do you cover? I read Quartz religiously, and they're in the news. We'll talk about that.
Alex: Really? I don't know what you're referencing here. I'm behind.
Leo: You are obviously behind. That's Alex Behind Wilhelm. We had to go out and get our production guy down at the amusement park at Six flags, he crafted that lower third just for you, and he's pissed at me.
Alex: That's why TWiT will never go off the air. It's the attention to detail.
Leo: Our show... Alex is at the new Crunchbase News. Can anybody go there, or do you have to pay money?
Alex: Anyone can.
Leo: Crunchbate.news. I like it. I like your use of pseudo Simpson designer graphics.
Alex: That's our lead designer Leighanne. She does all of our stuff for us.
Leo: It's not the design, it's the color. I like the palette. It ties into the headline, profit taking a backseat to growth. Grace Gou. Good job, Grace. Grace can you get on the Alex Wilhelm graphic, though?
Alex: Don't encourage my team to harass me more than they already do.
Leo: It's time to fix that. You know what? You started it. You used to come in here and rip me, I'd be nice to you. Now, the gloves are off, Wilhelm. The gloves are off. It means I like you. I'm like Scaramucci.
Alex: Does that make me Sean Spicer? As long as I'm not your Reince Preibus, I'm good.
Leo: It just means I like you. Our show to you today brought to you by hover.com. I love the Hover. When you're going to get a new domain name, don't go to the place where they sell 15 other things, it's like going to the Bodega to buy.com. You want to go somewhere where they specialize in domain names. Domain names are what they do, they're not about upselling you to some other product. Hover is very simple, they sell domain names, and email and that's it. But they've got them all. 400 domain name extensions. You've got .com, .net, great extensions like .design, .tech. .pizza. Alex Will Wilhelm.pizza. Wilhelm.ninja.horse. Once you find a domain, you can use hover Connect. It couldn't be easier. Look at all the services they support. When you want to use your domain name, it's trivially easy. Just press a button and they'll set it up for you. Your domain works with whatever email programs you're using. One of the things people should absolutely do, we had a house painter come in and give us an estimate the other day, and his email was @comcast.net. I said no. If you're a business, first thing you do, go to hover.com and for ten bucks you get a domain name. Yourbusiness.com or .net or .ninja. Get that custom domain name and have Hover do your email. They can host it or read what I do is have it go over to Gmail, that's very inexpensive, and that way you look more professional. People say do I have to have a website? You don't. It's easy to do, but Hover isn't going to upsell you on that. They don't do websites. When you want to buy a domain name, when you want to buy an email address, you shouldn't have to opt out of page after page of ones you don't want. By the way, who is privacy? Those are the guys who upsell you? it comes with every domain. Every domain registers... All of the supported domains, which is most of them. Who is privacy, you want it, trust me. With Volume discounts, the more domains you have in your account, the more discount it will apply. It encourages you. I have several hundred.
Alex: I have like five.
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Alex: For example slowslatty.com.
Leo: They go we've locked that for six months, sorry. Call us. I finally got it transferred over to Hover, it was Leo Laporte.com. Finally transferred to Hover. It's the best, and we thank them for their support. hover.com/twit. OK.
Alex: Who uses .ninja, by the way? Comcast.ninja? Iamnota.ninja? What do you use it for?
Leo: Anything you want. What's the question? That's obvious. Therock.ninja.
Alex: But he's not a ninja. He's a flabby little human.
Leo: If you were a ninja, would you admit you were a ninja?
Alex: I would brag about it nonstop. You would never hear the end of it. I would just ramble.
Leo: Anything else to say about Amazon's earnings.
Alex: AWS was big.
Leo: We didn't get to AW... we should mention Amazon Web service is a sponsor of some of our shows.
Alex: Can we still talk about it?
Leo: Yes, of course. Absolutely. I like to disclaim that kind of stuff. I'm not going to say nice things about it... amazon.books opened actual bookstores in Linfield, Mass, Paramus, New Jersey and Manhattan. They have five more coming, what's the deal there? Why would Amazon be opening up bookstores?
Steve: A big F U to Borders and Barnes and Noble!
Leo: We put you out of business, now we're going to take over. I think the only thing that might be interesting, and it ties in with the purchase of a Whole Foods; this is Bezos. he's thinking 20 moves ahead. If you're going to have everything go online, you take a cut of all transactions, what happens to downtown? What does shopping mean? Some of us still want to go shopping. Go to the bodega, go to the bookstore and browse. I can't claim credit for this, but I think he's starting to think of shopping as an experience as opposed to a purchase. People will still want this experience. They'll want to go somewhere, they'll want to get out of the house, they'll want to look at stuff before they buy it, but they'll still buy it at Amazon. I think he's using these as experiments. Whole Foods will become like that.
Steve: The grocery store is real interesting too. Grocery stores, the experience still stinks and hasn't changed in decades. You go to a super market today in 2017, and it's the same as it was in 1967.
Leo: You have to think that Jeff looks at it and goes how inefficient. Right?
Steve: This Cashier free store idea, that's one thing. The idea that you can just walk in and grab all the stuff you want and leave on your own without having to interact with a human, that's cool and interesting, and don't have to wait in line, and the person who checks you out is miserable with their job and they don't want to talk to you or whatever, that's an interesting play, if they can do something and change the grocery store experience. Delivered groceries still kind of stinks. Anyone who uses instacart or Fresh Direct or Amazon Fresh, getting produce... you want to see the food you're about to buy in a lot of cases, and there's room for them to experiment there for sure.
Mike: The difference between Amazon Go, their grocery store test, and these bookstores, they're almost antithetical, because the Grocery stores are doing exactly that. We're going to get rid of the friction and have this personal, creepy-less grocery experience, but the bookstore experiences are supposed to be these experiential, calm look at our stuff, maybe buy it here, buy it on Amazon, like a show floor, which is the exact opposite, so it's weird that they're trying both of these at the same time for different industries, essentially.
Leo: I have to think, why did Amazon buy Whole Foods? Partly they think we can do better. But I also think Whole Foods already had some of this vision. The Whole Foods in Austin has a coffee shop, a sit down restaurant... you've been there? Tell me about it.
Steve: My sister used to live across the street from there and we would go whenever I visit her. You can sit down. You can get a glass of wine at the wine bar and walk around and drink wine or beer or whatever while you shop.
Leo: That's what I'm saying. That's what Bezos is interested in, experience, not shopping.
Alex: Ambulatory boozing.
Steve: You just want to get drunk and shop, and then you spend more because you're lit. Perfect.
Leo: I think one of the reasons Whole Foods was of interest to him, of course there's other reasons including all their locations, but I feel like this is, Jeff is trying to understand what shopping will look like in 20 years.
Alex: I have an idea that I want to flip past you. What if he was watching companies try to reinvent the grocery world through Instacart and blue Apron and realized without having a physical presence that he could leverage to make amazon Fresh more competitive in the long-term, they would eventually not be able to take over the grocery business with their strategy as the market changed underneath them, so they bought Instacart.
Leo: You've got to think Blue Apron is praying Amazon buys them.
Alex: Amazon won't.
Leo: By the way, Blue Apron, another sponsor. I love the idea of Blue Apron, but Amazon is already offering in certain locations packaged meals similar to Blue Apron, and their stock tanked very similar to last week. It was hurt by this.
Alex: If Amazon buys Whole Foods, I feel that's a much better way into your kitchen...
Leo: Instacart is not Whole Foods. Amazon Fresh is... so they didn't buy Instacart, another company that didn't do so well in the markets as a results of Amazon's purchase of Whole Foods. I'm trying to read the Quartz crystal so to speak. I feel like there's a long-term strategy that's not immediately obvious when Bezos does stuff.
Mike: It also gives you credibility. Everybody essentially likes Whole Foods. They're respected for their quality versus Kroger or any other supermarket. That helps, if you are as Alex is saying trying to move into these new fields. I don't want an Amazon box of food, but I would want a Whole Foods box of food.
Leo: They bought the brand!
Mike: This is a big issue for them in general. They are quickly becoming the largest fashion retailer in the world, and yet nobody wants to buy Amazon clothes. They're launching brands specifically for this. In the same way they have Amazon basics for battery or whatever, you're not buying Amazon basics clothes, because people have some desire for branding or some perceived level of quality. I bought a shirt yesterday off of Amazon for $12, from this company called Good Threads, which is one of their fake companies. It felt more real for some reason than if it had bene Amazon Fashion. There's some utilitarian aspect of that brand that's great for certain things.
Leo: Doesn't Amazon own good reeds as well? Good threads is a play on Good reads I would guess. Expect good things from Amazon. Chris Sager is writing in Slate, Amazon is now the most interesting and important problem in American antitrust law. I think if I'm Jeff Bezos, I'm thinking briefly at least for the next four years, there's a huge opportunity to become a trust, because I doubt there will be any antitrust prosecutions under the Trump administration.
Steve: I disagree. Trump likes to needle Bezos, and there's a good populist message. The taxing, which he's not educated on. He gets on him about taxes, and then Steve Minuchen said something about their taxes, so they're looking at them.
Leo: That's the base. He's talking to the base for that.
Alex: When doesn't he talk to the base?
Leo: My point is, that's red meat for the base, but the base doesn't know from antitrust action. The base doesn't know... although on the campaign trail, he did say I'm not going to allow AT&T or Time Warner to go ahead, and yet, it's absolutely going ahead. Will there be? I think Congress might say we should investigate Amazon's acquisition of Whole Foods. Is the Government starting to worry about Amazon and its size, because I think what's absolutely happening is Amazon is making a strong move to become the place you buy everything, and do we as consumers.... I've already given into Amazon.
Steve: I think Cory Booker, senator from New Jersey, he was n the recode podcast a few days ago. He brought up Amazon, Amazon as the food steel. Members of Congress are definitely thinking about this. Not that they can take action on it right now, but it is something on their minds, at least on the Democrats side.
Mike: It's not as clear as it's been for past antitrust cases. You break up the bells because they're controlling the telephones. We're not at a state yet where you can say Amazon controls shopping. It might get to that, which is scary, but I still go to the bodega and buy batteries from other places when I need them. What are you saying that they're a monopoly on? Our dollars? Not necessarily yet. It's not like Google in Europe where they are the only search engine or something like that. There's nothing that they are the only thing of yet. They might be everything eventually, which is scary, but I don't know what the case is that you would bring right now.
Leo: I guess you can't, and yet my fear is it will happen so quickly that there will be nothing you can do about it.
Alex: Until you can prove that consumer prices will be harmed by going up due to an Amazon monopoly...
Leo: That's how it works in the US. Anti trust laws to protect consumers, in Europe, anti trust laws to protect companies. A competition.
Alex: I was looking at this only from a Us perspective. I don't know European laws.
Leo: That's one thing that slows Amazon down is they don't have a very good International presence and there are very big players like Ali baba in China that are in effect the Amazon of Asia or Europe.
Alex: We're also seeing, I think it was Bannon in the White discuss Google and Facebook as monopolies of a certain sort. They are required tools to use on the Internet and therefore should be regulated in some capacity. Which I'm sure will excite people, but I don't know how you put into place antitrust regulations against a web service like a search engine. I don't know how that works. To me, a lot of this is just talk and people haven't thought about how you would deprecate Amazon or break it up into smaller pieces. It's one of the pieces. You couldn't take Microsoft apart 15 years ago, I don't think you can take these companies apart now. I do agree that constitutional power is a risk in a market based economy, but I have yet to see any good ideas about how you can approach that. I don't think anyone has done the work required to come up with those plans, not that they'd be any good, but they haven't gone that far.
