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Facebook’s 119 Billion Reasons to Provide Better Guidance — Futurum Tech Podcast Episode 003
by Olivier Blanchard | July 27, 2018

On this edition of Futurum Tech Podcast, Futurum analysts, Daniel Newman, Fred McClimans and Olivier Blanchard discuss Facebook’s very, very bad week, explore the Fast Five—which include Twitter and digital transformation—Tech Bites, this week’s losers in tech, and our crystal ball. And we’re going to change it a little bit this week, as everybody gets their own crystal ball! Today, on FTP.

Our Main Dive

The biggest news we want to discuss is Facebook’s latest failure. If you’re not sure which one we’re talking about, it’s the one that has to do with the stock market. Basically, a Facebook executive put his foot in his mouth and revealed that the social media giant probably won’t be growing much anymore. Whether or not that’s a shock to you, it understandably caught some investors by surprise, resulting in Facebook’s stock falling by about 20 percent—which is kind of a big deal!

If you’re not sure what the significance of that is, keep in mind that 20 percent represents about $120 billion. At one point, Facebook’s stock went from $217 per share to $176.23, which was a 19 percent drop that represented a loss of over $119 billion. So yeah, these are some big numbers that sound bad for Facebook. But at the same time, let’s keep things in perspective here. The drop in stock isn’t permanent or unprecedented, as it’s happened before, and yet Facebook recovered.

Also, we all know Facebook has so many users that it probably doesn’t have much room to grow anyway. There’s got to be a ceiling somewhere, and the company is so big that it’s surely close to reaching it! Let’s not pretend it wasn’t going to happen eventually.

Bottom line: This issue looks bad for Facebook right now, but is it going to be its downfall? Surely not. What will probably happen is Facebook will reset expectations, essentially lowering them so they can more easily beat them—leaving investors feeling pleasantly surprised when they look at their Facebook shares.

Our Fast Five

We dig into this week’s interesting and noteworthy news:

  • Facebook isn’t the only company with some stock woes. Twitter isn’t doing great, either. Its user growth fell by about one million, which is not even 1 percent of its user base, but nonetheless, investors aren’t thrilled. So Twitter stock is down 18 percent.
  • Today, the Opera browser went public, with an IPO of $12 a share. That means it’s up 19.5 percent, which is interesting since most people don’t seem to be using this browser. Granted, Opera states it has about 182 million people who use at least one of its products every month, so it does have some fans!
  • The Brookings Institute and the Advocates for Highway and Auto Safety released some studies showing that most people are hesitant about riding in autonomous cars. In fact, two-thirds of people said they wouldn’t get in a driverless car. This is likely due to highly publicized accidents, such as the recent Uber self-driving car accident. But it’s also simply because most people just don’t understand this technology yet, and they don’t see its value.
  • The Wall Street Journal just published a study that shows that companies that invest in their own technologies tend to have higher productivity growth. That pretty much validates the techniques of major companies like Amazon, Google, and Facebook that invest in their own technologies and see better growth and productivity as a result.
  • LinkedIn just announced it will incorporate voice messaging into the LinkedIn messenger. So basically the messages you get there—most of which are spam anyway—will feel more intrusive!

Tech Bites

We have a few winners of this week’s “tech that bites” award. First, Facebook, just because the earnings announcement was pretty bad. But there’s also the fact that analysts are so quick to drop a stock due to a simple announcement of poor user growth. We need to stop basing everything on user growth, especially when getting rid of fake spam accounts like Twitter recently did is actually a good thing. Finally, we’re disappointed that China killed the deal between Qualcomm and NXP, as we think the merger was going to have a positive outcome overall.

Crystal Ball: Future-um Predictions and Guesses

This week we decided to let everyone have their own crystal ball prediction! So first we have the idea that social media companies will soon find they need to change how they sell their value to investors, since Facebook and Twitter have suffered recently from the way they do it currently. Future growth shouldn’t be the be-all, end-all anymore.

In addition, in the next 12 to 18 months, companies will likely find the need to start being more transparent instead of hiding all the bad stuff that goes on behind the scenes, including data abuse. All of that tends to affect the market while dashing the public’s trust in them, so it needs to change. And our final prediction is that as we continue to rely more on technology, we’re going to trust it less. After all, we can’t even keep up with all the new tech inventions when it comes to creating applicable laws and regulations, creating a turbulent, even dangerous atmosphere in some cases. So expect even less trust in technology as we use it more than ever.

