December 23, 2016 • 22 mins
It's been a year full of surprising developments, from Brexit to the election of Donald Trump. This week we're bringing you our pessimist's guide to 2017: What might happen in the tech industry if it all goes horribly wrong? These are the most dire scenarios our team of reporters could come up with.
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Speaker 1 (00:10):
Well, acky, here we are the final days of two
thousand sixteen, the year of Brexit, the election of Donald Trump,
the year we lost Prince and David Bowie. I mean,
I think as a journalists we did such a terrible
predicting what would happen this year? And gosh, is it
even worth trying to think about what might happen next year?
(00:33):
Maybe the problem is in these predictions were too optimistic.
We look for the things that we want to see happening. Well,
how about this, how about we think about the worst
possible things that could happen next year and beyond, and
we prepare ourselves for the that worst case scenario that's
really grim. I like it that. Let's do it. Hi,
(00:57):
I'm brad Stone, and I for our final episode of
two thousand sixteen, we bring you the Bloomberg Pessimus Guide
Global Technology Edition for two thousand seventeen. These are the
most dire doomsday scenarios are reporters could come up with
the things that might happen in the world of tech.
Hopefully not if it all goes terribly wrong. Okay, So
(01:20):
buckle in and grab some tums to settle that ominously
grumbling stomach. Or maybe that shouted tequila. Actually, we should
have a bottle of tekula with us. Now, Well, the
(01:41):
US is still digesting the shock eleection of Donald Trump.
So let's start with the potential for doom and gloom
in Washington, d C. And bringing us that scenario is
Josh Brustein. He's our reporter in New York and he's
on the line with us. Hey guys, Okay, Josh, so
scare the heck out of us. What do you have
for two seventeen? Well, the great thing um for a
pessim us in seventeen and the surveillance realm, is that
(02:03):
there's plenty to be terrified about. Whether your main fear
is mass surveillance or whether your main fear is the
intelligence agencies of the United States being being hampered in
some way or another. That is a perfect pessimas. Okay,
So there has been this ongoing debate over over the
Vice Acts, the Foreign Intelligence Surveillance Act. What do you
(02:23):
think Trump is likely to do with this law? Yeah,
I mean, I think the thing is that nobody knows
and that makes people very nervous. This law has been
very controversial. A major part of it is going to
come up for renewal, and if it's not renewed by
the end of the year, it just goes away. And Jess,
is that a bad thing? Though it is seen as
a very bad thing. If you are in the intelligence community,
(02:47):
if you're in the a c. L U or the
Electronic Frontier Foundation UM or your privacy advocate, then you
actually kind of might welcome this. They have a website
where they're actually counting down to the expiration of US
Section seven two. Of course, Trump as a candidate, you know,
was for forms of torture. I mean, it does suspect
that he will push these things to the limits. So
what does what does it mean not just for privacy
(03:10):
of of Americans, but for you know, the u S
relationship with its allies in Europe and the and the
status of American Internet companies abroad. Yeah. Absolutely, so if
Trump is more aggressive with surveillance, something you could do
even aside from this law, because the president has a
lot of power just to start claiming just start claiming
authority under executive orders, and the if he starts being
(03:34):
more aggressive or is suspected of being more aggressive, because
it's a possibility that we wouldn't really know what's going on.
You could see europe uh start to put pressure on
American companies. We've already seen a lot of skepticism about
whether American companies can protect the information they have against
the U. S. Government, and that could become a bit
(03:56):
of a hot button issue for European governments in Silicon Valley. Okay, Josh, well,
thanks for bringing that to us today. Absolutely, thank you.
All right, So, how are you feeling so far? Acky? Uh?
I really wish we brought that bottle of tequila here. Okay,
(04:25):
So let's move away from the federal government now and
take a look at blue chip tech companies. Alex, you
are our Apple reporter and you're here with us here
in San Francisco. Hi. So, Alex, welcome to the Bloomberg
Technology Pessimist Guide, where we're doing our best to ruin
everyone's day. So tell us what's the worst thing that
could happen to Apple in two thousandev So Apple could
(04:46):
lose its credit rating, and this has huge implications for
a company which has succeeded in keeping shareholders happy by
rewarding them with cash in recent years while they've been
waiting for the next blockbuster product to plump up the
share price Simco, the CEO has sold debt in order
to fund buybacks and dividends and keep investors pockets plot flush.