Leo: Amazon web services, which is the secret weapon of Amazon powered most of the revenue growth for Amazon. Its revenue rose 42% to 4.1 billion dollars. Anything to say about that? Everybody from Microsoft to Apple to Google going after Amazon web services, but they are the powerhouse aren't they?
Steve: I saw a very snarky tweet about that from IBM, saying they actually had a slightly higher revenue than Amazon web services this past quarter, which is like that's very nice for you.
Leo: Let's talk about Sweden as long as we're talking about IBM. You may ask, what's the connection? So the Swedish transport agency, in 2015 outsourced its IT to IBM Sweden, ignoring warnings from the Swedish security service, and breaking rules to protect the security of this database. IBM put the data, unencrypted on servers in Romania and the Czech Republic. What data? Well, everything. Turns out the Swedish transport agency has information on every driver's license, every vehicle, every road, every bridge. But even more than that. There's a New York Times article about it. Even more than this, the issue is what exactly... we know this data is now public record. We're curious as to what this data includes. Apparently even the things like names of people working undercover for special intelligence unit of the Swedish armed forces. The names of people working for Sapo, the Swedish security service. People in the Witness protection program. Everything. Birthdays, addresses, pictures, all of it was sent in clear text to the Czech Republic where at least 3 unauthorized people had full access to it, but worse, some of this data was publicly emailed clear text. When they found out there was some secret stuff in there, they sent another email saying here is all the secret stuff, could you delete that?
Alex: Is this a joke? They had no encryption?
Leo: None at all!
Alex: If only IBM had a tool that was AI, they put a bunch of marketing behind, you could know how smart they were.
Leo: It's unclear how much of this data leaked out, but there's no way to know because it wasn't protected in any way. It could easily have been copied and be on somebody's USB key somewhere, and there's no record so there's no way of knowing it. Maria Augran who is the director general of the Swedish transport agency did lose her job over this. She was fired in January and fined two weeks salary.
Alex: That's quite strict.
Leo: 8500 dollars. She paid the price.
Alex: She gets paid 8500 every two weeks?
Leo: It's not a high paying job. It's a $17000 a month job. Do the math. It's a quarter million a year.
Alex: It's more than I make.
Leo: But she was in charge of the entire Swedish transport agency.
Alex: I can still be jealous. I can be as petty as I want.
Leo: She also sidestepped security, privacy laws. She didn't do it right, they wanted to save money and the budget was tight. Millions of personal records and data about the infrastructure of the country's defense. Anyone with a driver's license, pilots, train conductors, air traffic controllers. Armored vehicles. Bridges and tunnels. Weak points, all of this, it's got to be terrifying. Again, maybe nobody knew and it's been sitting there for a couple years and nobody made a copy but you'll know it because you'll see it floating around in the dark net at some point if it got out.
Alex: How embarrassing for IBM, right?
Alex: The old joke was that nobody ever got fired for buying IBM. Well. We now have a direct case.
Leo: They were paid a hundred million dollars in this outsourcing.
Alex: A hundred million dollars!
Leo: It wasn't really even IBM, it was subsidiaries in the Czech Republic.
Alex: And they're making it worse?
Leo: So, ok. You know, it is now considered to be the worst breach of government breach of data in history.
Alex: All right. Can I say one more think about Amazon before we move on?
Leo: Oh, yea, sure.
Alex: So, the AWS operating income was $916-million in the last quarter and Amazon's total operating income for North American was $436-million. And then they're net loss in international was, on an operating basis, was $724. So, essentially, AWS made a bulk of their operating profits around the world and subsidized their international losses. So, that's how important AWS is to the Amazon engine.
Leo: Not bad.
Alex: It's not off course. It's actually incredibly—
Leo: It's kind of funny because it was an afterthought product.
Leo: It was just some engineer said, "You know, we can do this."
Alex: We can sell it too.
Leo: That's actually where you have to say Jeff maybe didn't have all the chess pieces in mind. He was just lucky a little bit. Hey, lucky is as good as anything.
Alex: It's better than most things.
Leo: I'll take luck. Apple's paid a couple of big fines. They just paid the University of Wisconsin $506-million-dollars. This is a long-standing patent lawsuit against the University of Wisconsin, Madison. A district judge ruled on Monday, Apple has to pay that half a billion dollars for infringing on a microprocessor technology IP, adding, by the way, to a previous $234-million-dollar decision two years ago. And, I think we just learned from Nokia's quarterly results that Apple paid Nokia $1.7-billion dollars. I'm sorry, euros. That's even more. That's almost $2-billion dollars for patents.
Alex: It's almost like Apple should stop stealing stuff from other people. I mean, apparently, it's not very lucrative for them.
Leo: They're fighting against Qualcomm still, though.
Alex: Yes, they are.
Leo: That one's going to go on for a while. Qualcomm has stopped paying Apple. Apple has stopped paying Qualcomm, so.
Alex: And then also, Alphabet paid a large fine this quarter. So, really, it seems like the big 5 are trying to shell out instead of just receiving.
Leo: Well, but Alphabet made $26-billion dollars this quarter, so.
Alex: In revenue.
Leo: In revenue. Their profits though were significantly more than the fine, right? I'm trying to find the profits here. Net income was $3.5-billion, including the $2.7-billin dollar fine. So, even after paying the $2.7-billion dollar fine, they made $3.5-billion.
Mike: And they made a big point of saying that in their actual earnings release. They had a box at the top saying, "By the way, if we didn't have to pay this big, old fee, this is how much we actually would have made."
Leo: $6.2- billion, almost—more than $2-billion dollars a month.
Alex: That's crazy.
Leo: Revenue for Alphabet. I mean income, like profit for Alphabet. Their cash position, $94-billion. It's not Apple money, but hey.
Alex: I mean, I'll take it. That's fine.
Leo: Probably mostly in the US which is nice.
Alex: But they—didn't they fall, Kovach, after hours when they dropped this? Wasn't there some point?
Steve: They did. Yea, and so a lot of that was due to TAC or the tuition—tuition. Traffic.
Alex: (Laughing) That's amazing.
Leo: Did they get a tuition credit for their college tuition? I hope so.
Steve: Traffic Acquisition Costs are going up and they are going to continue going up and that is really squeezing their margins. And that's what spooked investors after hours that day.
Leo: So, tell us about Traffic Acquisition Costs.
Steve: That's what they pay mobile—Alex, correct me if I'm wrong, if I say this wrong. I'm trying to make it as simple as possible. But basically that's what they paid mobile operators and carriers and so, as mobile searches increase, TAC goes up and of course, mobile is only going to increase.
Leo: Is that also the money, like Mozilla gets if you use the Google search box or Safari gets because Google searches are built into Safari? They pay money to Apple. They pay money to Mozilla. In fact, that's what keeps Mozilla and Firefox afloat probably.
Alex: Oh, for sure. For a long time.
Leo: For a long time. So, that's interesting. You pay money. Traffic Acquisition Costs.
Steve: I'm just saying, it's just an increasing large expense for them and they're honest about it. They keep warning, "This is why it's happening. The rise of programmatic ads." There are two things. The rise of programmatic and increase mobile searches.
Leo: Ad business up 16% but that's a slowdown from the 20% growth a year ago. So, it's still growing but it's not growing as fast as it did.
Alex: In percentage terms. It could be growing at the same speed in dollar terms, but this underscores why Alphabet's paying so much money right now in terms of losses or expenses on its other bets, because Kovach is completely correct. This deceleration will persist. And if they want to maintain their revenue they need to have that next revenue source.
Leo: Next business, including Waymo which is self-driving cars, Nest which is the thermostats and the cameras and other IOT devices. I presume all the IOT stuff is under Nest. Except Google Home oddly and Verily. What is Verily?
Alex: That's the health tech.
Steve: Life sciences.
Mike: Life sciences.
Alex: They do the contacts that like track your glucose or something.
Steve: The utensils for people with tremors, they make those.
Leo: Oh, so they actually have products?
Steve: Yea, yea. You can buy the utensils now. I think they sell them, believe it or not, on Amazon. And another thing you might want to look at within Google, their hardware division and cloud business is growing nicely. I mean it's still tiny compared to the ad business, but they like to point to cloud and hardware and that includes the Pixel phone of course and things like that and as something that just continues to grow and they're betting big on. And then YouTube of course. They really think there is a lot of room to grow advertising revenue out of YouTube.
Leo: YouTube has to be both a huge drain on money and at the same time, it's revenue. But they—God, what they must spend in servers and storage and bandwidth.
Alex: You're right.
Steve: I wish I knew. I wish they would break it out.
Mike: It looked like it was going to be this time, they were going to break it out. But, no, it's still a mystery.
Leo: And you have to think the reason they don't break it out is they don't want people to know what a drain YouTube must be, right?
Steve: It's got to be but they keep talking about it.
Alex: Yea, but they spent $1.65-billion on Hunter Walk a decade ago, a decade or two, whatever it was and it still loses money but they can't give it up.
Leo: What's Hunter Walk?
Alex: Oh, Hunter Walk is a VC who's doing work at YouTube. It was a joke.
Leo: I'm sorry.
Steve: I got it. I got it.
Leo: You guys are having financial humor going on.
Alex: I mean there's like 10 people in all of Silicon Valley and we kind of all know them, so.
Leo: So, here's Alphabet's other bets. Google Ventures which is of course their venture arm. Verily, Google Fiber. That's kind of gone, right? That's dead. Nest. Calico. That's a long bet. That's researching why people age and die.
Steve: Yea, that's—they want to cure death with Calico.
Leo: Cure death. You know, it's one of those high risk, high reward kind of investment.
Alex: It's binary result.
Leo: If you succeed, you're golden. Forever.
Mike: It seems like a lot of those bets are that way. I mean not all as facetiously as that one, but if they figure out self-driving cars before anyone else, that's what they're going to be known for in a hundred years. It's the same with Verily or Calico or any of this stuff. If they're the ones who can figure out these massive changes, that's what they're going to be known for. They're not going to be known as a search bar company, you know, a company that made an OK phone once.
Leo: But, other bets are still a tiny fraction of the overall—7% of overall revenue and I don't know if that, how meaningful that is given the costs and so forth.
Steve: And I forget what other bets lost, but you can also keep in mind that some of the other bets, especially X for example, are designed to lose money. X and Jigsaw will never make money, period. Their goals are to make the next big thing and to have something that spins out and becomes a Waymo or something.
Leo: Yea, it's kind of like the—
Mike: The lab.
Leo: It's a lab. It's kind of like Bell Labs or SRI or—so, in fact, Waymo came out, ultimately came out of X. It was originally an X project that they spun out.
Steve: And they just spun out another one called Dandelion which is—
Leo: What? They've got to get better names. This is ridiculous.
Steve: Now, Dandelion is going to be—it's not going to be an Alphabet company. It's going to be its own individual company outside of Alphabet. But they spun it out of X and what they're doing is making affordable, geothermal heating and cooling for houses.
Leo: I love that. That's cool.
Steve: And usually, I've never really looked into it until this happened, but apparently it's a very expensive process and they kind of, they claim, cracked the code to make it more affordable to install.
Leo: But it's only good where there's geothermal activity, right?
Steve: Yea, I think they're starting in New York State at first and they might go on from there.
Leo: Up at the Saratoga Springs. Wherever there are spas, there will be geothermal heat.
Mike: Yea, it's like all of Iceland.
Mike: Yea, the Blue Lagoon.
Leo: We have Calistoga over here. We've got geothermal.
Alex: Maybe we can use that to power the city. Who knows?
