With Trump in the White House, Americas gun manufacturers are in trouble after a golden era under Barack Obama
With Trump in the White House, Americas gun manufacturers are in trouble after a golden era under Barack Obama
A coalition of 97 child health advocates sent a letter to Mark Zuckerberg on Tuesday asking him to discontinue Messenger Kids, a new advertising-free Facebook app targeted at 6-to-12-year olds. Advocates say the app likely will undermine healthy childhood development for preschool and elementary-school-aged kids by increasing the amount of time they spend with digital devices.
The letter to Zuckerberg was signed by individuals and 19 nonprofits including Common Sense Media, Campaign for a Commercial-Free Childhood, and Parents Across America, who say their concern stems from recent studies that link increased depression, poor sleeping habits, and unhealthy body image in children and teens with higher use of social media and digital devices.
For instance, a study by Jean Twenge, a psychology professor at San Diego State University and author of iGen, found that social media use by teens is tied to significantly higher rates of depression. (Twenge signed the letter.) Another recent study found that adolescents who spend an hour a day chatting on social media report less satisfaction with nearly every aspect of their lives and 8th graders who use social media for six to nine hours per week are 47 percent more likely to report they are unhappy than their peers who use social media less often.
“Raising children in our new digital age is difficult enough,” the letter says. “We ask that you do not use Facebook’s enormous reach and influence to make it even harder.”
Facebook has said that it took precautions with Messenger Kids, including barring advertising, and giving parents more tools to control a child’s social media use. “But even if these safeguards are effective,” the letter says, “the app’s overall impact on families and society is likely to be negative, normalizing social media use among young children and creating peer pressure for kids to sign up for their first account.”
The letter adds to growing concerns about the impact of social media and smartphones on our minds and bodies. In January, two major Apple shareholders wrote a public letter to the company, citing some of the same studies, and asking Apple to address potential negative mental and physical effects of smartphone usage on children, including funding research and building better tools for parents.
The message to Zuckerberg, however, strikes a much less conciliatory tone. Advocates poked holes in Facebook’s stated motivation for launching the app, and pointed out features that were seemed to be designed for Facebook’s benefit.
When Facebook launched Messenger Kids in December, the company pitched it as a way to safeguard pre-teens who may be using unauthorized social media accounts. (The Children’s Online Privacy Protection Act, or COPPA requires parental permission to collect data on children under 13.) But advocates say pre-teens who already have a Snapchat, Instagram, or Facebook account are unlikely to convert, especially when features are designed with younger users in mind. Instead, they say the app seems designed to hook children on social media at younger ages.
Josh Golin, executive director of Campaign for a Commercial Free Childhood, the nonprofit that helped organize the coalition, pointed to comments from David Marcus, Facebook’s head of Messenger. When the kids version launched, Marcus told TechCrunch that Facebook hired a special team to build creative tools for kids, like fidget spinner and dinosaur augmented reality masks, as well as crayon-style stickers. He said the filters would allow children to conduct longer conversations with grandparents, for example.
But iIf a 7-year-old can’t chat longer than 5 to 10 minutes, why extend it, says Golin. “Using filters and AR in order to extend the chat will only make it harder for kids to have real conversations without gimmicks in both the short and long run,” he says. “So here’s Facebook framing increased use and dependence on its tools as a benefit to 7-year-olds and grandparents when really its Facebook that’s the beneficiary.”
In a statement to WIRED, a Facebook spokesperson said, “Since we launched in December we’ve heard from parents around the country that Messenger Kids has helped them stay in touch with their children and has enabled their children to stay in touch with family members near and far. For example, we’ve heard stories of parents working night shifts being able read bedtime stories to their children, and moms who travel for work getting daily updates from their kids while they're away.”
Twenge, whose work was also cited in the public letter to Apple, says it’s a good first step that Messenger Kids doesn’t have ads and that parents can limit their kid’s contact list. But she says the company should have considered imposing time limits on children’s use of the app, citing research that correlates increased time on social media with detrimental effects.
The coalition is asking Facebook to shutter the app rather than improve it because there’s no need for children under age 12 to be on social media. High school students, on the other hand, use it as a resource, and those who use social media a little bit are happier than those who don’t at all, says Twenge but 6-, 7- and 8-year-olds lack the maturity, ability to deal with the anticipation and complex online relationships, or understanding of privacy. Facebook may have pitched it as a way to keep in touch with grandparents, but there are better options. “Call them on FaceTime,” Twenge says.
The only way to be truly secure on Facebook is to delete your account. But that's crazy talk! Here's how to lock down your privacy and security and bonus, keep targeted ads at bay.
The centerpiece of Apple Inc.’s new headquarters is a massive, ring-shaped office overflowing with panes of glass, a testament to the company’s famed design-obsessed aesthetic.
There’s been one hiccup since it opened last year: Apple employees keep smacking into the glass.
Surrounding the building, located in Cupertino, California, are 45-foot tall curved panels of safety glass. Inside are work spaces, dubbed “pods,” also made with a lot of glass. Apple staff are often glued to the iPhones they helped popularize. That’s resulted in repeated cases of distracted employees walking into the panes, according to people familiar with the incidents.
Some staff started to stick Post-It notes on the glass doors to mark their presence. However, the notes were removed because they detracted from the building’s design, the people said. They asked not to be identified discussing anything related to Apple. Another person familiar with the situation said there are other markings to identify the glass.
Apple’s latest campus has been lauded as an architectural marvel. The building, crafted by famed architect Norman Foster, immortalized a vision that Apple co-founder Steve Jobs had years earlier. In 2011, Jobs reportedly described the building “a little like a spaceship landed.” Jobs has been credited for coming up with the glass pods, designed to mix solo office areas with more social spaces.
The building is designed to house some 13,000 employees. Wired magazine, first to pay a visit at its opening last year, described the structure as a “statement of openness, of free movement,” in contrast to Apple’s typically insular culture. “While it is a technical marvel to make glass at this scale, that’s not the achievement,” Jony Ive, Apple’s design chief, told the magazine in May. “The achievement is to make a building where so many people can connect and collaborate and walk and talk.”
An Apple spokeswoman declined to comment. It’s not clear how many incidents there have been. A Silicon Valley-based spokeswoman for the Occupational Safety and Health Administration referred questions about Apple’s workplace safety record to the government agency’s website. A search on the site based on Apple’s name in California found no reports of injuries at the company’s new campus.
It’s not the first time Apple’s penchant for glass in buildings has caused problems. In late 2011, 83-year-old Evelyn Paswall walked into the glass wall of an Apple store, breaking her nose. She sued the company, arguing it should have posted a warning on the glass. The suit was settled without any cost to Apple, according to a legal filing in early 2013.
One day in late February of 2016, Mark Zuckerberg sent a memo to all of Facebook’s employees to address some troubling behavior in the ranks. His message pertained to some walls at the company’s Menlo Park headquarters where staffers are encouraged to scribble notes and signatures. On at least a couple of occasions, someone had crossed out the words “Black Lives Matter” and replaced them with “All Lives Matter.” Zuckerberg wanted whoever was responsible to cut it out.
“ ‘Black Lives Matter’ doesn’t mean other lives don’t,” he wrote. “We’ve never had rules around what people can write on our walls,” the memo went on. But “crossing out something means silencing speech, or that one person’s speech is more important than another’s.” The defacement, he said, was being investigated.
All around the country at about this time, debates about race and politics were becoming increasingly raw. Donald Trump had just won the South Carolina primary, lashed out at the Pope over immigration, and earned the enthusiastic support of David Duke. Hillary Clinton had just defeated Bernie Sanders in Nevada, only to have an activist from Black Lives Matter interrupt a speech of hers to protest racially charged statements she’d made two decades before. And on Facebook, a popular group called Blacktivist was gaining traction by blasting out messages like “American economy and power were built on forced migration and torture.”
So when Zuckerberg’s admonition circulated, a young contract employee named Benjamin Fearnow decided it might be newsworthy. He took a screenshot on his personal laptop and sent the image to a friend named Michael Nuñez, who worked at the tech-news site Gizmodo. Nuñez promptly published a brief story about Zuckerberg’s memo.
A week later, Fearnow came across something else he thought Nuñez might like to publish. In another internal communication, Facebook had invited its employees to submit potential questions to ask Zuckerberg at an all-hands meeting. One of the most up-voted questions that week was “What responsibility does Facebook have to help prevent President Trump in 2017?” Fearnow took another screenshot, this time with his phone.
Fearnow, a recent graduate of the Columbia Journalism School, worked in Facebook’s New York office on something called Trending Topics, a feed of popular news subjects that popped up when people opened Facebook. The feed was generated by an algorithm but moderated by a team of about 25 people with backgrounds in journalism. If the word “Trump” was trending, as it often was, they used their news judgment to identify which bit of news about the candidate was most important. If The Onion or a hoax site published a spoof that went viral, they had to keep that out. If something like a mass shooting happened, and Facebook’s algorithm was slow to pick up on it, they would inject a story about it into the feed.