And there you have it, this week’s Futurum Tech Podcast.

Transcript:

Olivier Blanchard: Hi, welcome to FTP, Future and Tech Podcast, I am your host today. My name’s Olivier Blanchard, I’m senior analyst at Futurum. I’m here with Daniel Newman, principal analyst at Futurum, and Fred McClimans, who’s senior analyst at Futurum. And on today’s show, we’re going to focus almost exclusively on Facebook’s very bad week. We’re also going to have an interesting Fast Five that’s going to involve Twitter. We’re also going to talk about Tech Bites, Tech Bites, B-I-T-E-S, not B-Y-T-E-S. So basically this week’s losers. And also we’re going to end the show with our crystal ball and see where we see things going in the next few months.

So before we begin, as always, this podcast is for information purposes only. None of what we share here is meant to be taken as investment advice.

So let’s begin with Facebook’s very, very bad week. Which one of you gentlemen wants to explain to our audience, in case they’ve been living under a rock, what happened to Facebook this week? Fred.

Fred McClimans: Sure. So just to kind of get right to the meat of it here, Facebook reported some good earnings this year, or this quarter, as they always have. But they fell short on users. User growth has been an issue for them, and the market reacted a little bit in kind right after the announcement.

But the bigger news was a Facebook executive then went on to explain things a little bit more in an extended call, and revealed that, for lack of a better way of putting it, Facebook’s growth days are kind of over. The message was very clear. They expect a deceleration in growth, and some very difficult quarters moving ahead. That sent the stock into a literal free fall. At one point the stock was down over 20 percent, which is a significant thing for any company. Given that it’s Facebook, that 20 percent represented at one point 120 billion dollars. That’s a big chunk of change to just all the sudden drop out of your pocket.

They closed the following day, the 26th, they closed at $176.23 per share, down from 217 and a half. That was almost a 19 percent drop. And again, they tallied out at just over 119 billion for a loss. This got so much attention just because of the size of the loss here. Headlines were everywhere, this is the single largest one day drop of any company in US history. Bonus points if you can name the number two that it replaced.

Daniel Newman: Bear Sterns?

Fred McClimans: No, it was Intel. So Intel, earlier this decade had a pretty significant drop there. But nothing really quite compared to this.

Now having said that, putting the headlines that Zuckerberg just lost 15 billion dollars plus, what we’re really looking at here I think is a bit of a knee jerk reaction, probably caused be a couple of different things. Facebook has some issues, as we all know. They have some data privacy issues, they have Cambridge Analytica issues, they have the political issues. They have the Alex Jones issues. How do we moderate content, and how do we make sure that Facebook is sort of that family place where everybody from your older teen to your great grandparent can log on and participate?

So these issues I think kind of combined, had people on edge, and then when Facebook didn’t deliver the bottom just simply fell out at this point. But again, I think it’s an overreaction, I think this is kind of expected. And to put things in context here, that drop that they had, yes, a significant drop, almost 18, 19 percent, 120 billion dollars, but all they really did is they set their clock back about two months. Back on Mary 3rd, they were at $174.00 per share. So I look at it and I go, you know, what’s the time span there? It turns out that that was 58 trading days between May 3rd and July 26th. That represents only 3.7 percent of the total number of days that Facebook has been trading on the market. The drop itself, 18.96 percent drop, that’s less, much less, than Facebook dropped in the months following its IPO, where it went from a first day close of $38.23 a share, down to $17.73 a share about four months after that.

So that’s my take on it. Counter me, if you will, but I think this is something that is acceptable and not extreme in the marketplace at this point.

Daniel Newman: Yeah, I’ll give you a counter and I’ll give you a non-counter. So let’s do some simple math. If you have personal equity of 50 billion and you lose 16 billion, do you still have enough money that you never need to work again the rest of your like? Mark Zuckerberg can have a lot of really bad days and be doing just fine. Facebook had a really bad day, and they are still, as you said, doing just fine.