(05:07):
What about iPhone sales? So they continue to prop up
the company. So iPhone sales are still pretty healthy, but
they are falling and flattening. Um. So you know, there's
been at the first revenue decline in over a decade
in the most recent fiscal year. So the expectation is
one hopes that the iPhone coming next year will be
a real blockbuster product. But if for some reason it
(05:28):
isn't and it's vastly disappointing and it doesn't encourage and
huge new fresh burst of sales, then that could be
a problem for Apple. All right, So we should remember
that Apple is the world's biggest technology company, actually the
world's biggest company period. So if credit agencies suddenly decide
that Apple is no longer credit worthy, that's going to
(05:50):
have implications for every other tech company out there, every
other publicly traded company in the world. It is something
that could also have implications for someone like Microsoft. Now
the is an Apple raises this debt is because while
it has vast amounts of cash in the bank, most
of it is offshore. Of the two billion in cash
reserves that it has, two six billion dollars of that
is outside the US. In order to repatriate that money,
(06:14):
Apple has to pay a thirty five pc tax rate
in the US, which is clearly great news for the Treasury,
but not such great news for Apple itself. There is
hope that in Congress they will pass some legislation which
will reduce that tax bill, which increases the likelihood and
that Apple's willingness to repatriate money from off shore that
would essentially reduce their need to sell debt in order
to reward the shareholders and come up with that sort
(06:35):
of Donald Trump has signaled the willingness to do that, yes,
and it's been one of his big campaign pledges that
would help spare investment in the US. So there is
a real appetite to make that happen in the new
White House. Is there a chance where we might see
another miracle product category spring from Cooper Tino that averts
this worst case scenario. I mean, that's the question every
(06:55):
investor in the world is asking. We know they've looked
at cars, they've broadly scrapped the Apple s hardware part
of the car project that they're still carrying on with software.
We think they're exploring some things in glasses. We've reported
that maybe something in healthcare. We don't quite know what
that is, maybe just some sort of healthcare platform. They're
investigating a lot of avenues, but we're yet to see
anything concrete surface just yet. All right, so we just
(07:17):
asked you to tell us the worst case scenario. But
how likely is it? I was speaking to the Moody's
analyst who looks at this staff as his job, and
he said that if Apple continues to raise debt at
a faster pace than it's cash balance increases, then this
could happen within eighteen months. One hopes that the blockbuster
new iPhone next year renders such a likelihood impossible, but
(07:40):
we'll have to look and see. All right, Alex Webb,
thank you for contributing to the dark mood in the studio.
We appreciate it. Happy Christmas, sorry I should say Holidays
in New Yestian so Akey, who's up next? We are
(08:01):
now going from the blue chips to the unicorns, and
specifically we're going to talk about the worst thing that
could happen to Uber, which is now the world's biggest
private technology company. And we have Eric newcomer here in
San Francisco. Eric, Eric, Hey, thanks for having me. All right,
so scare us. What could possibly happen to our beloved Uber?
You know, what what if? What if the unicorn with
(08:23):
the biggest private valuation in the world sixty nine billion
dollars saw its valuation fall? I mean, this is a
company that's been built around sort of the ever growing
rise of that that number. We've just watched it. When
it was three billion, we thought it was crazy and
up and up and up and up. You know, there
are no short sellers against it. It's it's a number
that's climbed. So what happens if it falls? So who cares? What?
(08:44):
What would be the impact of that? The problem is
one for Uber morale would be heard. Some employees would
see their stock compensation fall dramatically. A lot of them
have sort of counted on that is why they're working
there and not sort of the lush offices of Google. Uh.
Uber's reputation would fall. You know, it's been this gigantic titan.
But I think you know the problems for Uber aside
(09:06):
it would be a bad sign for Silicon Valley. This
is a valuation that towers above all other ones. It
sort of sets the brominter for what companies should be worth.
If Uber's value is misguided, then I think a lot
of other companies are gonna have to question how much
their worth and that could have broad implications for you know,
not just these technology workers, but also the broader San
Francisco economy too. Right, maybe housing prices would come down
(09:29):
to Well, that's a good point. I mean, would a
decline in unicorn valuations be good for some people presumably
incumbents and everyone that these unicorns have been able to
use a flood of cheap money to sort of suppress
I mean, Uber has helped drown out the taxi cab market. Here.
If it turned out Uber was operating on margins that
were unsustainable, had to raise its margins, heard its valuation,
(09:53):
lower its market share, that might see we might see
a resurgence in taxi cabs, or maybe Uber sort of
steamrolled too many of them to really make a strong comeback.
I mean, it really is hard to imagine Uber making
money off of these uberpool routes. I mean they are
so cheap. Yeah, for Uber. It's all about volume, drive
price to the bottom, and then expand into pool, expand
(10:13):
into food delivery. So they know the margins are going
to be pretty thin, but they just need to do
a lot of them. Let me see this though, as
a consumer, I think the worst case scenario for me
would be for Lift to go out of business and
for Uber to have a complete monopoly over the San
Francisco market and check out prices like crazy and make
my transportation costs spike. I think that's a fair point.