Facebook prides itself on being a place where people love to work. But Fearnow and his team weren’t the happiest lot. They were contract employees hired through a company called BCforward, and every day was full of little reminders that they weren’t really part of Facebook. Plus, the young journalists knew their jobs were doomed from the start. Tech companies, for the most part, prefer to have as little as possible done by humans—because, it’s often said, they don’t scale. You can’t hire a billion of them, and they prove meddlesome in ways that algorithms don’t. They need bathroom breaks and health insurance, and the most annoying of them sometimes talk to the press. Eventually, everyone assumed, Facebook’s algorithms would be good enough to run the whole project, and the people on Fearnow’s team—who served partly to train those algorithms—would be expendable.
The day after Fearnow took that second screenshot was a Friday. When he woke up after sleeping in, he noticed that he had about 30 meeting notifications from Facebook on his phone. When he replied to say it was his day off, he recalls, he was nonetheless asked to be available in 10 minutes. Soon he was on a videoconference with three Facebook employees, including Sonya Ahuja, the company’s head of investigations. According to his recounting of the meeting, she asked him if he had been in touch with Nuñez. He denied that he had been. Then she told him that she had their messages on Gchat, which Fearnow had assumed weren’t accessible to Facebook. He was fired. “Please shut your laptop and don’t reopen it,” she instructed him.
That same day, Ahuja had another conversation with a second employee at Trending Topics named Ryan Villarreal. Several years before, he and Fearnow had shared an apartment with Nuñez. Villarreal said he hadn’t taken any screenshots, and he certainly hadn’t leaked them. But he had clicked “like” on the story about Black Lives Matter, and he was friends with Nuñez on Facebook. “Do you think leaks are bad?” Ahuja demanded to know, according to Villarreal. He was fired too. The last he heard from his employer was in a letter from BCforward. The company had given him $15 to cover expenses, and it wanted the money back.
The firing of Fearnow and Villarreal set the Trending Topics team on edge—and Nuñez kept digging for dirt. He soon published a story about the internal poll showing Facebookers’ interest in fending off Trump. Then, in early May, he published an article based on conversations with yet a third former Trending Topics employee, under the blaring headline “Former Facebook Workers: We Routinely Suppressed Conservative News.” The piece suggested that Facebook’s Trending team worked like a Fox News fever dream, with a bunch of biased curators “injecting” liberal stories and “blacklisting” conservative ones. Within a few hours the piece popped onto half a dozen highly trafficked tech and politics websites, including Drudge Report and Breitbart News.
The post went viral, but the ensuing battle over Trending Topics did more than just dominate a few news cycles. In ways that are only fully visible now, it set the stage for the most tumultuous two years of Facebook’s existence—triggering a chain of events that would distract and confuse the company while larger disasters began to engulf it.
This is the story of those two years, as they played out inside and around the company. WIRED spoke with 51 current or former Facebook employees for this article, many of whom did not want their names used, for reasons anyone familiar with the story of Fearnow and Villarreal would surely understand. (One current employee asked that a WIRED reporter turn off his phone so the company would have a harder time tracking whether it had been near the phones of anyone from Facebook.)
The stories varied, but most people told the same basic tale: of a company, and a CEO, whose techno-optimism has been crushed as they’ve learned the myriad ways their platform can be used for ill. Of an election that shocked Facebook, even as its fallout put the company under siege. Of a series of external threats, defensive internal calculations, and false starts that delayed Facebook’s reckoning with its impact on global affairs and its users’ minds. And—in the tale’s final chapters—of the company’s earnest attempt to redeem itself.
In that saga, Fearnow plays one of those obscure but crucial roles that history occasionally hands out. He’s the Franz Ferdinand of Facebook—or maybe he’s more like the archduke’s hapless young assassin. Either way, in the rolling disaster that has enveloped Facebook since early 2016, Fearnow’s leaks probably ought to go down as the screenshots heard round the world.
By now, the story of Facebook’s all-consuming growth is practically the creation myth of our information era. What began as a way to connect with your friends at Harvard became a way to connect with people at other elite schools, then at all schools, and then everywhere. After that, your Facebook login became a way to log on to other internet sites. Its Messenger app started competing with email and texting. It became the place where you told people you were safe after an earthquake. In some countries like the Philippines, it effectively is the internet.
The furious energy of this big bang emanated, in large part, from a brilliant and simple insight. Humans are social animals. But the internet is a cesspool. That scares people away from identifying themselves and putting personal details online. Solve that problem—make people feel safe to post—and they will share obsessively. Make the resulting database of privately shared information and personal connections available to advertisers, and that platform will become one of the most important media technologies of the early 21st century.
But as powerful as that original insight was, Facebook’s expansion has also been driven by sheer brawn. Zuckerberg has been a determined, even ruthless, steward of the company’s manifest destiny, with an uncanny knack for placing the right bets. In the company’s early days, “move fast and break things” wasn’t just a piece of advice to his developers; it was a philosophy that served to resolve countless delicate trade-offs—many of them involving user privacy—in ways that best favored the platform’s growth. And when it comes to competitors, Zuckerberg has been relentless in either acquiring or sinking any challengers that seem to have the wind at their backs.
Two years that forced the platform to change
by Blanca Myers
Facebook suspends Benjamin Fearnow, a journalist-curator for the platform’s Trending Topics feed, after he leaks to Gizmodo.
Gizmodo reports that Trending Topics “routinely suppressed conservative news.” The story sends Facebook scrambling.
Rupert Murdoch tells Zuckerberg that Facebook is wreaking havoc on the news industry and threatens to cause trouble.
Facebook cuts loose all of its Trending Topics journalists, ceding authority over the feed to engineers in Seattle.
Donald Trump wins. Zuckerberg says it’s “pretty crazy” to think fake news on Facebook helped tip the election.
Facebook declares war on fake news, hires CNN alum Campbell Brown to shepherd relations with the publishing industry.
Facebook announces that a Russian group paid $100,000 for roughly 3,000 ads aimed at US voters.
Researcher Jonathan Albright reveals that posts from six Russian propaganda accounts were shared 340 million times.
Facebook general counsel Colin Stretch gets pummeled during congressional Intelligence Committee hearings.
Facebook begins announcing major changes, aimed to ensure that time on the platform will be “time well spent.”
In fact, it was in besting just such a rival that Facebook came to dominate how we discover and consume news. Back in 2012, the most exciting social network for distributing news online wasn’t Facebook, it was Twitter. The latter’s 140-character posts accelerated the speed at which news could spread, allowing its influence in the news industry to grow much faster than Facebook’s. “Twitter was this massive, massive threat,” says a former Facebook executive heavily involved in the decisionmaking at the time.
So Zuckerberg pursued a strategy he has often deployed against competitors he cannot buy: He copied, then crushed. He adjusted Facebook’s News Feed to fully incorporate news (despite its name, the feed was originally tilted toward personal news) and adjusted the product so that it showed author bylines and headlines. Then Facebook’s emissaries fanned out to talk with journalists and explain how to best reach readers through the platform. By the end of 2013, Facebook had doubled its share of traffic to news sites and had started to push Twitter into a decline. By the middle of 2015, it had surpassed Google as the leader in referring readers to publisher sites and was now referring 13 times as many readers to news publishers as Twitter. That year, Facebook launched Instant Articles, offering publishers the chance to publish directly on the platform. Posts would load faster and look sharper if they agreed, but the publishers would give up an element of control over the content. The publishing industry, which had been reeling for years, largely assented. Facebook now effectively owned the news. “If you could reproduce Twitter inside of Facebook, why would you go to Twitter?” says the former executive. “What they are doing to Snapchat now, they did to Twitter back then.”
It appears that Facebook did not, however, carefully think through the implications of becoming the dominant force in the news industry. Everyone in management cared about quality and accuracy, and they had set up rules, for example, to eliminate pornography and protect copyright. But Facebook hired few journalists and spent little time discussing the big questions that bedevil the media industry. What is fair? What is a fact? How do you signal the difference between news, analysis, satire, and opinion? Facebook has long seemed to think it has immunity from those debates because it is just a technology company—one that has built a “platform for all ideas.”
This notion that Facebook is an open, neutral platform is almost like a religious tenet inside the company. When new recruits come in, they are treated to an orientation lecture by Chris Cox, the company’s chief product officer, who tells them Facebook is an entirely new communications platform for the 21st century, as the telephone was for the 20th. But if anyone inside Facebook is unconvinced by religion, there is also Section 230 of the 1996 Communications Decency Act to recommend the idea. This is the section of US law that shelters internet intermediaries from liability for the content their users post. If Facebook were to start creating or editing content on its platform, it would risk losing that immunity—and it’s hard to imagine how Facebook could exist if it were liable for the many billion pieces of content a day that users post on its site.
And so, because of the company’s self-image, as well as its fear of regulation, Facebook tried never to favor one kind of news content over another. But neutrality is a choice in itself. For instance, Facebook decided to present every piece of content that appeared on News Feed—whether it was your dog pictures or a news story—in roughly the same way. This meant that all news stories looked roughly the same as each other, too, whether they were investigations in The Washington Post, gossip in the New York Post, or flat-out lies in the Denver Guardian, an entirely bogus newspaper. Facebook argued that this democratized information. You saw what your friends wanted you to see, not what some editor in a Times Square tower chose. But it’s hard to argue that this wasn’t an editorial decision. It may be one of the biggest ever made.