But, and this isn’t the crystal ball, and we will come back full circle to this, but I am going to project forward a little bit. First of all, the market needs correction, period. The stock market is far too high, and this is not a trading show, I want to reiterate that, but all the stocks are over inflated right now. So a lot of companies are due a correction, and there’s nothing like a bad earnings report, or some bad future guidance to help accelerate the speed of correction.

Now having said that, will it correct, I don’t know. That’s, again, not our job to predict. But let’s talk tech. The technology itself, the user experience itself, the privacy management, the abuse of its customer base, the loss of attention to the younger audience, okay. Great story, just this morning my daughter’s visiting a college out in North Carolina, she’s in a shop, and the shop is a … it’s like this cool kind of future forward coffee, bagel joint and you can draw with chalk on the tables. And she drew a really pretty picture. And the guy that’s the owner of the shop comes up, he says, “This is really cool, you should take a picture and post it on Facebook.” Well guess what my 16 year old daughter said to the guy?

Fred McClimans: No.

Daniel Newman: I don’t use it-

Fred McClimans: Why Facebook?

Daniel Newman: I don’t have Facebook. And the thing is, is none of her friends do. And they’re not interested in Facebook. And that’s still been one of the big problems. I know we’re not really talking right now about Facebook and how to fix Facebook, we’re just talking about Facebook’s really bad week, but they seem to be, to counter your point, Fred, is you’re right, if you look at this as an equities analyst, the correction over 58 days is very manageable, and very easy to deal with and they will probably gain some of their losses back today. But the fact that their platform is losing momentum, the fact that younger people don’t like to use Facebook, the fact that their policies have been abused, they’re now associated with all kinds of racism and bigotry, and misappropriation, and misuse, and election rigging, and all the things that Facebook has found itself in the middle of now, has put quite a damper on the company, and I would say it’s not going to be as easy of a road back as it may have been the last time.

So I’m with you, some of this is correctable, but I actually think their bad week is deserved, because if this wasn’t the opening session and it was Tech Bites, I’d say we could put this section right there as well, because Facebook, you bite.

Olivier Blanchard: Well you guys are pretty spot on, which it’s interesting that we can have very differing points of views, and different perspectives on this, and still all of them are right, all of them are correct.

The one thing I’d want to add to this is that the market didn’t correct because Facebook was acting badly. Investors didn’t run for the fences because of Cambridge Analytica, because of Alex Jones, because of data protection infractions or negligence from Facebook. They ran to the fences when the numbers were disappointing to them. And so it’s purely financial, it’s not substantial. So I just wanted to iterate that first, that’s the first item.

So another piece of this, and one that really I’ll come back to a little bit later in the show that really bothers me, is that their numbers were actually pretty good. Let me look at this. Their revenue was only one point away from the analyst projections. They’re solid, the only real number that was low was user growth. So number one, Facebook user growth cannot keep growing forever, it’s kind of like the economy, at some point it’s going to have to kind of stabilize before something happens to make it grow again.

And also, Facebook’s user numbers or growth have been declining for four consecutive quarters. I mean, it’s a trend that should be not surprising to anyone. So for anyone to put that much emphasis on user growth, and that much panic over the fact that user growth is slowing for Facebook doesn’t make any sense to me. If anything, those numbers show that Facebook is becoming better at monetizing what users it does have. And that should be really positive news.

So I’m not really understanding the over reaction. The only thing to me that sticks, that actually has some meat to it, is the fact that one of the reasons why Facebook is seeing its numbers drop a little bit in some areas, is because of new privacy laws, like GPR, that are requiring Facebook to be a little bit more … a little bit less lenient on the types of activities it can do with data, and with users.

So that’s something that’s not going away, that’s something that Facebook is going to be forced to adapt to over the next year, year and a half. And it doesn’t really have a solution to that. But that’s a very temporary kind of obstacle to Facebook’s growth, and I don’t think it’s really a long term concern. Thoughts?