Leo: Yea. How close do you have to be to the hot springs to get—
Mike: The plants are usually right next to them. Like literally the one at the Blue Lagoon is across the street, so, like one side of it is industrial park and one side of it is beautiful spa.
Leo: I think you'd maybe invest in something a little more like global, like wind or something. I don't know.
Alex: Solar's doing great.
Leo: Solar's doing great.
Mike: They have a solar arm. They have something in solar and wind.
Steve: They have wind.
Leo: I've got wind but that's another story for another day. Let's take a break (laughing). We're talking. There's so much to talk about, ladies and gentlemen. So much to talk about. I guess if you drilled a hole deep enough you could take advantage of the difference in temperature between the earth's core and the earth's surface.
Alex: We tried that in Russia once.
Leo: Seems risky.
Alex: We drilled down as far as we could and it melts. Your drill bits melt.
Leo: It seems risky like you're going to let—Godzilla's going to, something bad is going to come out of the hole.
Mike: Or a volcano.
Leo: Our show today brought to you by—but great panel, by the way. I'm having a great time. Steve Kovach is here from Business Insider. From Quartz, it's Mr. Murphy. First time. How do you feel? Is it ok? Is it going well?
Mike: Pretty great, yea, over here in Brooklyn.
Leo: Mike Murphy in Brooklyn. Steve Kovach in Queens. And the man without a country, Alex Wilhelm.
Leo: He is bicoastal.
Alex: I now am bicoastal, yes.
Leo: There's a rumor floating around.
Steve: Oh, you are?
Alex: Yea, I can say it, right? I live in Leo's old house, ironically, in Providence part of the time now.
Leo: I grew up. The house I grew up in and moved out of when I was like 15. He's living in my house.
Steve: No way.
Alex: My girlfriend owns it.
Leo: He's living in my mom and dad's bedroom. Talk about confusing.
Alex: I just got back a week ago.
Leo: I'm so confused.
Alex: It's a great place.
Steve: How did you guys figure out—how did you figure out it was his house? How did you make this connection?
Leo: So, his girlfriend was visiting and she mentioned that she grew up in Providence. And I said, "Oh, I grew up in Providence. Providence, Rhode Island." And she said, "Oh, where?" And it didn't take—it took us about 30 seconds to figure out she owned my old house.
Alex: It was, "I live on Street X." "Oh, my gosh. Me too. I grew up in X neighborhood."
Leo: What house on Street X? And I said, "21." And she said, "That's my house."
Alex: I took pictures for you.
Leo: That's, by the way, that's when I knew we're in a simulation. That proved it. That's a glitch in the matrix. I now know it's a simulation. Has that happened to you guys? It happens every once in a while. Oh, simulations.
Steve: Nothing on that scale. That's pretty amazing.
Leo: That's a glitch in the simulation.
Alex: If this is a simulation, I want to reroll my character with better hair.
Leo: Too late.
Leo: Well, you've got to understand the rules of the simulation. The whole idea is that this is it. You roll the character. You've got to go from birth to death. This is it. There's no fixing.
Alex: Do I get to try it again?
Leo: Yea, next time you could roll a different character. You've decided to do a chaotic age and that's it. You've got to live with that.
Alex: I don't even know if that's offensive or a compliment. I'll just take it. Let's do it.
Leo: The simulation is saving RAM. Right, Untoward? They didn't have enough RAM to have more houses and they thought, "Well, what is the chance of a collision? Oh my God. We had a collision." There's somebody, there's some operator, some system going on. "Oh, crap. Now I've got to rewrite that code."
Alex: Why did I give IBM this contract?
Leo: Yea, they should have put more RAM in the damn thing. Our show today—see, if they used a Drobo, this wouldn't have been a problem.
Alex: Good segue.
Leo: Our show today brought to you by the best way to store your stuff. Drobo's a family of expandable, massive, safe, simple to use storage arrays. It's all of that. Safe because—well, it was started by a guy who had a hard drive crash. He said, "I have a RAID array. I'm safe." And his data died and then the RAID didn't work and he said, "This RAID sucks." So, he invented something better. They call it Beyond RAID and it is awesome. It's got all the features of a redundant storage array but better. Take a look at the amazing Drobo devices. I have multiple Drobos. I use a Drobo Mini as my data drive for my iMac at home. I have a Drobo 5N and now the new Drobo 5D3. Oh, you've got to take a look at that. That thing is a beast. Look at the 5D3. Inside, you've got lightning fast Thunderbolt 3, so, you're able to, you know, what is it? 40 gigabits a second? I mean it's amazing through put. Dual Thunderbolt 3 ports so you can daisy chain it. You don't give up your port. A USB 3.0 Type-C Port just for fun. Just for giggles. The Drobo 5D3 has performance twice as fast as the previous generation. It's their 3rd generation, 5-bay, direct attach solutions. So, not only is it fast, they put a faster processer on here. And one thing I love about the Drobos, all of them have this little port in the bottom that you can put a little MVME card in, a little flash drive in. I do this on all my Drobos. And that really speeds up small file reads and writes. It's a little cache. Plus, the Drobo's set up in such a way that even if the power goes out, you will never lose any data. It's got a little battery in there. It will finish every write and safely shut down. You can use the 5D3 to safely edit stored photos, videos if you're doing 5 or 4K workflow, it's fast enough, it's big enough. Back up all your data and then some. And they're fully automated beyond RAID technology provides. Simplicity, expandability and data prediction. Right now, look at this. You get the little sticker on the front when you buy it, a free Drobo skin while supplies last. Go to Drobostore.com. Check out their complete line of products. They've recently lowered prices on almost the entire line, but we're going to do even more. We're going to save you an extra 10% on the purchase of select Drobo models including this new 5D3. If you're a photographer or videographer, why don't you have this yet? Go to Drobostore.com. Our discount code is TWiT10. TWiT10 and you'll get 10% off and a free Drobo skin. I love how it looks on the 5D3. That's pretty. I can go on and on. I can sing its—I am all in on Drobo. The lights on the front that tell you all is well. They tell you if a drive is you know, the smallest drive is running low on capacity, you swap in a bigger drive. You can mix and match drives. These lights all tell you something and that's awesome. Plus, it's just a magnet. You pull the front off and it's really easy to pop in the drives. Tool-less drives. I can go on and on. Get yourself a Drobo. Get thee to the Drobo store and then don't forget to use the offer code TWiT10 to save 10% off select models. Drobostore.com.
Leo: We had a great week this week on TWiT. Lots to talk about. But I thought instead of talking about it, I'd show you. Watch.
Narrator: Previously on TWiT:
Jason Howell: Lego is releasing a new kit that's going to help kids to learn how to program their own projects in creative ways.
Geoffrey Fowler: These are traditional Lego bricks. What the app has is a version of Scratch that if you move these little blocks of code together, things will happen and kids figure this out really quickly.
Megan Morrone: Can you program it to pick up all the Legos that are all over your floors?
Geoffrey: It might happen. It's going to have to be.
Narrator: iOS Today.
Megan: You're in a restaurant kind of thinking like, "I want to see my food before it comes to the table." You want to see the food at Tavern 62?
Leo: Yea. Ah!
Megan: Look at that.
Leo: Oh. This is exactly the kind of food I can eat on a fast. Nothing.
Narrator: MacBreak Weekly.
Leo: Yes, the Rock did make a movie with Siri.
The Rock: Hey, Siri. You're the best.
Siri: Thanks, Mr. Big, Bold and Beautiful.
Leo: Call me Mr. Big, Bald and Beautiful. Oh, I got Bold. I like being bold and beautiful. Siri, nice choice.
Narrator: TWiT. Why didn't I get your mass text? I'm in your contacts.
Leo: They really put the extra effort in to this year, so you've got the pit stains, you've got the Darth Vader helmet, the scissor lift going nowhere.
Alex Lindsay: Can I just say that's one of my favorite kinds of like shots, when they have to rent super expensive camera and lighting equipment just to put on a set.
Leo: And never use it. I forgot that I had Siri call me Mr. Big, Bold and Beautiful (laughing). It was a little embarrassing the other day when she responded to me that way.
Alex: You played it off pretty well. You looked confident in the moment.
Leo: Yea, oops. We've got a big week coming up. There's lots of news ahead and of course we'll have it all on TNT. Jason Howell, what will we be watching? What's on your schedule?
Jason Howell: This week on Tuesday, August 1st, Bitcoin could see a big fork that would result in something called Bitcoin Cash. This would be the result of many issues Bitcoin has had scaling over the past few years as transactions that should take minutes end up taking days or weeks to process. We'll find out on Tuesday. On Wednesday, August 2nd, Amazon is set to host its first job fair in almost a dozen factory locations across the US as it scales up its workforce to the tune of 50,000 new jobs, many of those will be filled onsite as the company staffs up in preparation for the holidays and you know, its other headline catching efforts. And on Thursday, August 3rd, AltspaceVR will be closing its virtual doors which some say is a harbinger of things to come for other VR outfits as the general excitement around VR continues to cool. AltspaceVR launched in 2013 and supported many of the cutting-edge VR technologies, but ultimately had a hard time convincing investors to spend more money with the company and in VR technology. That's a look at a few of the thing we'll be tracking in the coming weeks. Join Megan Morrone and me on Tech News Today every weekday at 4:00 PM Pacific, 7:00 PM Eastern here on TWiT.tv.
Leo: Thank you, Jason Howell. We're talking the week's tech news. Let's talk about that Bitcoin split because I don't understand it very well. But let me preface this with a little explainer. Bitcoin is what we call a crypto currency. I'm sure you've heard of it by now. It's not backed by any government or by any institution at all. Its value is a total—we call it a Fiat currency. Its value is just what people are willing to pay for it, what the consensual hallucination is that it's worth. It's currently worth a lot, like $2,000 a coin.
Alex Wilhelm: $2,600 or so.
Leo: A lot of money although there's very famous stories about people. There's the guy who paid, bought a pizza with like 5 bitcoins, so like a $10,000-dollar pizza.
Alex: Oh, it was—
Leo: It was more than that?
Audience: 2,000 Bitcoins for 2 pizzas.
Leo: He paid 2,000 Bitcoins for 2 pizzas?
Alex: That works out to, according to my math, $45-trillion dollars for two pizzas.
Leo: That is insane. So, he's kicking himself. The problem with Bitcoin, Bitcoin was created by a person or persons. We don't know. Pseudonym is Satoshi Nakamoto. No one's ever found Satoshi despite many articles claiming to have found him. He's never been found. He may not exist. Whoever he is, he owns a lot of Bitcoin which is one of the problems I have with all of these crypto currencies is, it's a little bit of a pyramid scheme because if you invent a popular crypto currency, you get to keep a lot of money.
Alex: Because you mine early on.
Leo: Right, when it's cheap. Of course, you're betting that it's going to become popular. Bitcoin is mathematically fascinating because and whoever Satoshi is, was brilliant, because among other things, the coins are created over a period of time, over a period of, I think—there's a pool you can create, something like 20 years, at some point it will max out of the total. There won't be any more Bitcoins, otherwise they become inflationary, right? You can't print Bitcoins. They just come into existence through a very complicated mathematical process. Basically, it's kind of like prime factoring. It's something that takes a lot of horsepower. But it's cleverly conceived because as it goes, it gets harder and harder to mine Bitcoin. And it's actually tracked pretty closely to the cost of electricity. Because otherwise, you would just—and people do this. I have a friend who's done this. He's taken over his garage. He's bought a lot of GPU powered Bitcoin mining equipment, spending lots of money for it. Power's cheap fortunately. He lives in Arizona. And that's the only reason this is financially feasible because it costs him so much to create the Bitcoin and yet he still makes money because the net, because power is cheap, is positive. At least it was the last time I talked to him. I don't know if it still is. But there's a bigger problem for people who use Bitcoin and that is the block chain itself. One of the strengths of Bitcoin is there's no central bank. Correct me, by the way, guys, if I'm saying anything wrong. This is just my—
Alex: You're doing like a B plus. Keep going. Keep going.