In any case, Facebook’s move into news set off yet another explosion of ways that people could connect. Now Facebook was the place where publications could connect with their readers—and also where Macedonian teenagers could connect with voters in America, and operatives in Saint Petersburg could connect with audiences of their own choosing in a way that no one at the company had ever seen before.
In February of 2016, just as the Trending Topics fiasco was building up steam, Roger McNamee became one of the first Facebook insiders to notice strange things happening on the platform. McNamee was an early investor in Facebook who had mentored Zuckerberg through two crucial decisions: to turn down Yahoo’s offer of $1 billion to acquire Facebook in 2006; and to hire a Google executive named Sheryl Sandberg in 2008 to help find a business model. McNamee was no longer in touch with Zuckerberg much, but he was still an investor, and that month he started seeing things related to the Bernie Sanders campaign that worried him. “I’m observing memes ostensibly coming out of a Facebook group associated with the Sanders campaign that couldn’t possibly have been from the Sanders campaign,” he recalls, “and yet they were organized and spreading in such a way that suggested somebody had a budget. And I’m sitting there thinking, ‘That’s really weird. I mean, that’s not good.’ ”
But McNamee didn’t say anything to anyone at Facebook—at least not yet. And the company itself was not picking up on any such worrying signals, save for one blip on its radar: In early 2016, its security team noticed an uptick in Russian actors attempting to steal the credentials of journalists and public figures. Facebook reported this to the FBI. But the company says it never heard back from the government, and that was that.
Instead, Facebook spent the spring of 2016 very busily fending off accusations that it might influence the elections in a completely different way. When Gizmodo published its story about political bias on the Trending Topics team in May, the article went off like a bomb in Menlo Park. It quickly reached millions of readers and, in a delicious irony, appeared in the Trending Topics module itself. But the bad press wasn’t what really rattled Facebook—it was the letter from John Thune, a Republican US senator from South Dakota, that followed the story’s publication. Thune chairs the Senate Commerce Committee, which in turn oversees the Federal Trade Commission, an agency that has been especially active in investigating Facebook. The senator wanted Facebook’s answers to the allegations of bias, and he wanted them promptly.
The Thune letter put Facebook on high alert. The company promptly dispatched senior Washington staffers to meet with Thune’s team. Then it sent him a 12-page single-spaced letter explaining that it had conducted a thorough review of Trending Topics and determined that the allegations in the Gizmodo story were largely false.
Facebook decided, too, that it had to extend an olive branch to the entire American right wing, much of which was raging about the company’s supposed perfidy. And so, just over a week after the story ran, Facebook scrambled to invite a group of 17 prominent Republicans out to Menlo Park. The list included television hosts, radio stars, think tankers, and an adviser to the Trump campaign. The point was partly to get feedback. But more than that, the company wanted to make a show of apologizing for its sins, lifting up the back of its shirt, and asking for the lash.
According to a Facebook employee involved in planning the meeting, part of the goal was to bring in a group of conservatives who were certain to fight with one another. They made sure to have libertarians who wouldn’t want to regulate the platform and partisans who would. Another goal, according to the employee, was to make sure the attendees were “bored to death” by a technical presentation after Zuckerberg and Sandberg had addressed the group.
The power went out, and the room got uncomfortably hot. But otherwise the meeting went according to plan. The guests did indeed fight, and they failed to unify in a way that was either threatening or coherent. Some wanted the company to set hiring quotas for conservative employees; others thought that idea was nuts. As often happens when outsiders meet with Facebook, people used the time to try to figure out how they could get more followers for their own pages.
Afterward, Glenn Beck, one of the invitees, wrote an essay about the meeting, praising Zuckerberg. “I asked him if Facebook, now or in the future, would be an open platform for the sharing of all ideas or a curator of content,” Beck wrote. “Without hesitation, with clarity and boldness, Mark said there is only one Facebook and one path forward: ‘We are an open platform.’”
Inside Facebook itself, the backlash around Trending Topics did inspire some genuine soul-searching. But none of it got very far. A quiet internal project, codenamed Hudson, cropped up around this time to determine, according to someone who worked on it, whether News Feed should be modified to better deal with some of the most complex issues facing the product. Does it favor posts that make people angry? Does it favor simple or even false ideas over complex and true ones? Those are hard questions, and the company didn’t have answers to them yet. Ultimately, in late June, Facebook announced a modest change: The algorithm would be revised to favor posts from friends and family. At the same time, Adam Mosseri, Facebook’s News Feed boss, posted a manifesto titled “Building a Better News Feed for You.” People inside Facebook spoke of it as a document roughly resembling the Magna Carta; the company had never spoken before about how News Feed really worked. To outsiders, though, the document came across as boilerplate. It said roughly what you’d expect: that the company was opposed to clickbait but that it wasn’t in the business of favoring certain kinds of viewpoints.
The most important consequence of the Trending Topics controversy, according to nearly a dozen former and current employees, was that Facebook became wary of doing anything that might look like stifling conservative news. It had burned its fingers once and didn’t want to do it again. And so a summer of deeply partisan rancor and calumny began with Facebook eager to stay out of the fray.
Shortly after Mosseri published his guide to News Feed values, Zuckerberg traveled to Sun Valley, Idaho, for an annual conference hosted by billionaire Herb Allen, where moguls in short sleeves and sunglasses cavort and make plans to buy each other’s companies. But Rupert Murdoch broke the mood in a meeting that took place inside his villa. According to numerous accounts of the conversation, Murdoch and Robert Thomson, the CEO of News Corp, explained to Zuckerberg that they had long been unhappy with Facebook and Google. The two tech giants had taken nearly the entire digital ad market and become an existential threat to serious journalism. According to people familiar with the conversation, the two News Corp leaders accused Facebook of making dramatic changes to its core algorithm without adequately consulting its media partners, wreaking havoc according to Zuckerberg’s whims. If Facebook didn’t start offering a better deal to the publishing industry, Thomson and Murdoch conveyed in stark terms, Zuckerberg could expect News Corp executives to become much more public in their denunciations and much more open in their lobbying. They had helped to make things very hard for Google in Europe. And they could do the same for Facebook in the US.
Facebook thought that News Corp was threatening to push for a government antitrust investigation or maybe an inquiry into whether the company deserved its protection from liability as a neutral platform. Inside Facebook, executives believed Murdoch might use his papers and TV stations to amplify critiques of the company. News Corp says that was not at all the case; the company threatened to deploy executives, but not its journalists.
Zuckerberg had reason to take the meeting especially seriously, according to a former Facebook executive, because he had firsthand knowledge of Murdoch’s skill in the dark arts. Back in 2007, Facebook had come under criticism from 49 state attorneys general for failing to protect young Facebook users from sexual predators and inappropriate content. Concerned parents had written to Connecticut attorney general Richard Blumenthal, who opened an investigation, and to The New York Times, which published a story. But according to a former Facebook executive in a position to know, the company believed that many of the Facebook accounts and the predatory behavior the letters referenced were fakes, traceable to News Corp lawyers or others working for Murdoch, who owned Facebook’s biggest competitor, MySpace. “We traced the creation of the Facebook accounts to IP addresses at the Apple store a block away from the MySpace offices in Santa Monica,” the executive says. “Facebook then traced interactions with those accounts to News Corp lawyers. When it comes to Facebook, Murdoch has been playing every angle he can for a long time.” (Both News Corp and its spinoff 21st Century Fox declined to comment.)
Zuckerberg took Murdoch’s threats seriously—he had firsthand knowledge of the older man’s skill in the dark arts.
When Zuckerberg returned from Sun Valley, he told his employees that things had to change. They still weren’t in the news business, but they had to make sure there would be a news business. And they had to communicate better. One of those who got a new to-do list was Andrew Anker, a product manager who’d arrived at Facebook in 2015 after a career in journalism (including a long stint at WIRED in the ’90s). One of his jobs was to help the company think through how publishers could make money on the platform. Shortly after Sun Valley, Anker met with Zuckerberg and asked to hire 60 new people to work on partnerships with the news industry. Before the meeting ended, the request was approved.
But having more people out talking to publishers just drove home how hard it would be to resolve the financial problems Murdoch wanted fixed. News outfits were spending millions to produce stories that Facebook was benefiting from, and Facebook, they felt, was giving too little back in return. Instant Articles, in particular, struck them as a Trojan horse. Publishers complained that they could make more money from stories that loaded on their own mobile web pages than on Facebook Instant. (They often did so, it turned out, in ways that short-changed advertisers, by sneaking in ads that readers were unlikely to see. Facebook didn’t let them get away with that.) Another seemingly irreconcilable difference: Outlets like Murdoch’s Wall Street Journal depended on paywalls to make money, but Instant Articles banned paywalls; Zuckerberg disapproved of them. After all, he would often ask, how exactly do walls and toll booths make the world more open and connected?
The conversations often ended at an impasse, but Facebook was at least becoming more attentive. This newfound appreciation for the concerns of journalists did not, however, extend to the journalists on Facebook’s own Trending Topics team. In late August, everyone on the team was told that their jobs were being eliminated. Simultaneously, authority over the algorithm shifted to a team of engineers based in Seattle. Very quickly the module started to surface lies and fiction. A headline days later read, “Fox News Exposes Traitor Megyn Kelly, Kicks Her Out For Backing Hillary."