(10:34):
Lift has about a billion dollars in the bank probably
and is slowly spending down that money, and maybe you know,
about six million dollars a year or less, so it
has some time to figure it out. But at some
point there's a ticking time bomb for Lift to figure
out how it gets more money, goes public, gets money
from those investors, or gets bought and has somebody subsidized
their business. Okay, taking time bombs, Thanks for unsettling us further, Eric,
(10:58):
Good job, Brad. Are you ready for the next one?
There's more? I feel like I need to go get
some anxiety medication. Well, this one is particularly scary. Lizette Chapman,
you are our venture capital reporter here in San Francisco,
(11:19):
and you're going to tell us about how personal health
data could be collected against our will and used against us.
What do you mean could be collected? It is being
collected right now, and we're volunteering it. Everybody has not everybody,
but like sixty million plus people have absolutely fallen in
love with all of these different wearable devices with different
(11:41):
sensors on it that track our steps that you know,
track our sleeping, and sensors are getting better and better.
So what's the problem. I thought all this was supposed
to make us feel healthier. It's true, a lot of
people have improved their health because they're able to quantify
how their habits range day to day and even sometimes
compete with their friends. The problem is that a lot
(12:04):
of people are just volunteering this information. You're not even reading,
you know, kind of like the terms and conditions when
you download an app. You just click it and move on. Well,
that could be a problem going forward. But how much
data can these insurers or employers really get out of
the number of steps we take every day? We'll see,
But that's just it. It's not just about steps anymore.
I mean now sensors are becoming so cheap and so
(12:27):
much better than they have been in past years that
they're able to monitor everything from blood oxygen levels to
heart rate to to you name it, it, just like
you would in a doctor's appointment. So the worst key
scenario is these insurers might use this against us that
you know, they'll see the number of steps we're taking,
our heart rate, our blood oxygen levels and say, maybe
(12:48):
this person has a good chance of getting heart disease
down the road. It could happen. We're volunteering this information.
I haven't seen any legislation saying hey, you know, uh,
you know, don't reach out to these different customers because
it hasn't happened yet. They're not they haven't made the
connection yet between this massive trove of data that's being
(13:08):
generated every day by Americans to um to health insurance policies. Yet,
just earlier this year, ETNA UM gave out fifty thousand
Apple watches to their employees so they can start working
on a joint venture with Apple to figure out how
to use the data. So I think it's might be coming.
(13:29):
That sounds scary. Does the potential repeal of the Affordable
Care Act Obamacare does a factor into this legal ambiguity
that might allow insurance or healthcare companies to penalize us
for unhealthiness. Perhaps it's kind of mes you know, you
look at that, that's kind of a big, hot red
mess right now. I think the larger point that that
(13:50):
you're getting at, I think is a good one, which
is that you know, health insurance is broken right now
and they're looking for new revenue streams. There's high cost,
low satisfaction um with the big data, the use of
big data, this is a new revenue stream and if
you think about it, you know we're just giving it away.
It's kind of like when you download an app and
(14:11):
you just agree to terms and conditions. Well, thanks for
sharing that with us today, Lizette Brad. I think it's
time for you to kick it off my Apple Watch
right now, at least change your privacy settings on your tracker. Well,
I'm going for a run. So this brings us to
(14:38):
our very last scenario of ready for one more bread?
Probably not, but let's do it. This one, you could say,
has been long overdue. Here's Dina Bass calling in from Seattle. Hey, DNS,
what have you got for us? So? My scenario is
that the a group of hackers working for a hostile
nation state or a stateless entity like a terrorist, scre criminals,
(15:00):
or hacked of US will hack into the industrial systems
at UM some critical infrastructure, say a power plant or
a damn public transport. They will tweak the software too,
in a manner that shuts down or destroys the hardware
and damaging the facility. Yeah, this sort of thing has
been possible for a while. I'm thinking of that attacked
by US and Israeli hackers on an Iranian nuclear facility
(15:22):
a few years ago with the stuck snet virus. Yes, absolutely,
that's exactly what they did there. They used a virus
to basically speed up the way the center fugees in
the reactor we're spinning and damaged um um. And you know,
the US government has been doing some tests going back
as far as two thousand seven, if you look at
Fred Kaplan's book, where they were trying to see whether
a remote programmer in d C could take out a
(15:43):
twenty seven ton power generator all the way across the
country in Idaho. And of course it took just twenty
one lines of code to send the generator to an
untimely death. That's incredible. I mean, one of our previous
podcast episodes was about how these hackers in Russia managed
to penetrate the Democratic now stional committees email servers and
they were able to read quite a bit of havoc
(16:05):
on the election campaign cycle. So if they were able
to hack emails in this way, he really makes you
think what happens if they actually hack physical infrastructure that
could put real lives in danger. Sure. Absolutely, we've had
a couple of, you know, examples of that around the world. Also,
there was hacking of of a damn in Westchester, New
(16:26):
York that was attributed to the Iranians. In we had
was sort of the first reported takedown of an electrical
power grid in Ukraine. Uh And the point you make
about the d n C hack is a good one
as well, because that that happened with you know, as
far as we know, not a lot of repercussions, and
you know, my sense is that that could embolden people
in twenty s to try something more seriously. Well, Dina,
(16:48):
considering all these very public instances, how prepared our computer
security experts for these kinds of attacks? So it's gotten.