Fred McClimans: I agree with you there. I think it’s one of those situations where, as I say probably too often, Facebook, it’s still a teenager. It’s in adolescence as a company. And it’s playing in a space where the rules are pretty much unwritten. And not only the rules, but the user community. I mean when you tap into the size of a market that they have, or the size of user base, you’re going to get a certain bit of unpredictable behavior. The, “No, I don’t want to do that this weekend, dad, I want to do something else,” kind of approach. Have they gotten better at monetizing? They have. I think they’ve gotten great at monetizing the user base that they have. But yeah, in this case, I think they’re doing okay. I see some potential challenges with data and users and privacy, but what that really means is they just need to refine how they’re actually extracting revenue out of their user base. And I’m still optimistic about that.

That said, I think they’re overvalued. Again, not stock advice for anybody, but I think the hype engine is kind of slowing down here a bit and I think that’s a good thing for Facebook.

Daniel Newman: I’m gonna end that segment real quick with one thing. I still think Facebook sucks and I don’t advise anyone to use it. So my negativity comes from a place of having used it for many, many years. I think their user experience is absolutely been demolished in the name of revenue. And I think that’s the anti-transformation for this age.

Olivier Blanchard: Sure. I don’t know we’ll see, but maybe we can talk about this in our crystal ball segment. But before we get to that, which is in a few minutes, what do you guys think is gonna happen next for Facebook? Say what is Facebook look like six months from now?

Daniel Newman: I think it’ll look to the majority of the world, they’ll look the same. I think when I was reading some of the analysts from Jefferies, and others, you know the financial people basically said Facebook’s done this before, they’ll reset their expectations, they’ll lower the expectations that they put to the Street, and then they’ll beat them, which’ll drive their stock forward because analysts are not always paying enough attention to the fact that under promise, and over deliver can be done intentionally, and it’s very easy to manipulate the markets that way.

I think they’ll reset expectations, I think they’ll reset user growth expectations. They’ll reset revenue expectations, and then they will monetize their user base further. And to their credit, they do have WhatsApp, they do have Messenger, and they do have Instagram. Which are popular channels with those younger audiences, and I think they will continue to think about how to incorporate those. Will it happen in the next six months? Probably not. But with all those tools at their disposal, long run they’ll be just fine. Doesn’t mean I like them, though.

Fred McClimans: So six months out? I’ll throw a curve ball in here. I think six months out, we see a lot less of Zuckerberg in Facebook. Not saying he’s extracted from the mix, but the recent Congressional hearings, the European Commission testimony, and sort of the cloud that’s now hanging over Facebook, plus, and this is probably the big one from an investor confidence perspective, Facebook did a very, very poor job of managing expectations leading up to the earnings call. And in the Street, that’s death. If they can’t trust you, if they can’t count on your reliability and predictability to kind of guide them and shape them for their expectations, they’re gonna turn away. They’re gonna look to something else, or they’re going to revolt. And we’ve seen a couple people not in the analyst space but in the investor space already saying, “Look, maybe Zuckerberg is best as a Chairman of the business.” Maybe there’s somebody else that should be driving the operations of this behemoth because Facebook is in that category too big to fail. So I don’t think it necessarily has to go to that extreme, but I would expect to see some other people stepping up a bit and Zuckerberg perhaps taking a little bit of back seat from a public perspective.

Olivier Blanchard: Well let’s move on to our Fast Five. So an easy transition point today, after Facebook’s very bad week is Twitter’s kind of also very bad week. They also had some numbers to share with the Street. And although they had solid revenues that actually exceed forecasts, their margins look to be falling a little bit from 34 to 33 percent, and more importantly, their user growth also fell by one million instead of going up one million. Which was a really, really small shift from like 336 million to 335 million. So it’s not even 1 percent, but investors have a very similar reaction to the Facebook numbers and let’s see, as of right now, or at least five or ten minutes ago, their stock seem to be down 18 percent. So you can kind of see that the trending kind of looking steady and then immediately following their announcement, it just crashes out.

Interestingly enough, the user growth metric seems to be more important for some strange reason to investors than actual revenues. So that’s a trend that we’ll have to keep an eye on and that maybe we can discuss in next few weeks in greater length.