Leo: If I say anything wrong, fix it. The block chain is the entire database of all Bitcoin transactions. All transactions are associated with a long, unique number. You have one, I have one, everyone with a wallet has one. So, and the database contains everybody with a number and every transaction they've made. And the reason this works is because everyone who has a Bitcoin wallet on their computer has the entire block chain. They have a copy of the database, which is approaching—it's hard to get the actual number, like 100GB. It's huge.
Alex: That's large.
Leo: It's huge. And there's a problem. And Bitcoin is getting slower and slower to get. If I pay you some Bitcoin, it used to take no time at all. Now it may take a considerably long time for you to get the Bitcoin because of this block chain bloat.
Alex: And there's been discussion of raising the size of each individual block up from 1MB, if I'm not too far off my skis here, and this has slightly been resolved now through the latest Bitcoin civil war we saw resolved in the last week.
Leo: Well, this is the problem is the Bitcoin Foundation, which Satoshi handed off the reins to—and I had him on Triangulation. I had a great interview with him, Andresen. What is his name? Gavin Andresen? And Gavin's pulled out of this, right? Because it was a big political battle between some Bitcoin miners who didn't want the algorithm to change and people who realized the algorithm in the long run was not going to do well. I hope somebody can explain the current politics better than I can. You said, Alex, when we were in the promo, that this is going to be in issue.
Alex: I've played myself because I have not been watching Bitcoin as close as I should in the last couple of weeks because I think a lot of us who cover this base even a little bit, we've been watching the ICO market and—
Leo: That's another story.
Alex: Yea. But—
Leo: ICO's next.
Alex: Yea, ICO's are fascinating. But the point is Bitcoins working through some maturity hurdles you could say, and its community has come together after a potential problem implementing what's called S-E-G-W-I-T, I don't know how to pronounce it. But—
Leo: Whenever you say that, I play that music. Go ahead. Say it again.
Alex: Watch this. SegWit. (music playing). I want a better theme song. That's just—that's like Mashable style. That's weak. I want some BuzzFeed stuff.
Leo: (Laughing) So, Bitcoin was able to avoid a split but SegWit 2X which will increase network capacity and avoid this damaging fork. You don't want a fork because then you've got 2 Bitcoins.
Alex: Right. That are mutually incompatible. The idea is that Bitcoin Cash is going to be launched on August 1st or discussed on August 1st and it's an attempt to increase the throughput of Bitcoin, making it more efficient on a per transaction basis. Because right now it's so much compute energy and therefore electricity goes into each individual transaction, it's slow and a little bit inefficient.
Leo: So, Bitcoin Cash which starts Tuesday will have a bigger block size than Bitcoin.
Leo: After the SegWit 2X has already been applied, right? You know what? The problem when you get into this is there are Bitcoin nut jobs who are going to now email me for the next 6-weeks saying, "Leo, you've got this so wrong." And I apologize. I know I'm getting it a little bit wrong. There's also Ethereum which another cryptocurrency that has some security issues. Recently the largest bank heist in the world, $31-million dollars of Ethereum was stolen.
Alex: Because someone changed their WordPress page to give a different address where people could send money, buy into the ICO and they didn't notice for a while.
Leo: In fact, it was almost $180-million Ethereum, dollars-worth of Ethereum. But people started pulling the plugs out of their machines real quick.
Alex: Yea, stopped that one.
Leo: Block chain is, I think, a good technology, an interesting technology. It does have this problem with the database is stored everywhere. It's distributed. That's not a bad thing but it's a technical issue when you have a lot of transactions.
Alex: But you've got to get everyone to agree. So, SegWit or SegWit I guess, probably closer, they had to have a certain number of people's signaling that they wanted to move to it in the mining groups. And so the people that run these vast mining pools that provide the core power—
Leo: That's really—the miners are all the power. A lot of them are in China.
Alex: And I've met Chandler from—well, he was AntPool? I forget.
Leo: From Friends? Because he's my favorite Friends.
Alex: No, not Chandler from Friends. Chandler from China. He works for Bitcoin. Like 2-year ago—but close though. It's almost the same person. They look dramatically the same.
Leo: How you doin'? No, that's another guy.
Alex: Oh, gosh. That's Joey.
Leo: That's Joey (laughing).
Alex: And Joey, little did you know, is actually based off of Leo's youth.
Leo: When I lived in Queens. That's another story.
Alex: That's not—anyway.
Leo: Bitcoin Cash will launch on Tuesday, and everybody who has Bitcoin which includes—I have 7 Bitcoins somewhere.
Alex: You have 7 Bitcoins?
Leo: Yea, somewhere. I can't remember my password to the wallet.
Alex: Oh, my gosh.
Leo: So, anyway. I'll find it. But—my son says, "Please, Dad. Let me try." So—
Alex: You tell your son that password, you'll have no Bitcoin.
Leo: Everybody who has Bitcoin including I guess me, will get Bitcoin Cash the day of the fork. There's already a futures market. Currently Bitcoin Cash value 13% of Bitcoin's price. So, when the Bitcoin split happens, this is according to Fortune Magazine, something like $6-billion dollars in new market value will poof. Go into existence. It's the poofing of these cryptocurrencies that I think bothers people. But remember, the US dollar is essentially a FIAT currency. It's only worth what we say it is. It's a piece of paper.
Alex: But you can use it to pay your US Government debts which is why—
Leo: Right, you can't do that with Bitcoin.
Alex: I can pay my taxes in dollars. I can't pay them in Bitcoin or Euros or anything else.
Mike: Well, also, you understand a piece of paper at the end of the day, the average person.
Leo: I'll give you a piece of paper that says one Bitcoin if that makes you feel better.
Mike: But that's the thing. I think the average person assumes that because cash and existing currencies have existed—when did we go off the gold standard? A hundred years ago?
Mike: Like, the fact is—
Leo: But can I just point out? Everybody thinks that the gold standard was some sort of magical thing. Gold doesn't—gold is not worth what you pay an ounce for it. The industrial value of gold, that's a FIAT currency really, too, right?
Alex: Just don't tell Ron Paul.
Leo: So, I mean what a FIAT currency is, is something that has value because everybody agrees it has value, not because it has intrinsic value, even gold.
Steve: Also, because there's an army backing it up, too.
Leo: Well, the army (laughing).
Mike: But that's the thing with Bitcoin. What is there backing it up? If you try to explain, I mean, we just took like 5-minutes to explain the process of this, you can't do that. People just understand the value of a dollar, right?
Leo: And no one wants to bring up the FIAT currency thing because no one wants to undermine the full faith and credit of the US Dollar, right? If we really started saying, "Well, it's just a pretend thing," that would be bad.
Alex: But everyone knows that, right?
Leo: No one knows.
Mike: I don't think the average person does.
Leo: It's one of those things that you know but you don't. It's in the back and you don't think about it. We all know we're going to die but we don't think about it.
Alex: I mean, I do.
Alex: It gets me through some sad days. I'm like, "Well, it's going to end eventually. Buck up."
Leo: Sorry. You're going to get another roll of the character die. It will be great this time.
Alex: All right. It was 1879 since we left the gold standard.
Leo: 1879. It's been a long time.
Alex: That's when Leo left Queens.
Leo: So, I'm going to leave it—yea, right.
Alex: I'm kidding. I'm sorry.
Leo: No, I was—I lived in the 5 Corners. I was in one of the fire departments. It was great. Those were the good days. I carried an axe. I didn't use it for fires, but that's another story. Let's ask the chatroom because I bet you there's people in the chatroom who are serious Bitcoin knobs. I'm going to use that word.
Mike: Does that mean something different in this country?
Mike: I grew up in the UK.
Leo: Oh, ok. Never mind. Ok, we're done. We're done. I just—something's going to happen on Tuesday. The world will go on but there will be some people, including Joey in China, no, Chandler in China—will he be upset? He will be upset because he's a Bitcoin miner.
Alex: I presume anything that makes Bitcoin worth more per coin he's fine with. And since I've met him, it's appreciated 4X, so, I think he's doing great.
Leo: He's made a lot of money now.
Alex: I'm very jealous.
Leo: The problem is, when do you sell your Bitcoin? Because do you sell it now at $2,600 bucks and become like the pizza guy? Oh, that could have been worth a million.
Alex: I think you sell until you feel like you have enough money to take on more risk. I mean, you sell down to the sleeping point is the old school investment advice here. If you have 7 Bitcoin, I would sell 2, keep 5 and then sell two more when it doubles, and 2 more when it doubles again.
Leo: If you're doing what they say in the casino, you're betting the banks money.
Leo: Yea. I sold my Apple stock and I don't want to talk about that (laughing).
Alex: You sold it early?
Leo: Well, I don't own any tech stock. I don't think I ever owned any Apple stock, but we have a guy, Scott Borne who's on our MacBreak podcast many years ago. And I said, "You can't be on the podcast if you have Apple stock." So, he sold his. And he's never forgiven me (laughing).
Alex: What year was this?
Leo: I don't want to say.
Alex: What year was it, Leo?
Alex: Oh, my gosh.
Steve: That's like right when they went to Intel, right? Or around then?
Leo: Yea. He's actually very gracious about the whole thing but I know that secretly he wants to kill me.
Steve: Oh, my God.
Alex: I would too. Yea.
Leo: I don't blame him. But that's our policy here. You've all sold your tech stocks, right?
Steve: I don't have any.
Leo: I'm sure Business Insider doesn't let you have tech stocks, right?
Steve: No, or any stocks.
Leo: Oh, no stock at all?
Leo: Well, that's kind of guaranteeing poverty in old age.
Steve: And I have 401K and I can have that kind of stuff but I can't go out there and buy Apple or something.
Leo: Technically, I do have tech stocks because I invest in the S&P 500 Index fund. So, I do.
Steve: Yea, me too.
Alex: That's different.
Leo: But it's diverisified and I don't control it and it's not—
Alex: That's why it's ok. I'm in the Vanguard 500.
Leo: Exactly. That's exactly the same investment vehicle I'm in.
Alex: Well, because we did that, we wouldn't have gotten a 1,340% gain on our Apple stock since 2006, Leo. You took that guy's house away from him.
Leo: He had a lot. He had a lot, too. It wasn't like I've got $5-bucks in Apple stock. It was tens or maybe hundreds of thousands of dollars.
Alex: You owe him like $5-million dollars.
Alex: That's what I'm saying.
Leo: He's a very nice guy. He's going to be back in the studio on The New Screen Savers. I think he's going to do TWiT, too. No, MacBreak Weekly.
Steve: He lives in a box now but he's doing great.
Alex: He's so mad. I would just burn. Every morning I'd wake up and go, "This could be a mansion." Instead, it's cardboard.
Mike: Does he have an iPhone?
Mike: Oh, geez.
Leo: (Laughing) Every time he looks at his phone, he thinks of me. Let's take a break. I'm depressed now.
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Alex: I feel like the ads on the show are increasingly about security and like data privacy. Like I wonder if that's indicative of the world now.
Leo: Yea, what a surprise
Alex: It's not like, "Blue Apron. Try it out." It's like, "Your stock will be stolen and be sad. But this now."
Leo: Actually, no Blue Apron today. We still have the Blue Apron ads.