Things have gotten better than stucks net. You know, companies
like Semens, which was theo that have made the controls
that were impacted in Iran, have worked to harden their systems.
They now go in and signed contracts with these companies
(17:08):
to go in and update the systems more frequently. But
you know, there's still a fair amount of issues. Just
last week, there's a Presidential Commission on Enhancing National Cybersecurity
and put they put out a report and a number
of the recommendations were related to these issues of defending
key infrastructure um, you know, and also they talked about
coming up with clear ideas of who does what and
(17:29):
you know, to respond to these kinds of attacks, and
what are the rules of engagement for state and local governments,
for the for the federal government, and also for private
companies who are are going to be helping out to protect.
And of course, as we bring more and more of
our systems connected to the Internet, the stakes are only
getting higher. Yeah. Absolutely, that was something that was flagged
(17:50):
by the Commission as well, and they were talking about,
you know, our cyber and physical worlds increasingly converge. You know,
earlier this year we saw that massive distributed denial of
service attack that took down a decent chunk of the Internet,
and that was basically, you know, people, the Internet was
attacked via webcams and and DVRs. It's great that we
have all of these Internet of things devices, but they're
(18:11):
now on networks that are connecting or can connect in
certain ways to our critical infrastructure, which is another thing
this Presidential Commission brought up. These two things are converging
the largely unsecured world of Internet of things devices and
our critical infrastructure. Well, let's keep our fingers crossed. None
of this is making me feel any better. Thanks for
that prediction, Dina, Thank you. How are you feeling, Hockey?
(18:47):
I don't know. I don't know if I'm ready for
twenty Neither apard the Optimist Guide the two after this episode.
Oh my gosh, I know, what's your worst case scenario,
brad Well. I mean, everyone gave gave me a lot
of food for thought here, you know. The one that
I contributed to the larger Bloomberg Pessimist Guide was that
we would find out that the law enforcement authorities were
(19:10):
wire tapping some of these passive listening devices like the
Amazon Echo or even some of our phones that are
kind of waiting for these watchwords like Hello, Google or Alexa.
You know, can they just turn those on and listen?
And if they do do that and or may be
able to, you know, to to amass some intelligence on
some bad guys. But what is it due to the
overall trust in these devices that are now populating our lives?
(19:32):
That's my question for two thousand and seventeen. How about you, well,
how about this? How about I reject the premise altogether
because I'm feeling terrible right now, and I give you
an optimist prediction next year. All right. So I was
talking to our biotech reporter Caroline Chen earlier, and she
was telling me about, um, all these really incredible advances
(19:54):
that doctors, researchers, biotech companies are making right now in
this in the few yild of cancer research. UM. Apparently
there's a new method called immunotherapy where instead of using
radiation to just kill off entire parts of your body, right, UM,
you can go in UH and implement this really targeted
(20:16):
form of therapy that makes your immune system attack the
cancer cells. And so far in university labs and the
biotech research labs, UH they're producing a lot of really
good results. That sounds very promising. It's two thousand seventeen,
the year when I make a difference in patients lives. Well,
let let's see. It sounds like I'm some therapies are
(20:37):
up for FDA approval right now, so they could become
widely available pretty soon. And you know, maybe they wouldn't
cure cancer altogether, maybe they wouldn't be able to prevent it,
but maybe it could make cancer this form of chronic
disease that you live with for the rest of your life,
kind of like kind of like AIDS. So a very
nice optimistic prediction to end to end our podcast today,
(21:07):
and that's it for this year on the Decrypted Podcast.
Thanks for listening. We're going to take a short break
for the holidays next week, but we'll be back with
a full slate of new episodes starting on January ten.
If you have an iPhone, please subscribe on your native
podcast app and leave us a rating and review there.
It helps more listeners discover the show and tell us
(21:28):
what you think could be the worst possible thing that
could happen in I'm on Twitter at Akio seven and
I'm at Brad Stone. This episode was produced by Pied Good,
Cary Magnus, Henrickson, and Liz Smith, with help from Aaron Plack.