Fred McClimans: Olivier, I’m gonna lay that issue there. The investor expectations. I’m gonna lay that squarely on Twitter’s management. They have conditioned the Street to follow that user number. Back in 2017, Twitter, when it was very undervalued, was one of my potential M&A picks for the year. I thought there was some great value to be unlocked there. Nobody bought on that. But they are unlocking the value. The challenge with users is they’ve purged a lot of people, and I don’t have any insight, or couldn’t find any insight, and then nothing on the call really that described how many new users did they add after they purged? That to me is an important number, but more importantly, management itself is now saying, “Look we could end up down around 330 million users total.” And as far as I’m concerned, if that’s because they’re purging bots and whatnot, that’s fantastic. Because there still … There are 700 million inactive users on Facebook, or on Twitter. So I’m not worried about that. I think they’re in the right direction here.

Olivier Blanchard: Totally great. Dan, what’s your pick?

Daniel Newman: Yeah, so I’m gonna step away from social media and social tech for just a minute here and talk about Norway based Opera. I’m sure many of you are probably clicking through to our podcast on iTunes via your Opera browser, and oh? No you’re not? Oh well, interestingly enough, if you haven’t heard of it, that big O browser Opera went public today. And they had an IPO at $12 a share, already up 19.5 percent, based on it’s $115,000,000 being raised through it’s IPO. They’re listing on the NASDAQ under OPRA.

Interesting company, because most people probably aren’t actually using it here. They do proclaim to have a fairly sizeable number of users, I think around a 182 million people that they say are using at least one of their products a month, which is basically desktop and mobile browsers. But it’s an interesting launch nonetheless. A new company in the browser space, really didn’t know if there was an opportunity for another player. They don’t really seem to do anything that really separates them or makes them unique. So, I think, it seems to be a short term little blip upward for them. But I’m not seeing the long term upside. I just don’t see how Opera’s going to compete with Chrome right now, when the incumbents like Microsoft and Mozilla, who’ve been at it a long time, seem to be really having a hard time making a dent in terms of popularity and growth.

Fred McClimans: Yeah, you know I’ll raise my hand by the way. I am an Opera user.

Daniel Newman: You’re the one.

Fred McClimans: I am the one. Every region of the U.S. gets one, and I’ve got that covered.

Daniel Newman: All right well Fred, well since you’ve got your hand up, what’s your Fast Five pick for this week?

Fred McClimans: So there are a couple studies that came out this week that were surprising to some, not necessarily to me or you guys I assume here, but the Brookings Institute and the Advocates for Highway and Auto Safety, they just released a couple of studies that show by a nice majority passengers, or just people in general are hesitant to the point of not wanting to actually ride in a car that is autonomous. Surprise, surprise. They cite a number of factors behind this, you know some of the recent accidents, the Uber accident, tragically not too long ago. And a number of issues there. I think this really comes down to sort of society and users not necessarily understanding the value proposition or actually how a lot of this technology works. And I think if you went to passengers in an airport and said, “Oh hey, did you know, by the way, that all the controls, the foot pedals, the flaps, everything that’s all controlled in a fly by wire system. There are no push this lever, this rod slides back and raises that.” I think a lot of them would get freaked out.

So there’s a learning curve that needs to come up here and an education process. But this is pretty much as expected. Not a surprise. Two thirds of people would not hop into a driverless car. I think that will change. Once they overcome that, and the adoption starts to progress, you know four or five years, I don’t see it as that big of an issue. People will convert ultimately.

Olivier Blanchard: I think so too. It’s just a matter of when, right?

So my second Fast Five pick this week is a study released, or at least published in the Wall Street Journal today, that shows evidence, clear evidence that higher productivity growth from companies that invest in their own technologies. So basically what we’re seeing is that … Is a little bit of a validation of some of the things that we talk about at Futurum and what Dan and I have written about in our books Building Dragons and Future Proof, which is kind of a validation of digital transformation and so companies like Amazon, Google, Facebook, et cetera, see higher productivity and higher growth because, at least in part, they invest in their own technologies. And I thought that was really interesting. So that’s probably also something that we’ll dive into a little bit more in the next few weeks, because I think there are a lot of really interesting lessons to be learned from that.

All right and the last Fast Five, I’m sorry I’m gonna go ahead and hand over to Dan.