While Facebook grappled internally with what it was becoming—a company that dominated media but didn’t want to be a media company—Donald Trump’s presidential campaign staff faced no such confusion. To them Facebook’s use was obvious. Twitter was a tool for communicating directly with supporters and yelling at the media. Facebook was the way to run the most effective direct-marketing political operation in history.
In the summer of 2016, at the top of the general election campaign, Trump’s digital operation might have seemed to be at a major disadvantage. After all, Hillary Clinton’s team was flush with elite talent and got advice from Eric Schmidt, known for running Google. Trump’s was run by Brad Parscale, known for setting up the Eric Trump Foundation’s web page. Trump’s social media director was his former caddie. But in 2016, it turned out you didn’t need digital experience running a presidential campaign, you just needed a knack for Facebook.
Over the course of the summer, Trump’s team turned the platform into one of its primary vehicles for fund-raising. The campaign uploaded its voter files—the names, addresses, voting history, and any other information it had on potential voters—to Facebook. Then, using a tool called Lookalike Audiences, Facebook identified the broad characteristics of, say, people who had signed up for Trump newsletters or bought Trump hats. That allowed the campaign to send ads to people with similar traits. Trump would post simple messages like “This election is being rigged by the media pushing false and unsubstantiated charges, and outright lies, in order to elect Crooked Hillary!” that got hundreds of thousands of likes, comments, and shares. The money rolled in. Clinton’s wonkier messages, meanwhile, resonated less on the platform. Inside Facebook, almost everyone on the executive team wanted Clinton to win; but they knew that Trump was using the platform better. If he was the candidate for Facebook, she was the candidate for LinkedIn.
Trump’s candidacy also proved to be a wonderful tool for a new class of scammers pumping out massively viral and entirely fake stories. Through trial and error, they learned that memes praising the former host of The Apprentice got many more readers than ones praising the former secretary of state. A website called Ending the Fed proclaimed that the Pope had endorsed Trump and got almost a million comments, shares, and reactions on Facebook, according to an analysis by BuzzFeed. Other stories asserted that the former first lady had quietly been selling weapons to ISIS, and that an FBI agent suspected of leaking Clinton’s emails was found dead. Some of the posts came from hyperpartisan Americans. Some came from overseas content mills that were in it purely for the ad dollars. By the end of the campaign, the top fake stories on the platform were generating more engagement than the top real ones.
Even current Facebookers acknowledge now that they missed what should have been obvious signs of people misusing the platform. And looking back, it’s easy to put together a long list of possible explanations for the myopia in Menlo Park about fake news. Management was gun-shy because of the Trending Topics fiasco; taking action against partisan disinformation—or even identifying it as such—might have been seen as another act of political favoritism. Facebook also sold ads against the stories, and sensational garbage was good at pulling people into the platform. Employees’ bonuses can be based largely on whether Facebook hits certain growth and revenue targets, which gives people an extra incentive not to worry too much about things that are otherwise good for engagement. And then there was the ever-present issue of Section 230 of the 1996 Communications Decency Act. If the company started taking responsibility for fake news, it might have to take responsibility for a lot more. Facebook had plenty of reasons to keep its head in the sand.
Roger McNamee, however, watched carefully as the nonsense spread. First there were the fake stories pushing Bernie Sanders, then he saw ones supporting Brexit, and then helping Trump. By the end of the summer, he had resolved to write an op-ed about the problems on the platform. But he never ran it. “The idea was, look, these are my friends. I really want to help them.” And so on a Sunday evening, nine days before the 2016 election, McNamee emailed a 1,000-word letter to Sandberg and Zuckerberg. “I am really sad about Facebook,” it began. “I got involved with the company more than a decade ago and have taken great pride and joy in the company’s success … until the past few months. Now I am disappointed. I am embarrassed. I am ashamed.”
It’s not easy to recognize that the machine you’ve built to bring people together is being used to tear them apart, and Mark Zuckerberg’s initial reaction to Trump’s victory, and Facebook’s possible role in it, was one of peevish dismissal. Executives remember panic the first few days, with the leadership team scurrying back and forth between Zuckerberg’s conference room (called the Aquarium) and Sandberg’s (called Only Good News), trying to figure out what had just happened and whether they would be blamed. Then, at a conference two days after the election, Zuckerberg argued that filter bubbles are worse offline than on Facebook and that social media hardly influences how people vote. “The idea that fake news on Facebook—of which, you know, it’s a very small amount of the content—influenced the election in any way, I think, is a pretty crazy idea,” he said.
Zuckerberg declined to be interviewed for this article, but people who know him well say he likes to form his opinions from data. And in this case he wasn’t without it. Before the interview, his staff had worked up a back-of-the-envelope calculation showing that fake news was a tiny percentage of the total amount of election-related content on the platform. But the analysis was just an aggregate look at the percentage of clearly fake stories that appeared across all of Facebook. It didn’t measure their influence or the way fake news affected specific groups. It was a number, but not a particularly meaningful one.
Zuckerberg’s comments did not go over well, even inside Facebook. They seemed clueless and self-absorbed. “What he said was incredibly damaging,” a former executive told WIRED. “We had to really flip him on that. We realized that if we didn’t, the company was going to start heading down this pariah path that Uber was on.”
A week after his “pretty crazy” comment, Zuckerberg flew to Peru to give a talk to world leaders about the ways that connecting more people to the internet, and to Facebook, could reduce global poverty. Right after he landed in Lima, he posted something of a mea culpa. He explained that Facebook did take misinformation seriously, and he presented a vague seven-point plan to tackle it. When a professor at the New School named David Carroll saw Zuckerberg’s post, he took a screenshot. Alongside it on Carroll’s feed ran a headline from a fake CNN with an image of a distressed Donald Trump and the text “DISQUALIFIED; He’s GONE!”
At the conference in Peru, Zuckerberg met with a man who knows a few things about politics: Barack Obama. Media reports portrayed the encounter as one in which the lame-duck president pulled Zuckerberg aside and gave him a “wake-up call” about fake news. But according to someone who was with them in Lima, it was Zuckerberg who called the meeting, and his agenda was merely to convince Obama that, yes, Facebook was serious about dealing with the problem. He truly wanted to thwart misinformation, he said, but it wasn’t an easy issue to solve.
One employee compared Zuckerberg to Lennie in Of Mice and Men—a man with no understanding of his own strength.
Meanwhile, at Facebook, the gears churned. For the first time, insiders really began to question whether they had too much power. One employee told WIRED that, watching Zuckerberg, he was reminded of Lennie in Of Mice and Men, the farm-worker with no understanding of his own strength.
Very soon after the election, a team of employees started working on something called the News Feed Integrity Task Force, inspired by a sense, one of them told WIRED, that hyperpartisan misinformation was “a disease that’s creeping into the entire platform.” The group, which included Mosseri and Anker, began to meet every day, using whiteboards to outline different ways they could respond to the fake-news crisis. Within a few weeks the company announced it would cut off advertising revenue for ad farms and make it easier for users to flag stories they thought false.
In December the company announced that, for the first time, it would introduce fact-checking onto the platform. Facebook didn’t want to check facts itself; instead it would outsource the problem to professionals. If Facebook received enough signals that a story was false, it would automatically be sent to partners, like Snopes, for review. Then, in early January, Facebook announced that it had hired Campbell Brown, a former anchor at CNN. She immediately became the most prominent journalist hired by the company.
Soon Brown was put in charge of something called the Facebook Journalism Project. “We spun it up over the holidays, essentially,” says one person involved in discussions about the project. The aim was to demonstrate that Facebook was thinking hard about its role in the future of journalism—essentially, it was a more public and organized version of the efforts the company had begun after Murdoch’s tongue-lashing. But sheer anxiety was also part of the motivation. “After the election, because Trump won, the media put a ton of attention on fake news and just started hammering us. People started panicking and getting afraid that regulation was coming. So the team looked at what Google had been doing for years with News Lab”—a group inside Alphabet that builds tools for journalists—“and we decided to figure out how we could put together our own packaged program that shows how seriously we take the future of news.”
Facebook was reluctant, however, to issue any mea culpas or action plans with regard to the problem of filter bubbles or Facebook’s noted propensity to serve as a tool for amplifying outrage. Members of the leadership team regarded these as issues that couldn’t be solved, and maybe even shouldn’t be solved. Was Facebook really more at fault for amplifying outrage during the election than, say, Fox News or MSNBC? Sure, you could put stories into people’s feeds that contradicted their political viewpoints, but people would turn away from them, just as surely as they’d flip the dial back if their TV quietly switched them from Sean Hannity to Joy Reid. The problem, as Anker puts it, “is not Facebook. It’s humans.”
Zuckerberg’s “pretty crazy” statement about fake news caught the ear of a lot of people, but one of the most influential was a security researcher named Renée DiResta. For years, she’d been studying how misinformation spreads on the platform. If you joined an antivaccine group on Facebook, she observed, the platform might suggest that you join flat-earth groups or maybe ones devoted to Pizzagate—putting you on a conveyor belt of conspiracy thinking. Zuckerberg’s statement struck her as wildly out of touch. “How can this platform say this thing?” she remembers thinking.