Alec McCabe is head of Bloomberg Podcasts. We'll see you
next year, Happy New Year, Land Land
Well, acky, here we are the final days of two
thousand sixteen, the year of Brexit, the election of Donald Trump,
the year we lost Prince and David Bowie. I mean,
I think as a journalists we did such a terrible
predicting what would happen this year? And gosh, is it
even worth trying to think about what might happen next year?
(00:33):
Maybe the problem is in these predictions were too optimistic.
We look for the things that we want to see happening. Well,
how about this, how about we think about the worst
possible things that could happen next year and beyond, and
we prepare ourselves for the that worst case scenario that's
really grim. I like it that. Let's do it. Hi,
(00:57):
I'm brad Stone, and I for our final episode of
two thousand sixteen, we bring you the Bloomberg Pessimus Guide
Global Technology Edition for two thousand seventeen. These are the
most dire doomsday scenarios are reporters could come up with
the things that might happen in the world of tech.
Hopefully not if it all goes terribly wrong. Okay, So
(01:20):
buckle in and grab some tums to settle that ominously
grumbling stomach. Or maybe that shouted tequila. Actually, we should
have a bottle of tekula with us. Now, Well, the
(01:41):
US is still digesting the shock eleection of Donald Trump.
So let's start with the potential for doom and gloom
in Washington, d C. And bringing us that scenario is
Josh Brustein. He's our reporter in New York and he's
on the line with us. Hey guys, Okay, Josh, so
scare the heck out of us. What do you have
for two seventeen? Well, the great thing um for a
pessim us in seventeen and the surveillance realm, is that
(02:03):
there's plenty to be terrified about. Whether your main fear
is mass surveillance or whether your main fear is the
intelligence agencies of the United States being being hampered in
some way or another. That is a perfect pessimas. Okay,
So there has been this ongoing debate over over the
Vice Acts, the Foreign Intelligence Surveillance Act. What do you
(02:23):
think Trump is likely to do with this law? Yeah,
I mean, I think the thing is that nobody knows
and that makes people very nervous. This law has been
very controversial. A major part of it is going to
come up for renewal, and if it's not renewed by
the end of the year, it just goes away. And Jess,
is that a bad thing? Though it is seen as
a very bad thing. If you are in the intelligence community,
(02:47):
if you're in the a c. L U or the
Electronic Frontier Foundation UM or your privacy advocate, then you
actually kind of might welcome this. They have a website
where they're actually counting down to the expiration of US
Section seven two. Of course, Trump as a candidate, you know,
was for forms of torture. I mean, it does suspect
that he will push these things to the limits. So
what does what does it mean not just for privacy
(03:10):
of of Americans, but for you know, the u S
relationship with its allies in Europe and the and the
status of American Internet companies abroad. Yeah. Absolutely, so if
Trump is more aggressive with surveillance, something you could do
even aside from this law, because the president has a
lot of power just to start claiming just start claiming
authority under executive orders, and the if he starts being
(03:34):
more aggressive or is suspected of being more aggressive, because
it's a possibility that we wouldn't really know what's going on.
You could see europe uh start to put pressure on
American companies. We've already seen a lot of skepticism about
whether American companies can protect the information they have against
the U. S. Government, and that could become a bit
(03:56):
of a hot button issue for European governments in Silicon Valley. Okay, Josh, well,
thanks for bringing that to us today. Absolutely, thank you.
All right, So, how are you feeling so far? Acky? Uh?
I really wish we brought that bottle of tequila here. Okay,
(04:25):
So let's move away from the federal government now and
take a look at blue chip tech companies. Alex, you
are our Apple reporter and you're here with us here
in San Francisco. Hi. So, Alex, welcome to the Bloomberg
Technology Pessimist Guide, where we're doing our best to ruin
everyone's day. So tell us what's the worst thing that
could happen to Apple in two thousandev So Apple could
(04:46):
lose its credit rating, and this has huge implications for
a company which has succeeded in keeping shareholders happy by
rewarding them with cash in recent years while they've been
waiting for the next blockbuster product to plump up the
share price Simco, the CEO has sold debt in order
to fund buybacks and dividends and keep investors pockets plot flush.