Daniel Newman: LinkedIn. Whoever talks about LinkedIn? Nobody. Actually LinkedIn has quietly been doing really, really well. But they just put out a blog, I read it today, that they are going to incorporate voice messaging into the LinkedIn messenger. I think every company wants to own your communications. I think this is a really interesting move by them. The idea, I already hate my InMail, I hate most of the messages I get. I hate almost every app now. Direct Messaging within Twitter, within Facebook, within now LinkedIn. It’s just full of crap and spam and the last thing on the planet I want is to get more crap and to give people more ways to deliver me crap. So between you, me, and the fence post, I think LinkedIn, good solid company, has built itself really like a dragon, like a company that’s done it, organically grown, got numbers, monetized, been profitable. I just wish that when they were adding these features that help people expand their network that they didn’t make it so intrusive.

Olivier Blanchard: Yeah, I agree. That’s always been one of the issues that I have with, not just LinkedIn, but I wish LinkedIn were a little bit less salesy and intrusive.

Fred McClimans: Yeah. I think there’s an opportunity, or at least they had an opportunity, to become that GoToMeeting without pushing GoToMeeting, but that place where people meet and connect. I would see some value there if they actually had some type of video communications. So that if you’ve got four or five contacts on LinkedIn, hey, let’s pull together, let’s have a chat, let’s have a discussion and collaborate. They could have gone that direction and I kind of thought they might when they acquired SlideShare but-

Daniel Newman: Well, they are owned by Microsoft and there is Microsoft Teams. It’s just a matter of integration, but maybe at some point, but for now, that was a perfect, good idea, but it bites, and maybe it leads us where we’re going.

Fred McClimans: You’re good.

Olivier Blanchard: Oh, right, so we now come to Tech Bites. Yeah, gentlemen, Fred. Who are your big losers this week or pick one.

Fred McClimans: Pick one big loser?

Olivier Blanchard: Yeah.

Fred McClimans: Oh, geez. Well, I hate to dump on Facebook the way they have here, but if I had to go somewhere, I’d probably say Facebook. They fell on their face with the earnings announcement. I think they were very late to the table with the Alex Jones suspension. If it’s not that, I’d probably toss it over to China and the NXP situation with Qualcomm.

Olivier Blanchard: Ah, yes.

Daniel Newman: I’d love to talk more about that for another day, but I want to counter on Bites. I know that it’s a little different than our segment when we normally talk about one thing and we all talk about it. If we’re going to do it this way today, Olivier, I’m going to say the analysts bite. I’m going to say that all this investment, in purely looking at growth numbers, and then kind of being conveniently dropping a stock.

Twitter made 100 million bucks last quarter. They had their best ever earnings. I don’t care if they got rid of a million fake spam accounts. These are all good activities showing good progress. This is the one time probably in Twitter’s entire history that they got it wrong, and it actually should be going up because finally Twitter’s doing something right.

Olivier Blanchard: Well that was going to be mine but since you bring up NXP, I’m not going to repeat what you just said because I completely agree with it. I’m really disappointed in China’s behavior on this one.

For listeners who aren’t really familiar with it, we’ll get into in a future show, I’m sure, but US company, Qualcomm, huge tech giant has been trying to acquire NXP for some time, a European company. It was going to help them, among other things, get into the automotive market which goes back to the discussion that we had about autonomous vehicles. Really the only thing standing in the way of this acquisition, at this point, was China.

China decided that they weren’t going to let it through and gave some questionable reason for this, even though this acquisition has been ongoing for quite some time. That they wanted to give Qualcomm more time to give them good reasons why this would be a good acquisition and knowing full fell that the clock was running out.

That’s my Tech Bite for the week and we’ll dive into it in more detail some other time because I think there’s some bigger repercussions for the year to come when it comes to investments, acquisitions and the IOT.

That brings us to our last segment, our Crystal Ball. So gentlemen, Crystal Ball, predictions? One each, I’m changing the rules today.

Fred McClimans: Yeah, you can’t do that our audience is not going to know what to expect.

Olivier Blanchard: I’m the host today; I can break the rules. I’m a rule breaker.

Fred McClimans: Spin the wheel. Pick a topic.

Olivier Blanchard: Yup.

Fred McClimans: We’ll launch on from there. Give me a category.