Roger McNamee, meanwhile, was getting steamed at Facebook’s response to his letter. Zuckerberg and Sandberg had written him back promptly, but they hadn’t said anything substantial. Instead he ended up having a months-long, ultimately futile set of email exchanges with Dan Rose, Facebook’s VP for partnerships. McNamee says Rose’s message was polite but also very firm: The company was doing a lot of good work that McNamee couldn’t see, and in any event Facebook was a platform, not a media company.
“And I’m sitting there going, ‘Guys, seriously, I don’t think that’s how it works,’” McNamee says. “You can assert till you’re blue in the face that you’re a platform, but if your users take a different point of view, it doesn’t matter what you assert.”
As the saying goes, heaven has no rage like love to hatred turned, and McNamee’s concern soon became a cause—and the beginning of an alliance. In April 2017 he connected with a former Google design ethicist named Tristan Harris when they appeared together on Bloomberg TV. Harris had by then gained a national reputation as the conscience of Silicon Valley. He had been profiled on 60 Minutes and in The Atlantic, and he spoke eloquently about the subtle tricks that social media companies use to foster an addiction to their services. “They can amplify the worst aspects of human nature,” Harris told WIRED this past December. After the TV appearance, McNamee says he called Harris up and asked, “Dude, do you need a wingman?”
The next month, DiResta published an article comparing purveyors of disinformation on social media to manipulative high-frequency traders in financial markets. “Social networks enable malicious actors to operate at platform scale, because they were designed for fast information flows and virality,” she wrote. Bots and sock puppets could cheaply “create the illusion of a mass groundswell of grassroots activity,” in much the same way that early, now-illegal trading algorithms could spoof demand for a stock. Harris read the article, was impressed, and emailed her.
The three were soon out talking to anyone who would listen about Facebook’s poisonous effects on American democracy. And before long they found receptive audiences in the media and Congress—groups with their own mounting grievances against the social media giant.
Even at the best of times, meetings between Facebook and media executives can feel like unhappy family gatherings. The two sides are inextricably bound together, but they don’t like each other all that much. News executives resent that Facebook and Google have captured roughly three-quarters of the digital ad business, leaving the media industry and other platforms, like Twitter, to fight over scraps. Plus they feel like the preferences of Facebook’s algorithm have pushed the industry to publish ever-dumber stories. For years, The New York Times resented that Facebook helped elevate BuzzFeed; now BuzzFeed is angry about being displaced by clickbait.
And then there’s the simple, deep fear and mistrust that Facebook inspires. Every publisher knows that, at best, they are sharecroppers on Facebook’s massive industrial farm. The social network is roughly 200 times more valuable than the Times. And journalists know that the man who owns the farm has the leverage. If Facebook wanted to, it could quietly turn any number of dials that would harm a publisher—by manipulating its traffic, its ad network, or its readers.
Emissaries from Facebook, for their part, find it tiresome to be lectured by people who can’t tell an algorithm from an API. They also know that Facebook didn’t win the digital ad market through luck: It built a better ad product. And in their darkest moments, they wonder: What’s the point? News makes up only about 5 percent of the total content that people see on Facebook globally. The company could let it all go and its shareholders would scarcely notice. And there’s another, deeper problem: Mark Zuckerberg, according to people who know him, prefers to think about the future. He’s less interested in the news industry’s problems right now; he’s interested in the problems five or 20 years from now. The editors of major media companies, on the other hand, are worried about their next quarter—maybe even their next phone call. When they bring lunch back to their desks, they know not to buy green bananas.
This mutual wariness—sharpened almost to enmity in the wake of the election—did not make life easy for Campbell Brown when she started her new job running the nascent Facebook Journalism Project. The first item on her to-do list was to head out on yet another Facebook listening tour with editors and publishers. One editor describes a fairly typical meeting: Brown and Chris Cox, Facebook’s chief product officer, invited a group of media leaders to gather in late January 2017 at Brown’s apartment in Manhattan. Cox, a quiet, suave man, sometimes referred to as “the Ryan Gosling of Facebook Product,” took the brunt of the ensuing abuse. “Basically, a bunch of us just laid into him about how Facebook was destroying journalism, and he graciously absorbed it,” the editor says. “He didn’t much try to defend them. I think the point was really to show up and seem to be listening.” Other meetings were even more tense, with the occasional comment from journalists noting their interest in digital antitrust issues.
As bruising as all this was, Brown’s team became more confident that their efforts were valued within the company when Zuckerberg published a 5,700-word corporate manifesto in February. He had spent the previous three months, according to people who know him, contemplating whether he had created something that did more harm than good. “Are we building the world we all want?” he asked at the beginning of his post, implying that the answer was an obvious no. Amid sweeping remarks about “building a global community,” he emphasized the need to keep people informed and to knock out false news and clickbait. Brown and others at Facebook saw the manifesto as a sign that Zuckerberg understood the company’s profound civic responsibilities. Others saw the document as blandly grandiose, showcasing Zuckerberg’s tendency to suggest that the answer to nearly any problem is for people to use Facebook more.
Shortly after issuing the manifesto, Zuckerberg set off on a carefully scripted listening tour of the country. He began popping into candy shops and dining rooms in red states, camera crew and personal social media team in tow. He wrote an earnest post about what he was learning, and he deflected questions about whether his real goal was to become president. It seemed like a well-meaning effort to win friends for Facebook. But it soon became clear that Facebook’s biggest problems emanated from places farther away than Ohio.
One of the many things Zuckerberg seemed not to grasp when he wrote his manifesto was that his platform had empowered an enemy far more sophisticated than Macedonian teenagers and assorted low-rent purveyors of bull. As 2017 wore on, however, the company began to realize it had been attacked by a foreign influence operation. “I would draw a real distinction between fake news and the Russia stuff,” says an executive who worked on the company’s response to both. “With the latter there was a moment where everyone said ‘Oh, holy shit, this is like a national security situation.’”
That holy shit moment, though, didn’t come until more than six months after the election. Early in the campaign season, Facebook was aware of familiar attacks emanating from known Russian hackers, such as the group APT28, which is believed to be affiliated with Moscow. They were hacking into accounts outside of Facebook, stealing documents, then creating fake Facebook accounts under the banner of DCLeaks, to get people to discuss what they’d stolen. The company saw no signs of a serious, concerted foreign propaganda campaign, but it also didn’t think to look for one.
During the spring of 2017, the company’s security team began preparing a report about how Russian and other foreign intelligence operations had used the platform. One of its authors was Alex Stamos, head of Facebook’s security team. Stamos was something of an icon in the tech world for having reportedly resigned from his previous job at Yahoo after a conflict over whether to grant a US intelligence agency access to Yahoo servers. According to two people with direct knowledge of the document, he was eager to publish a detailed, specific analysis of what the company had found. But members of the policy and communications team pushed back and cut his report way down. Sources close to the security team suggest the company didn’t want to get caught up in the political whirlwind of the moment. (Sources on the politics and communications teams insist they edited the report down, just because the darn thing was hard to read.)
On April 27, 2017, the day after the Senate announced it was calling then FBI director James Comey to testify about the Russia investigation, Stamos’ report came out. It was titled “Information Operations and Facebook,” and it gave a careful step-by-step explanation of how a foreign adversary could use Facebook to manipulate people. But there were few specific examples or details, and there was no direct mention of Russia. It felt bland and cautious. As Renée DiResta says, “I remember seeing the report come out and thinking, ‘Oh, goodness, is this the best they could do in six months?’”
One month later, a story in Time suggested to Stamos’ team that they might have missed something in their analysis. The article quoted an unnamed senior intelligence official saying that Russian operatives had bought ads on Facebook to target Americans with propaganda. Around the same time, the security team also picked up hints from congressional investigators that made them think an intelligence agency was indeed looking into Russian Facebook ads. Caught off guard, the team members started to dig into the company’s archival ads data themselves.
Eventually, by sorting transactions according to a series of data points—Were ads purchased in rubles? Were they purchased within browsers whose language was set to Russian?—they were able to find a cluster of accounts, funded by a shadowy Russian group called the Internet Research Agency, that had been designed to manipulate political opinion in America. There was, for example, a page called Heart of Texas, which pushed for the secession of the Lone Star State. And there was Blacktivist, which pushed stories about police brutality against black men and women and had more followers than the verified Black Lives Matter page.
Numerous security researchers express consternation that it took Facebook so long to realize how the Russian troll farm was exploiting the platform. After all, the group was well known to Facebook. Executives at the company say they’re embarrassed by how long it took them to find the fake accounts, but they point out that they were never given help by US intelligence agencies. A staffer on the Senate Intelligence Committee likewise voiced exasperation with the company. “It seemed obvious that it was a tactic the Russians would exploit,” the staffer says.