(05:07):
What about iPhone sales? So they continue to prop up
the company. So iPhone sales are still pretty healthy, but
they are falling and flattening. Um. So you know, there's
been at the first revenue decline in over a decade
in the most recent fiscal year. So the expectation is
one hopes that the iPhone coming next year will be
a real blockbuster product. But if for some reason it
(05:28):
isn't and it's vastly disappointing and it doesn't encourage and
huge new fresh burst of sales, then that could be
a problem for Apple. All right, So we should remember
that Apple is the world's biggest technology company, actually the
world's biggest company period. So if credit agencies suddenly decide
that Apple is no longer credit worthy, that's going to
(05:50):
have implications for every other tech company out there, every
other publicly traded company in the world. It is something
that could also have implications for someone like Microsoft. Now
the is an Apple raises this debt is because while
it has vast amounts of cash in the bank, most
of it is offshore. Of the two billion in cash
reserves that it has, two six billion dollars of that
is outside the US. In order to repatriate that money,
(06:14):
Apple has to pay a thirty five pc tax rate
in the US, which is clearly great news for the Treasury,
but not such great news for Apple itself. There is
hope that in Congress they will pass some legislation which
will reduce that tax bill, which increases the likelihood and
that Apple's willingness to repatriate money from off shore that
would essentially reduce their need to sell debt in order
to reward the shareholders and come up with that sort
(06:35):
of Donald Trump has signaled the willingness to do that, yes,
and it's been one of his big campaign pledges that
would help spare investment in the US. So there is
a real appetite to make that happen in the new
White House. Is there a chance where we might see
another miracle product category spring from Cooper Tino that averts
this worst case scenario. I mean, that's the question every
(06:55):
investor in the world is asking. We know they've looked
at cars, they've broadly scrapped the Apple s hardware part
of the car project that they're still carrying on with software.
We think they're exploring some things in glasses. We've reported
that maybe something in healthcare. We don't quite know what
that is, maybe just some sort of healthcare platform. They're
investigating a lot of avenues, but we're yet to see
anything concrete surface just yet. All right, so we just
(07:17):
asked you to tell us the worst case scenario. But
how likely is it? I was speaking to the Moody's
analyst who looks at this staff as his job, and
he said that if Apple continues to raise debt at
a faster pace than it's cash balance increases, then this
could happen within eighteen months. One hopes that the blockbuster
new iPhone next year renders such a likelihood impossible, but
(07:40):
we'll have to look and see. All right, Alex Webb,
thank you for contributing to the dark mood in the studio.
We appreciate it. Happy Christmas, sorry I should say Holidays
in New Yestian so Akey, who's up next? We are
(08:01):
now going from the blue chips to the unicorns, and
specifically we're going to talk about the worst thing that
could happen to Uber, which is now the world's biggest
private technology company. And we have Eric newcomer here in
San Francisco. Eric, Eric, Hey, thanks for having me. All right,
so scare us. What could possibly happen to our beloved Uber?
You know, what what if? What if the unicorn with
(08:23):
the biggest private valuation in the world sixty nine billion
dollars saw its valuation fall? I mean, this is a
company that's been built around sort of the ever growing
rise of that that number. We've just watched it. When
it was three billion, we thought it was crazy and
up and up and up and up. You know, there
are no short sellers against it. It's it's a number
that's climbed. So what happens if it falls? So who cares? What?
(08:44):
What would be the impact of that? The problem is
one for Uber morale would be heard. Some employees would
see their stock compensation fall dramatically. A lot of them
have sort of counted on that is why they're working
there and not sort of the lush offices of Google. Uh.
Uber's reputation would fall. You know, it's been this gigantic titan.
But I think you know the problems for Uber aside
(09:06):
it would be a bad sign for Silicon Valley. This
is a valuation that towers above all other ones. It
sort of sets the brominter for what companies should be worth.
If Uber's value is misguided, then I think a lot
of other companies are gonna have to question how much
their worth and that could have broad implications for you know,
not just these technology workers, but also the broader San
Francisco economy too. Right, maybe housing prices would come down
(09:29):
to Well, that's a good point. I mean, would a
decline in unicorn valuations be good for some people presumably
incumbents and everyone that these unicorns have been able to
use a flood of cheap money to sort of suppress
I mean, Uber has helped drown out the taxi cab market. Here.
If it turned out Uber was operating on margins that
were unsustainable, had to raise its margins, heard its valuation,
(09:53):
lower its market share, that might see we might see
a resurgence in taxi cabs, or maybe Uber sort of
steamrolled too many of them to really make a strong comeback.
I mean, it really is hard to imagine Uber making
money off of these uberpool routes. I mean they are
so cheap. Yeah, for Uber. It's all about volume, drive
price to the bottom, and then expand into pool, expand
(10:13):
into food delivery. So they know the margins are going
to be pretty thin, but they just need to do
a lot of them. Let me see this though, as
a consumer, I think the worst case scenario for me
would be for Lift to go out of business and
for Uber to have a complete monopoly over the San
Francisco market and check out prices like crazy and make
my transportation costs spike. I think that's a fair point.