Alex: Ransomware's tough.
Leo: It is. Hey, here's happy news. This is going to cheer us all up. Apple is teaming up with Cochlear. You know, Cochlear does these implants, right? They actually can help deaf people hear. And I know a number of people with Cochlear implants. It's remarkable. Maybe you saw the video of the girl who never heard and she heard for the first time and, I mean, if you didn't cry, you've got a heart of stone because it was amazing. Apple's teaming up with Cochlear. They're going to make the first iPhone Cochlear implant. So, it will stream sound directly from a compatible iPhone, iPad or iPod Touch to the sound processor which then communicates with surgically imbedded implants in your cochlea to help people who have never heard, hear again. Vince Surf's wife was congenitally deaf and I remember talking to Vin about this, father of the internet. The day she heard his voice for the first time. Can you imagine what that's like?
Alex: No, actually I can't. But is this just for sound hearing? Then why does it need the iPhone if this has worked without smartphones before?
Leo: It doesn't. It would use a microphone or something else on your hip.
Alex: Oh, ok.
Leo: As long as you've got a smartphone, why not use that for it as well?
Alex: So, it's just a step forward using smartphones.
Leo: Well, it's another way. There have been in the past—in fact, my hearing aids, my Starkeys, I have an iOS app. iOS has built into it in its accessibility features, they have made for iPhone hearing aids. You can connect to that. And actually, it's pretty awesome. Somebody calls me, if I want, I can go through the hearing aid so I can just talk to somebody. I can listen to—don't tell my wife this. I can listen to audiobooks at dinner all the time.
Alex: You do know this is recorded, right?
Leo: No, she's watching. She knows. She's watching right now. Actually, I'll never forget the day that we wanted to hear, like it was the World Series or something. Remember when—are you guys old enough to remember going to school and listening to the World Series on a transistor radio? You probably aren't. Oh, my God. I'm so old.
Alex: You're not, Leo.
Leo: Yea, if the Red Sox were playing in the World Series, which they weren't, but if they were, you would hope that the teacher didn't notice that you had a thing in your ear going down your shirt because you had a transistor radio so you could hear the game in school.
Alex: Oh, we did that with sweatshirts and the old Discmans because you could thread the headphones through the little pocket.
Leo: Ok, close enough.
Alex: And you could play the Lincoln Park album in 6th grade.
Leo: See, now I don't care. It's my hearing aids. I have to leave those in. And I can—but so, at one point, Lisa and I were trying to listen to something. I lent her my hearing aid and she could hear. It worked great. It's amazing.
Alex: That's proof that romance is still real.
Leo: That's true romance, man,
Alex: Honey, it's my hearing aid. Here you go.
Leo: Here you go, honey.
Alex: Wipe it off first.
Leo: So, there are things you get, a benefit you get I know with hearing aids and I guess this is true with a cochlea implant. For instance, because the iPhone has GPS built in, you can setup different profiles. So, for a restaurant, you definitely want the hearing aid to do different things. You don't want to amplify all that noise. A movie. Sitting in your living room watching TV. And so, the phone can say, "Oh, I know where you are. I will adjust your sound automatically." Actually, that was one of the reasons I got it. I thought it was so cool.
Mike: Probably easier to get than AirPods, too.
Leo: (Laughing) Yea, right. I couldn't find an AirPod so I just got a Cochlear implant instead.
Steve: I got surgery instead.
Leo: Yea, yea.
Alex: And Doppler Labs is making the AirPod equivalent headphones that do the sound dampening as well based on the environment you're in. So, this is probably where everything is going to go.
Alex: I like that.
Leo: Absolutely. You guys, when you get to be my age you probably won't get hearing aids. You'll just keep your earbuds in (laughing). I thought that was actually the best possible use for an AirPod, right? And I was disappointed that Apple- but battery life's not long enough. It would kill it.
Steve: And there's legislation going through where they are not going to be medical devices anymore, where you can just go to Target or something and buy them. And that will be a game changer for the hearing aid industry and for companies like Doppler, for Apple, for all of them.
Leo: Oh, can I tell you something? Hearing aids, what a scam. $6,000-dollars. I mean, come one. Really?
Alex: Does it come with $5,000-dollars in cash?
Leo: Well, I guess they figure everybody's insurance is paying for it or something. Medical devices, it's a scam all around, right? So, Doppler Labs did those earbuds that weren't so good. It was the Dash? Oh, that was Bragi.
Mike: That's Bragi.
Leo: So, are these better? Have you tried these?
Steve: They're really cool. I've tried them before. It's cool how they can filter out certain sounds and things like that, like in the office or a plane but the battery life is terrible in them right now.
Leo: See, that's the problem. And they come just like the AirPods with a case that has a battery in it. But that's not—you can only get half an hour. What was the battery life like?
Steve: Like 3 hours maybe. Something like that.
Leo: Well, that's not awful. It just means you can't wear them all the time. You have to—
Alex: But I wear my AirPods in like 30-minute bursts. Like when I'm walking to Whole Foods or the bodega.
Leo: When I'm walking to the bodega.
Alex: It's actually the main use that I have. They don't sell cigarettes in Whole Foods.
Leo: Well, you need a musical theme. Walking to the bodega for Alex.
Alex: As long as you sing it, I'll dance to it.
Leo: You won't be able to get an iPod Nano or a Shuffle. The Shuffle has shuffled off the mortal coil. Apple silently killed them on Thursday. Now, if you want an iPod, God knows why you would want an iPod, if you want an iPod you have to get a Touch which starts at $200-bucks. I guess for kids, right? But everyone else has a phone.
Mike: It's a starter device for the iPhone. If you're 10-years-old and your parents don't want you to have a phone, it's great.
Leo: My first iPod.
Mike: I still want an iPod, to be honest. I actually wish I—I found when I was looking for these headphones to come on here, I found the thing that these were attached to which was an iPod Classic from like a decade ago and it doesn't work anymore because who has those like big connectors? But—
Leo: It's a 30-pin connector. Wow.
Mike: Yea, I forgot the number. I kind of like that I had a device that just had 80GB of music and I didn't have to like stream over my expensive data connection to like listen to every piece of music I ever have owned.
Leo: Oh, why would you want to do that?
Alex: How many songs is 80GB? I totally forget the conversion.
Leo: So, when they killed the Classic which was a few years ago, that was the 160GB iPod. I bought one because I thought, "This is it. It's over." I have 2 160GB iPod Classics but I don't ever use them because, you know, I've got my phone. I mean for audiobooks and I can get enough music on 128GB iPhone. I don't need to really worry about, every worry about an iPod.
Mike: My phone's all full of photos.
Leo: John, you want it? I already gave it to my mom. I put all my music on one and I put all my audiobooks on another and I sent it to my mom. She has a dock. She still has a dock. She has two docks. She's got that tower speaker with the dock in it, so she can listen to music and iPhones. I'm sorry, John. I would have given it to you but my mother carried me for 9-months. What have you done lately?
John: I got you water.
Leo: Got me a cup of coffee. That's ok (laughing). Yea. I agree. I'm kind of with you, Mike. These will become fetish and there are a lot of people upset about the loss of the Nano and the Shuffle. If you go to the gym, there are a lot of people wearing Nanos, right?
Alex: Then they should have bought more of them and Apple wouldn't have cancelled them.
Leo: Yea, maybe that's true. You don't want to wear an—I do see people wearing phones on their biceps. That's not a good look.
Alex: Why not? I was going to buy one of those, actually. Why is it not a good look?
Leo: Well, I don't know.
Mike: It's so big, right? It's like the size of my face. Like it's too big for my non-muscular arms.
Leo: Well, that's why you're going to the gym, Mike.
Alex: You can come with us, man.
Leo: Beef them up. Yea, I have one of those straps, but look it. Unless you had a smaller phone. This is the 7 Plus. Mike's absolutely right.
Alex: Yea, but I don't care if I look dumb in the gym, though. I'm already sweaty and gross.
Leo: Right, you already look dumb.
Mike: It's like awkward. When I used to be able to run, I strapped my 6 Plus or yea, 6 Plus, I guess, and it just felt weird, you know? It's such a big thing on your arm. I don't know. Like back in the day when I had an iPod Nano or whatever, that was fine. And they were great for runners. And Apple's argument now is, "Oh, just get an Apple Watch," even though that is not the best device, right? And they want you to wear it all the time but it's actually only a device for using when you're working out. Like I can't square that circle and maybe it would be easier if you just still sold a music player.
Leo: Well, I think that's what we kind of concluded is that Apple would prefer that you bought a watch. But who wants to get a watch? And this only has 4 GB of storage.
Alex: 4 GB?
Leo: Yea. You can put 4GB of music on. Well, I mean how long do you work out (laughing).
Alex: Very high bitrate songs is the actual answer to that question.
Leo: Oh, ok.
Alex: No, I mean, I don't know. But 4GB of songs, if I put it on shuffle and I worked out for 2-weeks with that playlist, I'd get super bored of it.
Leo: Then you just—
Alex: I don't want to update my watch. Come on. I don't go home and think like, "What's more stuff I can do with my devices today?" My Mac Pro won't even turn off.
Leo: Didn't you, Mike, wrote an article saying why would anybody want to buy an Apple Watch? This was last year I think.
Mike: Yea, that was something I wrote that Apple has made their feelings very clear about.
Leo: Oh, you're not getting invited to events anymore either.
Mike: I finally do, but they told me that the reason I didn't was—yea.
Leo: What? They told you that that was—see, they've always denied there's a blacklist. But they said to you, "We're not going to invite you?"
Mike: Oh, there's definitely a blacklist.
Steve: Oh, there's a blacklist. I was on the blacklist for a while. There's always a blacklist, yea.
Leo: So, I haven't been invited to an Apple invent since the iPad announcement in 2010, when I—everybody was doing it. They had all these cameras behind me. I turned my laptop around and I streamed it.
Alex: Oh yea, that's a big no.
Leo: But Steve saw me and he looked at me. And I swear to God, he went… and I never got another invitation. But I think that that was just, you know, chance.
Alex: That doesn't sound like chance. Apple press events are not left to chance.
Leo: So, I would really like to go see the new spaceship campus. And I'm hoping that I can get an invite to the September iPhone 10th Anniversary event for old time's sake. What do you say, Mike? Let's call them up. Let's say, "Come on. Come on. What's the statute of limitations? Come on."
Alex: You want to call them up?
Mike: I feel like I'm probably getting uninvited right now for the next one.
Leo: No, no, no. I don't know him. Mike is not—
Alex: We're not friends.
Leo: We're not friends. It's ok, Apple. We're not friends. So, but I mentioned that I had a story about the Atlantic, I mean about Quartz, because wasn't Quartz a spinoff of Atlantic?
Mike: It's still part of the Atlantic Media Group and that is now a very confusing term as of Friday at 3:00 AM.
Leo: Because Laurene Powell Jobs, and I don't want to be the guy who says Steve Jobs' widow, but I guess I better. By the way, wonderful person. I really admire her. She has a group she calls the Emerson Collective named after Ralph Waldo Emerson. So, now you know she's an intellectual. Turns out Ralph Waldo Emerson created the Atlantic. Did you know that?
Alex: I did not know that.
Mike: He was actually a financier. I looked into this. He was not a founder. He put money up which you know, kind of interesting what the Emerson Collective does, right?
Leo: So, she's put a—she has a little bit of money. Steve had a retirement account. And she put a little bit of that money into buying The Atlantic from—yea. So, is she now your boss?