When Facebook finally did find the Russian propaganda on its platform, the discovery set off a crisis, a scramble, and a great deal of confusion. First, due to a miscalculation, word initially spread through the company that the Russian group had spent millions of dollars on ads, when the actual total was in the low six figures. Once that error was resolved, a disagreement broke out over how much to reveal, and to whom. The company could release the data about the ads to the public, release everything to Congress, or release nothing. Much of the argument hinged on questions of user privacy. Members of the security team worried that the legal process involved in handing over private user data, even if it belonged to a Russian troll farm, would open the door for governments to seize data from other Facebook users later on. “There was a real debate internally,” says one executive. “Should we just say ‘Fuck it’ and not worry?” But eventually the company decided it would be crazy to throw legal caution to the wind “just because Rachel Maddow wanted us to.”
Ultimately, a blog post appeared under Stamos’ name in early September announcing that, as far as the company could tell, the Russians had paid Facebook $100,000 for roughly 3,000 ads aimed at influencing American politics around the time of the 2016 election. Every sentence in the post seemed to downplay the substance of these new revelations: The number of ads was small, the expense was small. And Facebook wasn’t going to release them. The public wouldn’t know what they looked like or what they were really aimed at doing.
This didn’t sit at all well with DiResta. She had long felt that Facebook was insufficiently forthcoming, and now it seemed to be flat-out stonewalling. “That was when it went from incompetence to malice,” she says. A couple of weeks later, while waiting at a Walgreens to pick up a prescription for one of her kids, she got a call from a researcher at the Tow Center for Digital Journalism named Jonathan Albright. He had been mapping ecosystems of misinformation since the election, and he had some excellent news. “I found this thing,” he said. Albright had started digging into CrowdTangle, one of the analytics platforms that Facebook uses. And he had discovered that the data from six of the accounts Facebook had shut down were still there, frozen in a state of suspended animation. There were the posts pushing for Texas secession and playing on racial antipathy. And then there were political posts, like one that referred to Clinton as “that murderous anti-American traitor Killary.” Right before the election, the Blacktivist account urged its supporters to stay away from Clinton and instead vote for Jill Stein. Albright downloaded the most recent 500 posts from each of the six groups. He reported that, in total, their posts had been shared more than 340 million times.
To McNamee, the way the Russians used the platform was neither a surprise nor an anomaly. “They find 100 or 1,000 people who are angry and afraid and then use Facebook’s tools to advertise to get people into groups,” he says. “That’s exactly how Facebook was designed to be used.”
McNamee and Harris had first traveled to DC for a day in July to meet with members of Congress. Then, in September, they were joined by DiResta and began spending all their free time counseling senators, representatives, and members of their staffs. The House and Senate Intelligence Committees were about to hold hearings on Russia’s use of social media to interfere in the US election, and McNamee, Harris, and DiResta were helping them prepare. One of the early questions they weighed in on was the matter of who should be summoned to testify. Harris recommended that the CEOs of the big tech companies be called in, to create a dramatic scene in which they all stood in a neat row swearing an oath with their right hands in the air, roughly the way tobacco executives had been forced to do a generation earlier. Ultimately, though, it was determined that the general counsels of the three companies—Facebook, Twitter, and Google—should head into the lion’s den.
And so on November 1, Colin Stretch arrived from Facebook to be pummeled. During the hearings themselves, DiResta was sitting on her bed in San Francisco, watching them with her headphones on, trying not to wake up her small children. She listened to the back-and-forth in Washington while chatting on Slack with other security researchers. She watched as Marco Rubio smartly asked whether Facebook even had a policy forbidding foreign governments from running an influence campaign through the platform. The answer was no. Rhode Island senator Jack Reed then asked whether Facebook felt an obligation to individually notify all the users who had seen Russian ads that they had been deceived. The answer again was no. But maybe the most threatening comment came from Dianne Feinstein, the senior senator from Facebook’s home state. “You’ve created these platforms, and now they’re being misused, and you have to be the ones to do something about it,” she declared. “Or we will.”
After the hearings, yet another dam seemed to break, and former Facebook executives started to go public with their criticisms of the company too. On November 8, billionaire entrepreneur Sean Parker, Facebook’s first president, said he now regretted pushing Facebook so hard on the world. “I don’t know if I really understood the consequences of what I was saying,” h
If the latest seed-funded startups have their way, this is what your future will look like.
You’ll find your mortgage through a company named Morty, refill your contact lenses with Waldo and get your cannabis news from Herb. (Which is not to be confused with Bud, the startup that handles your banking.)
Notice any patterns here? Yes, first names, foods and animals have been quite popular lately with founders choosing startup names.
Those are a few of the top naming trends Crunchbase News identified in our latest perusal of seed-stage startups. The project involved parsing through names of more than 1,000 startups that raised seed rounds of $200,000 and up in the past nine months.
This data crunch was an update (see our methodology section below) to a prior overview of the often bizarre naming trends that startups follow. At that time, we found top trends included putting AI into your name, using popular first names and employing creative misspellings of common words.
Most of these things are still popular in startup naming, but some more than others. Adding AI at the end of a name, for instance, is still common, but seems to be waning some. Creative misspellings are still getting done, but less frequently.
Meanwhile, other naming styles are getting more fashionable. Below, we take a look at what’s hot now and what might be in vogue next.
The first-name trend seems to be intensifying, diversifying and creeping into more sectors. Last year, we started noticing a proliferation of chatbot startups using first names. More recently, the first-name trend has pervaded insurance, cannabis, fintech and a whole lot of other spaces.
First names that startups are using are getting nerdier and less common. Morty, for example, is commonly short for Mortimer, which peaked in popularity in the 1880s. It was most recently ranked No. 12,982 on the list of most common baby names. Then there’s Fritz, a learning software developer with a name that also hit its peak in the late 1800s. Last year it ranked No. 4,732.
Another mini-trend that we’d like to see expand is the use of startup names based on textures.
This is a stark contrast with the chatbot crowd. They tended to go with popular monikers, like Ava, Aiden and Riley, that rank high on the latest baby name lists. Some of the more offbeat names, however, do tie into their sectors. Herb has been used as slang for marijuana. Morty, for instance, shares a first syllable with mortgage.
It’s also noteworthy that many startups go with single-word names. This is a shift from the old school practice of combining a first name with another word, as in well-known brands like Trader Joe’s and Sam’s Club.
Startups also like naming themselves after foods lately. Of course, this isn’t an entirely new phenomenon, and it has worked well before. Apple named itself after a fruit and later became the world’s most valuable technology company.
It should be noted that the food names we refer to here are for companies that, like Apple, have nothing to do with the food industry. Carrot Fertility, which raised $3.6 million in seed funding last fall, for example, offers insurance policies for employers to help cover costs of workers’ fertility treatments. MoBagel is a data science startup. Parsley Health provides primary care. The list goes on.
One of the nice things about naming yourself after a food is that these are general purpose nouns that don’t seem to raise a lot of copyright issues. Vegetables and baked goods aren’t going to sue you for misappropriating their names.
Animal names are also good from a trademark perspective. Plus, with an animal name you can also create a cute logo featuring the creature.
Those may be some of the reasons why animal names are also in vogue lately with startups developing both consumer-facing and backend technologies. The formula is also pretty straightforward: pick an animal and then add another descriptive word.
There are plenty of textures out there that don’t have a funded startup associated with them, including spongy, slimy, gelatinous, puffy, gloppy, stringy, pasty, hairy and fluffy.
Of course, for most of the animal-monikered startups, mascots have nothing to do with the underlying businesses. MortgageHippo obviously doesn’t expect hippopotamuses to use its mortgage tool, and Purple Squirrel doesn’t cater to furry-tailed job seekers.
That said, we do worry about the animal kingdom theme getting a bit overused. For instance, MortgageHippo and Hippo Insurance were both funded in the past couple of years.
Another interesting trend is that many startups hopping on the fashionable name bandwagon are in the insurance sector. We’ve seen a huge spike in insurance startup funding over the past couple of years, with many upstarts looking to re-architect the industry to appeal to millennial consumers. They have names like Oscar, Lemonade and The Zebra.
Much of this activity is being bankrolled by the largest insurance companies, most of which are a century old and tend to have dull names that sound like, well, insurance companies. So don’t be surprised if the trendy new insurer is actually part-owned by the old boring one your parents complained about.
It’s not too late to get in on this trend, either. An analysis of Crunchbase funding archives reveals there are plenty of textures out there that don’t have a funded startup associated with them, including spongy, slimy, gelatinous, puffy, gloppy, stringy, pasty, hairy and fluffy, to name a few.
We altered the methodology for this naming piece since the last one. Previously, we looked at startups based on founding date. This time, we looked based on closed seed rounds of $200,000 or more in the past year for companies founded in 2015 or later.
John Flannery hardly needs any more headaches.
But at a time when General Electric Co. is facing what amounts to an existential crisis, a $31 billion deficit in its pension plan may complicate any turnaround that involves a breakup of the 126-year-old icon of American capitalism.
Divvying up the obligations won’t be easy. After all, GE owes benefits to at least 619,000 people. And retirees aren’t the only ones at risk. Ideally, breaking up a conglomerate as sprawling as GE would unlock value for shareholders, who have seen their stock fall 40 percent since the CEO took the reins from Jeffrey Immelt in August. Stronger divisions wouldn’t be dragged down by weaker ones, and each business would stand on its own financially.