(10:34):
Lift has about a billion dollars in the bank probably
and is slowly spending down that money, and maybe you know,
about six million dollars a year or less, so it
has some time to figure it out. But at some
point there's a ticking time bomb for Lift to figure
out how it gets more money, goes public, gets money
from those investors, or gets bought and has somebody subsidized
their business. Okay, taking time bombs, Thanks for unsettling us further, Eric,
(10:58):
Good job, Brad. Are you ready for the next one?
There's more? I feel like I need to go get
some anxiety medication. Well, this one is particularly scary. Lizette Chapman,
you are our venture capital reporter here in San Francisco,
(11:19):
and you're going to tell us about how personal health
data could be collected against our will and used against us.
What do you mean could be collected? It is being
collected right now, and we're volunteering it. Everybody has not everybody,
but like sixty million plus people have absolutely fallen in
love with all of these different wearable devices with different
(11:41):
sensors on it that track our steps that you know,
track our sleeping, and sensors are getting better and better.
So what's the problem. I thought all this was supposed
to make us feel healthier. It's true, a lot of
people have improved their health because they're able to quantify
how their habits range day to day and even sometimes
compete with their friends. The problem is that a lot
(12:04):
of people are just volunteering this information. You're not even reading,
you know, kind of like the terms and conditions when
you download an app. You just click it and move on. Well,
that could be a problem going forward. But how much
data can these insurers or employers really get out of
the number of steps we take every day? We'll see,
But that's just it. It's not just about steps anymore.
I mean now sensors are becoming so cheap and so
(12:27):
much better than they have been in past years that
they're able to monitor everything from blood oxygen levels to
heart rate to to you name it, it, just like
you would in a doctor's appointment. So the worst key
scenario is these insurers might use this against us that
you know, they'll see the number of steps we're taking,
our heart rate, our blood oxygen levels and say, maybe
(12:48):
this person has a good chance of getting heart disease
down the road. It could happen. We're volunteering this information.
I haven't seen any legislation saying hey, you know, uh,
you know, don't reach out to these different customers because
it hasn't happened yet. They're not they haven't made the
connection yet between this massive trove of data that's being
(13:08):
generated every day by Americans to um to health insurance policies. Yet,
just earlier this year, ETNA UM gave out fifty thousand
Apple watches to their employees so they can start working
on a joint venture with Apple to figure out how
to use the data. So I think it's might be coming.
(13:29):
That sounds scary. Does the potential repeal of the Affordable
Care Act Obamacare does a factor into this legal ambiguity
that might allow insurance or healthcare companies to penalize us
for unhealthiness. Perhaps it's kind of mes you know, you
look at that, that's kind of a big, hot red
mess right now. I think the larger point that that
(13:50):
you're getting at, I think is a good one, which
is that you know, health insurance is broken right now
and they're looking for new revenue streams. There's high cost,
low satisfaction um with the big data, the use of
big data, this is a new revenue stream and if
you think about it, you know we're just giving it away.
It's kind of like when you download an app and
(14:11):
you just agree to terms and conditions. Well, thanks for
sharing that with us today, Lizette Brad. I think it's
time for you to kick it off my Apple Watch
right now, at least change your privacy settings on your tracker. Well,
I'm going for a run. So this brings us to
(14:38):
our very last scenario of ready for one more bread?
Probably not, but let's do it. This one, you could say,
has been long overdue. Here's Dina Bass calling in from Seattle. Hey, DNS,
what have you got for us? So? My scenario is
that the a group of hackers working for a hostile
nation state or a stateless entity like a terrorist, scre criminals,
(15:00):
or hacked of US will hack into the industrial systems
at UM some critical infrastructure, say a power plant or
a damn public transport. They will tweak the software too,
in a manner that shuts down or destroys the hardware
and damaging the facility. Yeah, this sort of thing has
been possible for a while. I'm thinking of that attacked
by US and Israeli hackers on an Iranian nuclear facility
(15:22):
a few years ago with the stuck snet virus. Yes, absolutely,
that's exactly what they did there. They used a virus
to basically speed up the way the center fugees in
the reactor we're spinning and damaged um um. And you know,
the US government has been doing some tests going back
as far as two thousand seven, if you look at
Fred Kaplan's book, where they were trying to see whether
a remote programmer in d C could take out a
(15:43):
twenty seven ton power generator all the way across the
country in Idaho. And of course it took just twenty
one lines of code to send the generator to an
untimely death. That's incredible. I mean, one of our previous
podcast episodes was about how these hackers in Russia managed
to penetrate the Democratic now stional committees email servers and
they were able to read quite a bit of havoc
(16:05):
on the election campaign cycle. So if they were able
to hack emails in this way, he really makes you
think what happens if they actually hack physical infrastructure that
could put real lives in danger. Sure. Absolutely, we've had
a couple of, you know, examples of that around the world. Also,
there was hacking of of a damn in Westchester, New
(16:26):
York that was attributed to the Iranians. In we had
was sort of the first reported takedown of an electrical
power grid in Ukraine. Uh And the point you make
about the d n C hack is a good one
as well, because that that happened with you know, as
far as we know, not a lot of repercussions, and
you know, my sense is that that could embolden people
in twenty s to try something more seriously. Well, Dina,
(16:48):
considering all these very public instances, how prepared our computer
security experts for these kinds of attacks? So it's gotten.