Mike: So, it's an interesting structure. There were a bunch of articles but that one was right. But a bunch of them were wrong and Laurene Powell Jobs now has the controlling share of The Atlantic Magazine but the Atlantic Media Group which contains the magazine, she has no share in. So, she has no share in Quartz, Government Executive, National Journal, all of that stuff. So, David Bradley is still very much our owner for, as far as I know, ever.
Leo: Interesting. Laurene has $20-billion dollars. She's the number one, at least I think maybe they sold their stake, but she was the number one shareholder in Disney.
Leo: And she apparently owns a Hollywood studio. She's supported Pro Publica and the Marshall Project. So, she's very apparently interested in media. And when she was asked at the Code Conference last May if she would ever consider buying something like The New York Times, she said, "Is it for sale?"
Alex: (Laughing) I wish I had that kind of money.
Leo: This is not unprecedented. Chris Hughes, Facebook millionaire, briefly owned and almost killed—
Alex: The New Republic.
Leo: The New Republic which I love but I think he was not a good steward. Of course, Jeff Bezos currently owns the Post and has done, I think, a very good job.
Alex: And what did Kushner buy? He bought the New York Observer.
Steve: The Observer and sold it.
Alex: Oh, he doesn't own it?
Steve: He's not involved in it anymore. He got rid of it.
Leo: Yea. So, I love The Atlantic. I think The Atlantic is fantastic.
Mike: Me too.
Leo: And I hope that she keeps, I think she will, keep it—you had to say that, didn't you?
Mike: No, there is definitely no one outside the frames.
Leo: And it's no longer related, right?
Mike: Yea. Well, it's an odd structure which I meant to ask but you know, it was a big day. But no, I think it will be fine.
Leo: The big thing about The Atlantic and I really admired The Atlantic, is they—a lot of older publications do not handle the digital transition well. The Atlantic, of all them, maybe even better than the New York Times, has done an excellent job. I see Atlantic articles in a lot of my feeds. I refer to them a lot. I think they've done a very good job of keeping, you know, James Fallows' Rights Forum. They did a very good job of staying relevant in the digital age even though they are 160-years-old.
Alex: They are one of my favorite airport buys.
Leo: And whenever Game of Thrones is over, I go immediately to The Atlantic to figure out what the hell just happened. That's, by the way, that is the new form of journalism that I like. The roundtables discussing shows on HBO or Netflix.
Mike: We just launched one of those for Game of Thrones that we're doing every Monday called Joffery's Place.
Leo: Oh, I love it. It's on Quartz? Are you in that?
Mike: Yea, it's on—I was actually on last week even though I've watched the show like twice and I don't get it. So, they take someone, they make someone watch an episode every week and go, "What happened?" And you're supposed to like make it up and figure it out. So, I did that this week. But, yea, it's awesome. Like that's a thing we're doing and we're doing it for Game of Thrones and I think probably, you know, with our awesome TV writer, Adam Epstein, we'll probably do more stuff like that.
Leo: Is it a podcast only?
Mike: It's on our Facebook page. Actually, I think it's on our new Facebook page, Quartzy, which is our new lifestyle section. But last weeks was on the Quartz Facebook page as well.
Leo: Yea, because I don't see it on qz.com. Quartzy? This is definitely the wrong Quartzy (laughing).
Alex: How do you spell Quartzy? Because I did it wrong too.
Mike: Quartz with an Y.
Alex: No, I'm in the right place. Is it an orange logo?
Leo: Yea, that's it.
Mike: I don't know. That's so weird. I was reporting a story in Wisconsin, middle of nowhere on the self-driving trucks that went up a couple of weeks ago. But I got off the interstate and there's just this giant billboard saying Quartzy. They knew I was coming. But apparently, it's some other company.
Leo: Well, I'm going to do what everybody does when you can't find something on Facebook, Apple, anywhere, you Google it. And there it is. Joffrey's Place. That is a great picture. We'll be starting shortly. So, they do it as a Facebook Livestream?
Mike: Yea, it's like a roundtable just like this but only on Game of Thrones.
Alex: I hate it but I would totally watch that.
Mike: It's really good.
Leo: I'll be honest. I'll watch and this has happened with House of Cards too, but Game of Thrones especially, I will watch it and I'll spend a lot of time going—I feel like an old man now—who's he? What is he doing? Who's that? Why'd they kill him? She's who? A lot. And so, I need these things, these explainers and then I'll read it and go, oh. Oh. Oh. Here's in The Atlantic, Lyanna Mormont and the Slogan Feminism of Game of Thrones. See, this is exactly. There's stuff going on in these shows I just don't—like, I didn't even know this is Lyanna Mormont. She's a little kid but she's like talking like a grownup. She's like, "Let's go. Aye. You're his." And it's like who is this little kid and why?
Alex: She's from Bear Island, right?
Leo: Yea, she's from Bear Island.
Steve: Oh, I love that character.
Alex: Yea, she's amazing. She bullies around all the cowardly, old men and it's great. And then she helps out John Snow, so that way he can get together with Khaleesi and take over Westeros and kill Cerci. Come on, it's obvious.
Leo: And you say you've never seen the show?
Alex: Oh, I've seen all of it. Like 500 times.
Mike: No, I've never seen it so this is all just gibberish.
Leo: No, I've seen it and it's gibberish.
Mike: Too many characters. Our brain isn't wired to think that way. That's why this content has to exist.
Alex: Ok, but I can't take politics all day and I need to have some things I do during the week that are just non-politics.
Leo: Lyanna Mormont, according to The Atlantic, is just the video personification of the fearless girl statue on Wall Street. I think that's actually true.
Leo: Well, see, these are the cultural connections that these new kind of form of media does I love. Donald Trump says Apple has promised, promised to build three manufacturing plants in the US. Apple declined to comment (laughing). Nor did they say where or when these plants would be, what they would do, who they would hire.
Alex: And then Foxconn made an announcement, right?
Leo: And then Foxconn which is not Apple, but does assemble the iPhone, said, "We're going to be the plant in Wisconsin to make Sharp Televisions."
Alex: If you're a person who thinks that Amazon owns the Washington Post, don't you think you can make a mistake about if Apple owns Foxconn?
Steve: That's exactly what I think happened. He thinks Foxconn is Apple and he heard that Foxconn makes the iPhone so he just assumed it was an Apple factory. That's probably what it was.
Leo: Can you imagine, the Apple executive suite reading this tweet going, "What? Did you? Are we?"
Alex: I can imagine Tim slowly screwing up like, (sigh). Why?
Leo: So, let's talk about the campus. You know there have been great articles. Steven Levy's article in Wired. The most recent in The Wall Street Journal yesterday, How Jony Ive Materminded Apple's New Headquarters. And you read along. Oh, I've got to login to read it. But you read along and I actually pay for The Wall Street Journal, so I could do that. But I don't have my YubiKey with me and it's a long story. But anyway, there you go. You've got it. If you read along, pretty soon there's a little trouble in paradise because apparently, there's no—really, for the programmer's offices, there's just big tables and even meetings are held, everybody's—and there's not enough white boards. And even already some people are saying, "This is not good." So, this is an example of what happens when you say, you know, you empower a master designer like Johy Ive, just do whatever you think's best. And Jony goes, "Ok."
Alex: It turns out industrial design and interior design are not the exact same discipline.
Leo: Well, and it's interesting because Jony says, "I don't think of this as architecture. I think of it as a product." That's a bad sign.
Mike: It's so obnoxious.
Leo: That is a bad sign.
Alex: It is obnoxious. Mike's right. That level of pretention makes me want to vomit in my own hands.
Mike: Yea, Dieter Rams never built a building for a reason. He didn't know what he was doing.
Alex: But the broader point about open workspace is, or what we call open floorplans in Silicon Valley, being the bane of programmers, is actually too small of a point in my view. I think it's the bane for all of us. I mean I work in an office right now that's going to an open floorplan.
Leo: There it is. This is what it's going to look like when you come into work.
Alex: That looks like hell.
Mike: It's an Apple Store. It's an Apple Store with desks.
Leo: It looks like an Apple Store.
Alex: It's like Apple Store and Dilbert got together. It's just terrible. I don't want to work there. The building from the outside is amazing.
Leo: But let's talk about the larger issue, because I think you're right. I think that one of the problems about working in a company at this point is that there are some people who don't want to work and they don't want you to work because you're making them look bad. And those people will go around from cubicle to cubicle bugging you so that you can't get anything done. And it's really hard if you're programmer, your mind is focused. Or a writer. You probably have the same exact issue. You're really in the zone and then somebody says, "So, what do you think about them Bears, eh?"
Alex: Drives me nuts.
Leo: Yea, it must be very hard. Nobody dares do this here, right? We're working here, Jon. Or, lets—it's time for a meeting. That's my favorite. There's an hour lost forever.
Alex: Into the void. But, I think everyone suffers from open floorplans, not just programmers. So, I think that Apple made a really serious mistake here. You can't solve it with cubicle walls. You need actual walls with actual doors.
Leo: Now we're not going to get invited to that event.
Alex: I would take a 30% pay cut if I had a door.
Leo: We're screwed, Mike (Laughing).
Steve: I like my open floor plan. Am I the only one?
Leo: Yea, it's a great idea.
Alex: I want to hear why. I want to hear why.
Steve: I work in a newsroom and I love being able to just shout and collaborate with the people I work with.
Leo: Aren't they traditionally like that, right? It's so you can go, "Copy!" and the copy boy comes and takes your—
Alex: No, no, no, no, no, no, no. Wrong.
Mike: We don't have those.
Alex: There's no copy boys.
Leo: Clearly, there's not even any copy editors anymore.
Alex: Tell my copy editor that.
Leo: So, and I think that that's actually the thinking behind this Apple floorplan is that communication. He says, "I want people to look at each other and talk to each other." But it can be antithetical to production, productivity, right?
Steve: For programmers is that good? Maybe not. Not every job is collaborative in that sense, so, yea, I can see that being annoying. I like my open floor plan. I love—
Leo: Microsoft has offices for every single engineer.
Steve: A private office?
Leo: Yea, a private office. So, does—what?
Alex: Why are they laughing?
Mike: Microsoft Office.
Leo: Oh. I thought they were laughing because I forced them to sit in an open floorplan.
Mike: I think that's a fair point, right? Like especially given what Apple's history is, you know, Brian Merchant just wrote that great book about the first iPhone and how it was you know, built and they hid everyone in an office offsite and couldn't talk about it. And they all had their little room where they like locked the doors. And now they're an open floorplan office company? That doesn't make any sense. It's antithetical to their own way that they've always worked. Open plan is how you get news traveling and obviously in a newsroom that's awesome. I like my open plan office for my newsroom that I work in, but if I were at Apple and I had developers from one section working on something and perhaps you know, cross-contaminating with another section, that might actually be really detrimental to not only productivity but you know, secrecy, which they absolutely value.
Leo: Well, they do have to be fair on the campus. The R&D building is a separate building that probably has good security and that's probably where the new stuff—I don't think Apple's going to abandon its secrecy by any means.
Mike: I wonder if that's open floor plan though.
Leo: Oh, God. But you just described the original. The iPhone team was kind of in an open plan. They were really kind of all in it. But you're all working on the same thing.
Leo: And maybe also because you're all working on the same thing, you have some respect for what the other person's doing and, "Shh. He's writing the boot loader. Everybody leave him alone."
Alex: Yea, if we're working in a team I want to be in the same room as you. But, I think the problem with the picture you showed was a really long hallway. You can't cast small teams into something that big. It's just going to be chaotic and noisy.
Leo: Yea, we'll see.
Alex: I will say though, the most beautiful office building I've seen from the outside ever.