Olivier Blanchard: I don’t know. Okay, well, fine, I’ll just come back to you in a second. My Crystal Ball is that in the next six months the social media companies or at least social media platforms like Twitter, Facebook, LinkedIn, YouTube, will all have to completely readjust the way that they sell their value to the street and to investors. They have to give over this notion that user growth is as big of a factor as it is. I think that there needs to be not just an adjustment, but re-calibration of how they articulate their value to investors.

This week, to me, has been kind of like the biggest flag or the biggest indication that this needs to happen, that it will finally happen. That’s something that’s been a problem, in my mind, for the last three or four years that this user growth thing was unsustainable, that we couldn’t continue to look at these platforms, these companies, as very young companies. That they’re now mature and that we need to evolve into a different phase evaluation for them.

Fred McClimans: Fair enough.

Daniel Newman: So let me jump in and give my future forward looking Crystal Ball moment and you know, for me, I’m kind of keeping onto this theme but it is transparency has got to be the next wave for these companies. I really do think we’ve hit the wall with all the dirty, behind the scenes’ manipulation that’s been going on, not just in social but just in tech as a whole. There’s a little bit more future forward but these bad weeks that continue to seem to happen to tech companies all are rooted in the fact that they are doing things that they imagine they’ll never be caught doing and they’re always caught doing them. Then, once they’re caught, it’s causing massive turbulence, volatility in markets because it’s like people know it’s happening but they don’t want to believe it’s happening.

I watched the Big Short the other day, for the second time, I really enjoyed that movie. It talks about one of the funds that did really well on shorting the market was they built their entire presence on betting on bad things that are going to happen because people are by nature optimistic. So they don’t want to believe in bad things happening so they tend to not believe they will happen or they tend to underestimate the likelihood of them happening. I think that’s kind of almost the approach that a lot of these companies take with their decisions on how they’re telling people about products, about privacy, about data usage is we’re not going to tell them because as long as the experience is good enough, no one is going to care.

All of those chickens are coming home to roost and I don’t know if it’s six months out, Olivier, but I would say in the next 12 to 18 months there’s going to be some more major fallout with data abuse.

Fred McClimans: Yeah.

Daniel Newman: That’s going to then need to be corrected or companies, incumbent companies, very successful companies, are going to be on a spiral that nobody right now is predicting. So once you figure out who those companies are, short them. By the way this isn’t financial advice.

Olivier Blanchard: Not stock advice.

Daniel Newman: All right, Fred, sorry I put you on the spot earlier, have you figured out what your Crystal Ball is?

Fred McClimans: No. No, hey, that’s okay. So you know we talked about a couple things earlier that I think kind of dovetailed nicely into something that’s just kind of been simmering in the back of my mind here. Looking, you know six months out, maybe 12 months out, somewhere in this time frame, I think what we’re going to see is that we as a society, as a culture, become, obviously,A,  increasingly dependent upon tech but, B, I think the level of trust we have in technology is going to decline, perhaps significantly.

We’re at that point where technology is starting to do things and legislation is starting to allow things that just make you scratch your head. It’s now permissible in the US, for example, to distribute the blueprints for a 3D printable gun, made of plastic, undetectable, and it’s legal to download and to print that gun. You know I’m scratching my head going this is ridiculous, we’re seeing a lot of concern and some outrage in some circles about things like this where technology is moving faster than we can keep up from a societal or a legislative perspective. I think that it’s going to cause an impact a lot of the things, Dan, that you were talking about with some of these tech companies.
I think we’ve eaten a lot and we haven’t figured out how to digest it yet. That’s my Crystal Ball for this week.

Technology, we’re going to rely more and we’re going to distrust even more.

Olivier Blanchard: Sounds good, I agree with everything you guys just said.

That is, unfortunately, all the time that we have today, so thanks for tuning into FTM, the Futurum Tech Podcast. Please remember to hit subscribe if you’d like to find us more easily. Also, you can find us on Twitter @futurumxyz, that’s our handle on Twitter for more daily news.

Outro: There will be plenty of more tech topics and tech conversations right here on the Futurum Tech Podcast, FTP. Hit that subscribe button, join us, become part of our community. We would love to hear from you. Check us out FuturumResearch.com or Futurum Tech Podcast, Daniel Newman, Fred McClimans, Olivier Blanchard. We’ll see you later.

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