Things have gotten better than stucks net. You know, companies
like Semens, which was theo that have made the controls
that were impacted in Iran, have worked to harden their systems.
They now go in and signed contracts with these companies
(17:08):
to go in and update the systems more frequently. But
you know, there's still a fair amount of issues. Just
last week, there's a Presidential Commission on Enhancing National Cybersecurity
and put they put out a report and a number
of the recommendations were related to these issues of defending
key infrastructure um, you know, and also they talked about
coming up with clear ideas of who does what and
(17:29):
you know, to respond to these kinds of attacks, and
what are the rules of engagement for state and local governments,
for the for the federal government, and also for private
companies who are are going to be helping out to protect.
And of course, as we bring more and more of
our systems connected to the Internet, the stakes are only
getting higher. Yeah. Absolutely, that was something that was flagged
(17:50):
by the Commission as well, and they were talking about,
you know, our cyber and physical worlds increasingly converge. You know,
earlier this year we saw that massive distributed denial of
service attack that took down a decent chunk of the Internet,
and that was basically, you know, people, the Internet was
attacked via webcams and and DVRs. It's great that we
have all of these Internet of things devices, but they're
(18:11):
now on networks that are connecting or can connect in
certain ways to our critical infrastructure, which is another thing
this Presidential Commission brought up. These two things are converging
the largely unsecured world of Internet of things devices and
our critical infrastructure. Well, let's keep our fingers crossed. None
of this is making me feel any better. Thanks for
that prediction, Dina, Thank you. How are you feeling, Hockey?
(18:47):
I don't know. I don't know if I'm ready for
twenty Neither apard the Optimist Guide the two after this episode.
Oh my gosh, I know, what's your worst case scenario,
brad Well. I mean, everyone gave gave me a lot
of food for thought here, you know. The one that
I contributed to the larger Bloomberg Pessimist Guide was that
we would find out that the law enforcement authorities were
(19:10):
wire tapping some of these passive listening devices like the
Amazon Echo or even some of our phones that are
kind of waiting for these watchwords like Hello, Google or Alexa.
You know, can they just turn those on and listen?
And if they do do that and or may be
able to, you know, to to amass some intelligence on
some bad guys. But what is it due to the
overall trust in these devices that are now populating our lives?
(19:32):
That's my question for two thousand and seventeen. How about you, well,
how about this? How about I reject the premise altogether
because I'm feeling terrible right now, and I give you
an optimist prediction next year. All right. So I was
talking to our biotech reporter Caroline Chen earlier, and she
was telling me about, um, all these really incredible advances
(19:54):
that doctors, researchers, biotech companies are making right now in
this in the few yild of cancer research. UM. Apparently
there's a new method called immunotherapy where instead of using
radiation to just kill off entire parts of your body, right, UM,
you can go in UH and implement this really targeted
(20:16):
form of therapy that makes your immune system attack the
cancer cells. And so far in university labs and the
biotech research labs, UH they're producing a lot of really
good results. That sounds very promising. It's two thousand seventeen,
the year when I make a difference in patients lives. Well,
let let's see. It sounds like I'm some therapies are
(20:37):
up for FDA approval right now, so they could become
widely available pretty soon. And you know, maybe they wouldn't
cure cancer altogether, maybe they wouldn't be able to prevent it,
but maybe it could make cancer this form of chronic
disease that you live with for the rest of your life,
kind of like kind of like AIDS. So a very
nice optimistic prediction to end to end our podcast today,
(21:07):
and that's it for this year on the Decrypted Podcast.
Thanks for listening. We're going to take a short break
for the holidays next week, but we'll be back with
a full slate of new episodes starting on January ten.
If you have an iPhone, please subscribe on your native
podcast app and leave us a rating and review there.
It helps more listeners discover the show and tell us
(21:28):
what you think could be the worst possible thing that
could happen in I'm on Twitter at Akio seven and
I'm at Brad Stone. This episode was produced by Pied Good,
Cary Magnus, Henrickson, and Liz Smith, with help from Aaron Plack.
Alec McCabe is head of Bloomberg Podcasts. We'll see you
next year, Happy New Year, Land Land
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