Leo: It's gorgeous.
Alex: It's staggering.
Leo: It's gorgeous.
Mike: It's not done though. I don't know. I mean, I was there for what, WWCD? I got lost in Cupertino because I had nothing better to do afterwards and it was still a building setting and that was like what, June 2nd or whatever.
Alex: Oh yea.
Mike: So, maybe it wasn't quite done. But like you know, that was right when Steven Levy's piece went up and you're seeing the beautiful CGI photos because I'm there and I'm like there's still like those weird sheet metal fences up saying, "Building Site. Hard Hat Area Only," which kind of sucks when you have to go to work and like make sure you don't go in the hard hat entrance.
Alex: That's like half of Soma though. Soma's under construction at any given time, so, it's not too different.
Leo: Half of New York is, too.
Alex: Yea, that's true. New York is the worst.
Leo: Joel Spolsky, we've had him on Triangulation. He's a great guy, created Stack Overflow, great programmer. He says, "Just shut up and let your devs concentrate." (Laughing) It's an article in GeekWire. Somebody in the chatroom passed this along. He was talking about Facebook's campus. He says, "It's an 8-acre open room and Facebook is very pleased with itself for building what they thought was this amazing place for developers but developers don't want to overhear conversations. That's ideal for a trading floor. Developers need to concentrate, to go to a chatroom and ask questions, to get the answers later. Facebook is paying 40-50% more than other places which is usually a sign, developers don't want to work there." Oh. Or maybe they can just afford it. All right. We're going to talk about DEFCON when we come back. Did you go? Did anyone go to DEFCON? You guys have been covering it, I'm sure.
Alex: I've been watching the insane badge tweets for the last couple days.
Leo: All right. We'll talk about the insane badge, the robot that can crack safes.
Leo: And some other news from the hacker, the big hacker conference.
Leo: But first a word from WordPress.com. You know that 28% of all website run on WordPress? 28%. Quartz I believe is one of those websites.
Mike: It is indeed.
Leo: Yea. I run my blog on WordPress. Now, I used WordPress, self-hosted WordPress for years, for most of the 2000s. This is my blog. And I moved recently to WordPress.com and I'm so thrilled. First of all, they keep it up to date. They keep it secure. They make sure everything's working. They've got great 24/7 support with smart people who are friendly and nice and helpful. They really make it easy to make a great site. But they also have a community. When you go to the WordPress.com front page, you'll see websites highlighted. You'll see people talking. They've put my site up there from time to time. I have half a million people now following me. That's a community I wouldn't have had if I weren't on WordPress.com. I love WordPress.com. It is the best platform, whether you want to create a personal blog, that's what I do, but it's great for your business site or both. You're going to make a big impact when you build your website on WordPress.com. Pick a template. It's about as easy to get started as possible. If you just click the get started button, pick from—they'll give you a simple starting point and you'll just start going and you'll see how easy it is. But as you get more sophisticated and you want more, they have hundreds of templates. You get built-in search engine optimization. You don't even have to know what that means. You just get it. Social sharing so your posts can show up on Facebook, on Twitter, on everywhere. In fact, there's an AMP plugin that I turned on so that my stuff loads fast on mobile. You automatically get secure HTTP, HTTPS, which helps your ranking on Google and makes sure your site is secure. It's all built in. And you're part of a community. And I love that, too. See why more websites run on WordPress than on any other platform. 28% of the net and a lot of very big publications, too. WordPress.com/twit. Get started today with 15% off any new plan purchase. WordPress.com/twit. I have to say, I blog more. I'm really happy to be back on WordPress. The interface, everything just makes sense to me. It's really intuitive.
Alex: And we've used it so much. I mean, we've writing thousands of pieces on WordPress by now.
Alex: Kovach, what's BI on?
Steve: We have a custom CMS.
Alex: Oh, is that a good thing or a bad thing?
Steve: I love it.
Steve: Yea, it's really stable. It's really customized for what I'm going to do with it.
Leo: I remember when Vox did theirs, everybody said, "That's a reason to go work for Vox."
Alex: Chorus is the name of it, right?
Leo: Chorus, yea.
Steve: Yea, ours is called Viking.
Alex: It's called Viking?
Leo: It's manly and scary. The reason these guys care is because when you write your articles, you write it in the content management system, right? Or do you—
Steve: Usually, yea.
Leo: Or do you fire up Notepad, write it, and paste it?
Alex: No, no, no. You write it right in the CMS.
Steve: And it depends. If it's something longer, like it's a longer profile or you know, something that I'm working on for a long time, I'll do it in Google Docs first, just because I'm scared that it will get lost somewhere. But for quick, you know, one off stories, yea, right in the CMS.
Alex: If it's more than like 1,500-words, I'll write it in G-Docs with an outline. If it's less than that, in CMS just like stream of consciousness though.
Leo; Because all the links and all the images, you just put it in there. It's just a natural—yea. If it's a good CMS, it works very nicely.
Alex: I really want to play with Chorus but no one from VOX will let me play with it, sadly, so.
Leo: You know, I have a feeling. You should ask a year later, because everybody loves Slack until it became the biggest time sink in history, right?
Alex: You guys have Slack here?
Alex: No Slack.
Leo: We use HipChat which doesn't have animated GIFs, it doesn't have the Alex Trebek robot.
Alex: So, you have boring Slack.
Leo: Yea, we used Slack with our development team when we did the website and I typed, "That's nice." And a Borat shows up going, "That's nice." And it's like, "Stop it!"
Alex: Stop trying to make me fun and playful in a work environment!
Leo: I'm trying to get work done! So, I want a correction here. Not that I've ever made the mistake, but the folks at Roomba said, "We never said we're going to sell your data." The Roomba Vacuum, which maps your—or, has the capability, I guess the 900, the new one, has the capability of making a map. That's helpful because, for instance, when the Roomba runs out of power it goes back to its battery and it can pick up where it left off because it knows your house. People were really up in arms because its CEO implied in an interview with Reuters that at some point, they wanted to sell that mapping data to 3rd parties. First of all, at the time, it didn't bother me that much. Who cares if somebody else knows where my sofa is in relationship to my table lamp? And people have stretched. "Well, a burglar would then be able to break into your house and go swiftly." People stretched. I mean, I understand it's private and you probably should control it and Roomba did say, "We wouldn't sell it unless you said it was ok. We aren't doing it now." But they've backed off completely now. They said, "It's not going to happen. That was a misunderstanding. We currently don't sell your data and we never intend to sell your data. We were thinking, and maybe now we won't do it now that we know, is we would share that data—well, for instance, with other smart devices in your house. The Echo would love to know where there's furniture so that it would help shape the mic. Your stereo system could shape the sound. The Apple Home Hub which says it will shape the sound based on your room's acoustics would be nice for it to know. There's something here. There's something there. I can understand that being a value. I don't know who else would want to know where your sofa is. Maybe if you're IKEA, you'd want to know, you know, how big is too big or if you're an interior designer, like how to people like to—
Alex: There are easier ways to get that than through Roomba. I mean how many houses, what percentage of houses actually own a Roomba and then they have to get the data, sell it somehow and then it has to be leaked and then leaked to burglars who then figure it out, pinpoint it to your house if you haven't moved and then they break in and they step on the cat.
Leo: They still don't know how fancy your TV or sofa is. Just that there's a sofa there.
Alex: Or if you have like security in the house.
Mike: It's not even all the Roombas. It was only the 900 series which is their most expensive one, so all of these headlines that were like, Roomba, your robot is stealing your data. It's like, how many people actually have those $800-dollar super mapping robot vacuums, not the $200 one.
Leo: I had one and I got rid of it because—so, my Roomba, this is the most annoying thing you can think of. It would not get back to the charger. So, it would die midway, right? Ok, so you wake up in the morning, there's a Roomba in the middle of the carpet. Like the dog did something. So, you pick up the Roomba. It has handle and you put it back on the charger. But what I didn't know, is that the Roomba forgets date and time then, and any programming. So, you program the Roomba to work when you're at work or not when you're—not at 3:00 in the morning. So, the Roomba makes a racket. It plays a tune when it wakes up. Dee-dee-dee-dee-dee. And then you hear it, zzzzz. And then invariably, my Roomba used to, for some reason, try to get under the hutch that it can't fit under. So, it would get jammed and then that's when it's 3:00 in the morning and I go, "Oh." Dee-dee-dee-dee-dee-dee. Zzzzzz. And then boom, boom, boom, boom, boom, boom, until I got up and said, "No, Roomba." And put it back on the charger (laughing).
Alex: This is the definition by the way of a first world problem.
Leo: Ok, I admit.
Alex: And I say that with love because my sister has a Roomba and whenever I'm down at her house, it does that too at 6:00 AM.
Leo: It's so annoying.
Alex: And wakes me up and I want to kick it but I'm also trying to sleep, so.
Leo: So, I finally took the Roomba, and my wife found them. I wedged them under the rear tires in the garage hoping she would accidentally drive over them. But she unfortunately found them before she did that and gave them away.
Alex: There are easier ways to whack your robot.
Leo: I know, but I was really-- oh, shoot, the Roomba got stuck under your tire? What a sad story.
Alex: I mean just—all right.
Leo: She still talks longingly and wistfully about when we used to have a Roomba. I don't understand it. DEFCON.
Leo: Anyway, I just want everybody not to worry about the Roomba. On the other hand, there is a robot that can crack a safe and did it on the DEFCON stage in 30-minutes. It was one of those Century safes that everybody probably has, you know, it's a cheap safe. They built the robot. SparkFun did it. They sell the products that they use to build the robot, like Arduinos and Raspberry Pi's. It's 3D design. They bought—the didn't bring the safe to Vegas. It wasn't a special safe. They bought one at a store because they didn't want to take it on the airplane. The Roomba—(laughing) Roomba. The repurposed Roomba was able to figure out, to eliminate—there's a million possible ways but they were able to narrow it down to 1,000 because apparently, a nice convenience factor, Century Safe puts a little notch on some of the numbers so you can—I don't know why. They found that within 30 minutes they were able to open up that safe. They said, "We were really happy that it opened up. It was one of the scariest things we've ever done. Lots of things could go wrong." And this was a very big audience.
Alex: And that's why DEFCON's cool. Because people will try stuff that may fail. It's not like an Apple event that we discussed earlier. It's so practiced, rehearsed and slick. This is nerds on stage with like wires going everywhere.
Leo: We've built this thing and—
Leo: It cost about $200-dollars. It's 3D printed. You can print different parts to fit any combination safe. So, I don't imagine this is a threat, that burglars will bring their erector sets around with them, but.
Alex: What are you doing there, sir? Absolutely nothing. This is totally unsuspicious.
Leo: (Laughing) more to the point, Iain Thomson's article in The Register, "IT took DEFCON hackers minutes to pwn actual voting machines that were used in the last US election." These are electronic voting machines from Diebolds have had security issues, but also Winvote and one other company. I'm going to try to find this. The Winvote system still had the information that was used in an election in the Commonwealth of Virginia, County of Fairfax Special Election. This one was really easy to hack because it had Wi-Fi. It had—why would a voting machine have Wi-Fi, you might ask. Well, so it could surf the internet. I don't know. Upload the votes?
Alex: Upload the votes. It just sounds bad.
Leo: And, eh, as long as you're running Wi-Fi you might as well run Windows XP.
Leo: Yes. Yes. So, they used RDP, a well-known flaw in Windows XP. They used Microsoft's remote desktop protocol to just hack right into that thing. No problem. There were bugs. Some of them were running SSL, unpatched, open SSL so they used—some of them were running Windows CE. Some had physical ports, you know, ethernet jacks or USB ports you could just plug in to, but my favorite is this Winvote machine from the Fairfax County Special Election.