Yet GE’s pension deficit has gotten so big, a misstep could risk leaving the separate units with commitments they ultimately can’t afford to pay.
“It can be difficult and tricky, especially when you’re substantially underfunded like GE,” said Georgeann Peters, a partner at BakerHostetler. “If it were a well-funded plan, no one would have too many qualms about it. Being materially underfunded and being such a material potential liability, I think it will be a major factor in any restructuring.”
In an emailed statement to Bloomberg, GE said that “in the evaluation of any alternative, we always consider the synergies and dis-synergies, and we only pursue things that generate meaningful value for our shareholders.”
Flannery, who has cut costs and pledged to sell assets, renewed talk of a breakup among analysts after GE disclosed a $6.2 billion charge tied to an old portfolio of long-term-care insurance. The setback, which has drawn scrutiny from regulators, was the latest for a company that’s struggled with flagging demand and suffered one of its biggest annual losses in recent memory.
At the time, the CEO said all options were on the table and emphasized an earlier plan to focus GE on jet engines, power-generation equipment and health-care machines. Flannery said he would update investors in the spring.
Although Flannery made scant mention of the underfunded plan during last month’s conference call, GE said in November it planned to borrow $6 billion to help plug its pension hole, the biggest among major U.S. companies. Like many others across corporate America, GE’s pension returns have been pressured by low interest rates that prevailed in the aftermath of the financial crisis.
To make matters worse, the liabilities swelled under Immelt as GE spent more than $45 billion in recent years on buybacks to win over Wall Street.
Of course, in its current form, GE can kick the can down the road because it has decades before some liabilities come due. What ultimately happens to the company’s structure is anyone’s guess. But most lawyers and actuaries agree that if Flannery does pursue a breakup, it might not be as simple as separating the pensions and dividing obligations across its business lines, particularly as GE has undergone a number of internal reorganizations over the years.
For instance, GE’s health-care division employed 54,000 workers at the end of 2016. While that’s almost as many as its power unit, the health group generated a third less revenue. The renewable energy division had just 2,000 more employees than the transportation unit, but almost double the sales. Then there’s the almost 300,000 retirees who currently receive defined pension benefits, as well as the 227,000 ex-GE employees with vested plans. And of course, not every current employee has a pension.
“That’s the challenge and hurdle to all of this — the leverage and liabilities they have on this balance sheet make it hard to separate businesses that are pretty bifurcated fundamentally,” said Steve Tusa, an analyst with JPMorgan Chase & Co. The size of GE’s pension deficit is “material, it’s meaningful.”
General Motors Co. serves as a cautionary tale. Back in 1999, the automaker spun off Delphi Corp., its auto-parts arm, along with its pension. When Delphi went bankrupt in 2005, GM was forced to take back some liabilities. But it, too, went bust during the financial crisis, leaving the underfunded plans for 70,000 Delphi workers and retirees in the hands of the Pension Benefit Guaranty Corp., a government agency responsible for backstopping troubled plans.
Because of the size of Delphi’s pension deficit, which exceeded $6 billion, and a legal limit on how much the PBGC could cover, some retirees were left with less than what they were promised.
That’s not to suggest GE retirees share the same fate. The PBGC, which has legal authority to terminate private pension plans and recoup assets, has historically focused on companies closer to insolvency. While Moody’s Investors Service downgraded GE one level to A2, the company’s credit rating is still five levels above junk. GE also has cash reserves of $82 billion, which it could use to plug the pension shortfall if it wanted to.
“If a company is spinning off a financially sound unit with a proportionate share of the pension liabilities, it makes it a lot easier,” said Donald Carleen, a lawyer at Fried Frank. “If an over-weighted portion of the pension liabilities will end up with a business unit that is weaker financially, the PBGC will want to take a closer look.”
More often, the agency works to ensure pension benefits are protected when a company decides to restructure, says Sanford Rich, the PBGC’s former chief of negotiations and restructuring, a job Karen Morris took over in 2016.
Under its early warning program, the agency can usually get companies to the negotiating table by dangling its power to terminate any underfunded plans. (Some have dubbed it the “nuclear option,” which the PBGC has never used.)
Both Alcoa, which spun off its aluminum-parts business in 2016, and Sears Holdings Corp., the embattled retailer, forged deals with the PBGC to shore up their pension plans. A PBGC spokesman said the agency hasn’t contacted GE about its situation.
“They want to make sure the pension liabilities are housed in an entity that can afford them,” said Laura Rosenberg, senior vice president of Fiduciary Counselors Inc., who previously worked at the PBGC.
For GE, any agreement with the agency could leave Flannery with less wiggle room as he tries to revive the industrial behemoth’s fortunes, not to mention less money to put toward shareholder rewards.
“Their plan is big enough that this is certainly a major issue for them,” said John Lowell, a partner and actuary at October Three Consulting. “It’s legally more difficult to do it if they’re underfunded.”
GlaxoSmithKline Plc and Reckitt Benckiser Group Plc are the only companies to have submitted non-binding bids for Pfizer Inc.’s consumer business after rival candidates walked away, according to people familiar with the matter.
Pfizer plans to open a data room for Glaxo and Reckitt to start due diligence on the assets before submitting final offers in the next few weeks, the people said, asking not to be identified because the matter is private. French drugmaker Sanofi, Switzerland’s Nestle SA and health care giant Johnson & Johnson were among companies to consider and then decide against bidding for the business, the people said.
The deadline for non-binding offers for the business, which makes well-known brands including the pain reliever Advil, ChapStick lip balm and the dietary supplement Centrum, was Feb. 1, the people said. The unit could fetch $15 billion to $20 billion, people familiar with the matter have said. Potential buyers have expressed concerns about stagnant sales at the division as well as the challenge from online competitors such as Amazon.com Inc, the people said.
Representatives for Glaxo and Reckitt declined to comment. A Sanofi spokesman also said he had no comment. A spokeswoman for Nestle wasn’t immediately available to comment. A spokesman for J&J confirmed that the company had withdrawn from the bidding process and declined to comment further.
A spokeswoman for Pfizer said the company is continuing to evaluate a range of options for its consumer healthcare business, including a full or partial separation from Pfizer through a spin-off, sale or other transaction, and it may still opt to keep the business. The company expects to reach a decision in 2018, she said.
Pfizer first announced a review of the business in October. A sale would help the U.S. drug giant raise billions of dollars in cash for acquisitions and streamline operations to focus on other growth areas.
Sales at the consumer-products business were little changed in the fourth quarter from a year earlier at $950 million. Full-year sales at the unit advanced by 2 percent to $3.47 billion.
Glaxo Chief Executive Officer Emma Walmsley said at a conference in San Francisco last month that the company’s top priority is the pharmaceutical business and that it doesn’t need the Pfizer assets though the unit would be complementary.
When more than 80 of China’s wealth managers gathered recently at the Shangri-La hotel on Singapore’s resort island of Sentosa, the chatter during tea breaks kept returning to one theme: Hong Kong is starting to be eclipsed by Singapore as the favorite destination for the wealth of China’s rich.
At stake for banks in both cities is a huge pile of money. China’s high-net-worth individuals control an estimated $5.8 trillion—almost half of it already offshore, according to consulting firm Capgemini SE. For some, the city-state of Singapore is preferable because it’s at a safer distance from any potential scrutiny from authorities in Beijing, according to interviews with several wealth managers. Multiple private banking sources in Singapore, who would not comment on the record because of the sensitivity of the subject, report seeing increased flows at the expense of Hong Kong.
The rich may be feeling exposed by changing banking practices. Hong Kong has signed tax transparency agreements that for the first time last year required all banks to report their account holders’ information to Hong Kong tax officials, in preparation for giving that information to 75 jurisdictions, including mainland China. Singapore will have similar agreements with 61 jurisdictions. But they don’t include either Hong Kong or Beijing, meaning its accounts and account holders aren’t visible to the Chinese government. “Many rich people from the mainland believe Hong Kong is still a part of China, after all,” says Xia Chun, chief research officer at Noah Holdings Ltd. of Hong Kong, an asset management service provider. “They think there’s no difference in putting money in Hong Kong, compared to Beijing.”
At the same time, more Chinese banks in Hong Kong are “trying to synchronize their internal systems with those on the mainland to improve service efficiency,” says Eva Law, the Hong Kong-based founder of the Association of Private Bankers in Greater China Region. “This also means the clients’ information will become more transparent and the mainland can identify fund flows more easily, or will have fuller and faster access to your asset holdings, thus enabling easier investigation and tracing.”
Overall, Hong Kong remains the primary destination for China’s offshore money, according to a Capgemini survey, followed by Singapore and New York. Yet the number of Chinese high-net-worth individuals who view Hong Kong as their preferred overseas place of investment is down to 53 percent, from 71 percent two years ago, according to a survey in July by Bain & Co. More than 20 percent favor Singapore, up from 15 percent two years ago. “Singapore is the Zurich of the East,” says Xiao Xiao, the Beijing-based chief operating officer of Chinese wealth manager Fortunes Capital.
“We see Singapore, not Hong Kong, as the bridgehead of China’s investment overseas,” says Li Qinghao, co-founder of NewBanker Tech Consulting, which organized the Sentosa conference last year. About 78 percent of S$2.7 trillion ($1.9 trillion) in assets under management in Singapore comes from overseas sources. Morgan Stanley, JPMorgan Chase & Co., and other firms with big private banking operations are building up their teams of China relationship managers in Singapore.
China has been tightening its grip on Hong Kong. A year ago, Chinese financier Xiao Jianhua was reported by local media to have been seized from a Hong Kong hotel by Chinese authorities and taken to the mainland. The incident followed the disappearance of several Hong Kong booksellers who sold books critical of China’s Communist Party and were reported to have been taken involuntarily across the border.
Then there are the increased restrictions on Hong Kong’s financial practices, such as a 2016 crackdown on sales of certain types of insurance products to mainland Chinese. The products pay dividends over a number of years and are essentially viewed as investments—and potentially a way to send money out of China and evade capital controls. “The Hong Kong market is now heavily affected by mainland China,” says Guan Huanyu, president of Beijing-based wealth manager Zhenghe Holdings, who attended the Sentosa event.
While Hong Kong’s Securities & Futures Commission doesn’t break down the origin of funds, its data show that growth in the city’s private banking business has been slowing. Hong Kong logged 10.7 percent growth in private banking assets under management in 2016, down from 18 percent in 2015.
Singapore has additional attractions for the wealthy of China. Mandarin is one of its four official languages, and it has world-class health facilities and international schools. Not far from the Shangri-La Hotel, Sentosa’s casinos are a popular draw for Chinese tourists. Mainland Chinese were the largest foreign buyers of luxury properties in Singapore during the first half of last year, according to consultancy Cushman & Wakefield. Real estate is far cheaper than in Hong Kong.
But mainly, the rich like to diversify—not only among asset classes, but among political regimes. “Most of our clients have undergone a shift from poor to rich,” says Kou Quan, vice president at Tianjin-based Xinmao S&T Investment Group. “And they’re all worried about becoming poor again.”
Almost all the buzz about Nusr-et, set in the former China Grill space in prime Midtown Manhattan, has been negative. The labeled its review “Public Rip-Off No. 1” and noted that after a $521.45 dinner for three, critic Steve Cuozzo still wanted a snack. referenced mundane, rather tough steak, terrible cocktails, and $9 bottles of water because the restaurant declines requests for tap.
The restaurant is home to Turkish butcher sensation Nusret Gökçe, known as Salt Bae. He has close to 11 million Instagram followers, famous friends such as DJ Khaled (Khaled Mohamed Khaled), and a panoramic way of seasoning steaks that is the most notable culinary meme since Emeril Lagasse said “Bam!” One re-posted YouTube video of his signature move—a crane pose-like sprinkle of salt on a finished steak—has racked up over 4 million views.
Although it’s my job as food editor at Bloomberg Pursuits to seek out good food, I can’t resist a train wreck of a restaurant.
In advance of my visit to Nusr-et, the signs for that kind of meal were auspicious. Hours before my dinner came news that the restaurant was under investigation by New York’s Health Department: Salt Bae would now have to wear gloves when salting meat. My dinner guest was Robert Sietsema, senior critic for Eater.com and one of the early visitors to Salt Bae. (His less-harsh-than-most review took the position that a meal there is performance art as much as a steakhouse spread. Spoiler alert: I agree.)
The first thing you see when you walk into the restaurant is a circular bar surrounded by red velvet ropes and staffed by bartenders in leather aprons; you could be at a nightclub. Above is a monster cartoon image of the chef sprinkling salt into the air. On the cocktail list is a #Saltbae Old Fashioned, made with ginger syrup and Scotch, instead of bourbon—quite good, if pricey at $21. Yet its actual cost is $26.64: The restaurant adds an 18 percent service charge, but you wouldn’t know that without asking since it doesn’t deliver itemized bills, and what you’re asked to sign has a very visible gratuity line.
Almost immediately upon sitting down, expect to make the acquaintance of the guy wheeling the “meat sushi” cart. Unless you’re good at saying no, you will find yourself watching a meat sushi performance that comprises wrapping thinly sliced raw tenderloin around some undercooked, under-seasoned rice, brushing the top with teriyaki glaze, and incinerating it with a blow torch for a good 30 seconds. It’s an early occasion for guests to whip out cell phone cameras (and maybe a warning to tie back any long hair.)
That’s nothing compared to the effect when the chef makes an appearance in his signature look: fitted, v-necked, white T-shirt with slicked coiff. It’s as if Rihanna strolled in. Initially, there’s no salt sprinkling. Salt Bae simply works the room, shaking hands. Robert and I begin to worry: Would the Health Department threat end the seasoning show? Could a high-styled handshake be Salt Bae’s new meme?
It turns out that a lot has changed in the week since Robert first visited. Tap water was initially not available. Now it is, though you have to ask, and it’s poured from a Voss water bottle so other tables don’t get the wrong idea. Burgers were initially served naked, with no accompaniments; now a pile of cold, shoestring fries snuggles next to the halved burger.
Most important, the chefs have stopped overcooking the meat. Initial reports were that, no matter what you asked for, the beef arrived brown and medium. Now a medium-rare rib-eye is actually rare in the middle, as is the burger.
One thing that hasn’t changed is the upsell.
Once it becomes apparent that fries would be served with our burger, we cancel our $15 order for them. The server recommends mashed potatoes instead (also $15). Then our salmon arrives on a bed of mashed potatoes. We end up with spinach—actually quite good, just out of the pan and nicely creamy—and asparagus, which is raw, unpeeled and not good at all. The salmon disappoints, unless you’re fond of the thin, fishy strips that are optional add-ons for a Caesar salad at a mall. (FYI, it’s one of the only non-beef options; the menu features no chicken.)
Like everyone else, we’re there for the meat and the show that comes with it. The majority of the beef is wagyu, on display at a wrap-around butcher case in the middle of the dining room. The waiters will tell you about the quality of the New Zealand beef, how it ranks 8!—9!—on the Wagyu scale; no two servers pitch the same story.
Still, our $100 rib-eye, though a little puny looking, had a great chew and caramelized char. (You can’t choose the weight of any of the steaks, but some cuts have options for the number of people they’re supposed to serve.) The $30 burger actually seems like a deal; the two-inch patty is very coarsely ground, so it’s part steak and supremely meaty. These are among the cheaper items on the menu. There’s also saslik (Turkish spice-marinated tenderloin cubes) for $70, a rack of lamb for $250, and most significant, the Saltbae tomahawk marinated in mustard, all yours for $275.
You want to hate the place, to dismiss it. There are better, less-expensive, steaks just a few blocks away, dry-aged and funkier than what you’ll find at Nusr-et.
Yet, when Salt Bae shows up to slice and season our steak, it’s embarrassingly thrilling, like watching your favorite cheesy movie. He poses for infinite pictures. Apart from a few short exchanges, he’s a silent presence. He doesn’t seem like a guy who owns the place; he’s more like a performer who expertly works the room, giving nothing of himself away. There’s not a moment that the crowd—a 50/50 mix of business men and women in jackets and tourists in branded sports apparel—isn’t hoisting a camera phone in his direction.
As we’re settling our $286.74 check, a family of four with a teenage son sits down next to us; they all get burgers. , we think, Then a tomahawk arrives at their table. Time passes, with no sign of Salt Bae. The family waits, phones in hand.
“They need a Salt Bae double,” murmurs Robert. Then, he appears, a last-minute Santa Claus of steak, pulling on a fresh pair of black gloves. Salt Bae squats and begins slicing dramatically, running his knife through the meat to cut out the bone, all positioned so the kid can take a video selfie. The meat gets an additional flourish of salt. The cameras don’t stop flashing.
The controversy over Volkswagen AG’s diesel-emissions cheating took another twist when the carmaker apologized for a test that exposed monkeys to engine fumes to study effects of the exhaust.
The company said the study, conducted by a research and lobby group set up by VW, Daimler AG, BMW AG and Robert Bosch GmbH, was a mistake. The New York Times reported earlier about a 2014 trial in a U.S. laboratory in which 10 monkeys inhaled diesel emissions from a VW Beetle.
“We apologize for the misconduct and the lack of judgment of individuals,” Wolfsburg, Germany-based VW said in a statement. “We’re convinced the scientific methods chosen then were wrong. It would have been better to do without such a study in the first place.”
The revelations show the rocky road for Volkswagen as it emerges from its biggest crisis after the 2015 bombshell that the company installed emissions-cheating software in some 11 million diesel vehicles to dupe official tests. They also do little to help the poor public perception of the technology under scrutiny for high pollution levels in many European cities. In an additional twist, the Beetle model used in the test was among the vehicles that were rigged to conform to test limits, The New York Times reported.
Daimler said separately it would start an investigation into the study ordered by the European Scientific Study Group for the Environment, Health and Transport Sector. BMW too distanced itself from the trial, saying it had taken no part in its design and methods. Bosch said it left the group in 2013. The study group, financed equally by the three carmakers, ceased activities last year and the project wasn’t completed, VW said.
“We believe the animal tests in this study were unnecessary and repulsive,” Daimler said in a statement. “We explicitly distance ourselves from the study.”