Alex: Are we surprised these are so insecure, because I feel like I'm kind of nodding my head going, "Yep, there it is. Oh, XP? Yea, real dumb." I am not surprised.
Leo: One minute and 40 seconds later, Carsten Schurmann had remote access to this voting machine.
Alex: Oh, my gosh.
Leo: Yep. It was running Windows XP with autorun enabled (laughing).
Alex: And it had a hard-coded password? Oh, my gosh.
Leo: Hard coded web password, so, first of all, web's crackable. But the password is hard-coded so, if you learned it for one machine, you knew it for all. Wow.
Alex: This is an argument against democracy I feel.
Leo: Yea, yea. But good news. Intrusion would have been detected and logged.
Alex: Oh, good.
Leo: Actually, the better news is this kind of information is really valuable in convincing registrars all over the country not to use electronic voting machines with no paper trail because there's no way to validate the votes and probably not have them connected to the internet (laughing).
Alex: Especially with a hard-coded algorithm. I mean come on. It's just frustrating.
Leo: What else? Injecting code into mouse firmware.
Alex: I can't tell if that's a euphemism or not. Is this genetics or is this like a mouse I can plugin to my PC?
Leo: (Laughing) They added their own, this was at the Saturday morning talk. Mark Williams and Rob Stanley walked through the process of adding their own custom code into a gaming mouse.
Alex: Oh. That's actually pretty cool.
Leo: Yea, retaining the full functionality, but just having a few extra features.
Alex: You're using the Surface Mouse there I see, not a gaming mouse.
Leo: No. I don't—it's probably hackable too.
Alex: Yea, probably.
Leo: They're all, you know, we're just sitting.
Mike: Why would you hack a mouse though? What are you going to—like what benefits can it be from getting access to my mouse?
Leo: I don't know. Let's see. Can be used on SteelSeries Sensei Mouse. Good for pranks, especially during E-Sports events.
Alex: Oh, no doubt.
Leo: If your team is playing—yea, cheat.
Alex: I wanted to prank my co-worker, not cheat at StarCraft 2.
Leo: $20-million-dollar prize pool at the international 2016 tournament. You might want to—that might be some incentive to hack that other guy's mouse. Did you go up to that one?
Alex: No, Peter Bright from Ars Technica, he's a big Dota 2 fan.
Leo: He's a big Dota 2 fan.
Alex: So, he keeps me appraised of the sich. I'm too old and boring to play games, sadly. Just Destiny.
Leo: What did you say? Destiny?
Leo: You play Destiny?
Alex: Yea, Ryan Lawler got me on it.
Leo: That's a game.
Alex: Yea. I don't watch E-Sports.
Leo: You go down to the bodega and—
Alex: I go down to their and play, exactly. By the paper towels for Steve. Destiny and paper towels.
Leo: You've heard of Broadpwn, we've talked about this I think on Security Now. This is a flow in Broadcom. This is a fun one. This is a fun bug. This also is part of a talk at DEFCON. It's a—you can take the Broadcom firmware and hack it in such a way that it then connects with all the other phones it can see and infects their firmware. So, it's a replicating worm and one billion devices, both Android and iOS were vulnerable to it until early July and last week when Google and Apple issued patches. Last week Apple fixed this.
Alex: When are we going to get some good news on the security front? I feel like whenever I come on TWiT it's like here's all the ways you can get pwned.
Leo: Well, here's the good news. This was patched before it was revealed at BlackHat.
Alex: Oh, ok. That is good.
Leo: But, I mean that is—imagine replicating code that I put on your phone and then everybody you come in contact with gets the bug and then everyone they—it would spread to those billion phones in no time. Like that shampoo ad. I infected 2 friends and they infected 2 friends.
Alex: I have not seen the shampoo ad.
Leo: It's an old ad. I don't know. I'm bringing up old stuff. I'm so old (laughing). I am so old.
Alex: You're not that old. We went over this before the show.
Leo: Yea, yea. I think we could stop.
Alex: You're spry.
Leo: Flash is dead. Woo hoo!
Leo: Finally. Well, it's not dead yet. 2020 (laughing).
Alex: Oh, are you serious, it's that far off?
Mike: Well, you know, you've got to degrade some system stuff.
Leo: Yea, it takes a while.
Mike: I checked my speed because I'm using ethernet for the first time in this apartment. I wanted to see what it was. The old speedtest.net, that was a Flash box for some reason. I don't know why that needed to be.
Leo: There's no reason. I mean, in fact there's tools now that will convert anything, almost anything in Flash to HTML5, so I think it's appropriate that Adobe said, "Well, we're going to kill it in 3 years. You might want to start porting your stuff to HTML5."
Mike: We did a great roundup of like all the old Flash games and like original viral videos that were on Flash from back in the day.
Leo: What was that, POGO, POGO.com? Is that still around. I bet it is and I bet it still uses Flash. Yep.
Alex: Oh, wow, this is like the old bonus.com site.
Leo: You want to play Mahjong Escape? Sure you do. Let's just play a little—it requires Flash Player enabled to run POGO Games. We recommend using the latest version of Internet Explorer 11.
Steve: Oh, my gosh.
Alex: Not even Edge?
Leo: So, I can't actually play the game because I don't have Flash on this Windows machine. POGO.com, it's still here. And guess what? Your grandma still uses it. They're going to take away my Mahjong?
Alex: Is POGO just like web based Zinga before Zinga?
Leo: Yea, POGO's been around forever.
Alex: When did POGO come out?
Mike: Yea, there are a bunch of those.
Leo: I don't know.
Mike: 15-years ago?
Alex: 2002? All right, well.
Leo: No, it's got to be older than that.
Alex: All right, this is like the internet archive episode. I like this.
Steve: Addictivegames.com I think was another good one.
Leo: Oh, remember that one? Yea.
Mike: Candy Stand.
Leo: Oh, there's a lot of disambiguation going on here. There's a lot of POGOs on—a website featuring free online games. Here we go. It was—
Leo: 1999, Electronic Arts owns it.
Mike: It's owned by EA? That's nuts.
Alex: Are you serious?
Leo: It used to be—well, some of them are Java I guess, but most of them are Flash.
Alex: Is Java still a thing or is that gone too?
Leo: No, Java is still alive. In fact, more people program in Java than any other language to this day.
Alex: Now I just sound stupid.
Leo: Well, who's really stupid here? They or you?
Alex: I don't know enough to answer that question, so I'll vote me.
Leo: I used the transitive verb correctly.
Alex: You want 5 points?
Alex: I have 10 points.
Leo: I could have said "them" but no, I said, "they."
Alex: Ok. 15 points.
Leo: Ok. Are you going to get microchip implants, kids, so you can use vending machines without any effort?
Mike: I like Apple Pay.
Leo: Yea. This is so dopey. But the best—ok, so you all probably saw the TV news article about Three Square Market, a technology company in Wisconsin. Is there such a thing? No, I'm sorry, Wisconsin. That was mean.
Alex: That was rude. The cheese is offended.
Leo: University of Wisconsin in Madison just got a half-billion-dollar payment from Apple for inventing some chip technology. So, of course. Anyway, they're getting RFID to the employees on Tuesday. When they come in, will be offered RFID chips. They have a little staple gun, they go plonk. Ah! The program is not mandatory but 50 out of 80 employees have volunteered. And they asked the CEO. By the way, the company that's providing this is from Sweden.
Leo: And its name is Biohax International. So, I think—yea, they already know. Biohax International. Now, remember, there were Mexican diplomats that were getting these RFID chips but that was because they were getting kidnapped and they just wanted to be identified after the remains were found.
Alex: Ok, that's just sad.
Leo: This is, they say, more for paying for stuff or identifying you for the card key when you come into the door.
Alex: No. You know what I have in my back pocket? My badge.
Leo: I think it's fine.
Mike: Yea. What happens when these people leave the company?
Alex: Sorry, Mike, go for it.
Mike: What happens when you leave the company? What, are you going to get a new chip for every company?
Leo: You know those staple removers? Just pluck it.
Mike: You're going to have track marks from RFID chips?
Alex: I don't want to be programmed in the first place. If my boss said, "You can either stay here or—you can either stay and get a chip or leave," I would be like, "All right. Deuces. I'm out." I'm not—no. You can't. You don't get to inject things into my body. I'm already selling you my time. And Leo told me that's the most important thing.
Leo: It's also the security issue because it's easy to figure out what that ID is, it's an encoded ID. And they asked, I think it was the CEO of the company, "Well, what about—couldn't somebody pose, you know, steal the number? Get a RFID reader while your employee's drunk at the bar and steal his number and get in?" He said, "No, no. You don't have to worry. They're encrypted." Well, there you go. They're encrypted. That's going to be soon. Watch. Mark my words, the new buzz phrase for security. It's encrypted. And you'll see it on potato chip bags and everything and people will just go, "Oh, well it's got to be."
Alex: Lock up your chips, kids.
Leo: It's got to be safe.
Alex: They're coming for your Barbeque Lays.
Leo: My chips are encrypted. Ladies and gentlemen, it is time to wrap this up. He is A-L-E-X, Alex on Twitter. A handle he got for mere pennies on the dollar.
Alex: True, actually.
Leo: And it's probably worth more.
Alex: Yea, people have offered me a lot of money for it.
Leo: Yea, A-L-E-X. But remember, Mat Honen got hacked because he had M-A-T. You've got to be careful.
Alex: I have two-factor turned on.
Leo: Oh, good. Steve Kovach, K-O-V-A-C-H. He's @stevekovach on the Twitter and you'll find him as a Senior Correspondent at Business Insider. Always a pleasure. Mike Murphy uses Roman numerals for his Twitter handle for reasons we don't fully understand.
Mike: My name. Those are my initials.
Leo: Oh, ok. MCWM. I thought it meant you were born in 19—well, W doesn't mean anything.
Alex: I was going to say.
Leo: (Laughing) It looks like a Roman numeral but it's not. Thanks for joining us, Mike. I hope you enjoyed your visit and come back soon, ok?
Mike: It's great. Thanks for having me.
Leo: Great to have you. Thanks to all of you for joining us. We do This Week in Tech every Sunday afternoon, 3:00 PM Pacific, 6:00 PM Eastern, 2200 UTC. Tune in live. You can be in the chatroom and help us with research topics. Irc.twit.tv. Actually, the chatroom is always great. They give me lots of good- they write all my best lines.
Alex: They write the title of the show most weeks, too.
Leo: They will write the title of the show.
Alex: It's important.
Leo: It's going to have something to do with Alex, I'm sure. Also, if you want to visit us in the studio, we had a nice studio audience. They're only half asleep now. Just email firstname.lastname@example.org and we put a really comfortable—you guys got stuck with the really uncomfortable chairs. I'm so sorry. But at least it kept you alert. Thank you for being here. We also want to encourage you to subscribe to the show because if you subscribe you'll be guaranteed every Monday morning to start your week with a nice, fresh, steaming TWiT (laughing). And who wouldn't want to start your day with a hot, fresh, steaming TWiT? Thank you everybody. Have I said everything I need to say? Thank you Karsten Bondy for producing the show, Tonya Hall for booking it, John Slanina for standing there and making sure everything worked. There are people involved in this. Who's going to be editing it? Bryan Burnett? Bryan Burnett for cutting out the dirty bits. If you didn't hear any dirty bits, he did his job. I'm Leo Laporte and we'll see you next time! Another TWiT is in the can. Bye-bye. Dead silence (laughing).