Silicon Valley investor Tim Draper defends Zuckerberg: ‘This guy is a hero’

Tim Draper

Venture capitalist Tim Draper defended Mark Zuckerberg as the Facebook co-founder and CEO testified on Capitol Hill.

“This guy is a hero, let’s face it. It’s awesome what he’s done,” said Draper, a longtime tech investor.

Draper also suggested that the intense scrutiny around Facebook’s handling around user data was hypocritical. “All of a sudden we’re worried about privacy. My God, we put all our pictures up there,” he said at Tuesday’s LendIt Fintech conference in San Francisco.

CNBC reporter Deirdre Bosa, who interviewed Draper at the conference, asked the attendees if they agreed with Draper or thought that Facebook had violated their trust in terms of privacy. The crowd of more than 200 was approximately evenly split.

Draper also implied that Facebook’s privacy concerns were relatively minor compared with other tech giants.

“If you have your credit card up on Amazon, you should be a little bit circumspect about all this attack going on on Facebook,” said Draper. “They’ve got your credit card. Facebook’s just got pictures of you, and maybe they’ve analyzed that you like cats. Who cares?”

The founding partner of Draper Associates and DFJ discussed the possible fallout from government involvement, saying that “more regulation leads to more corruption.” Another risk, said Draper, is that entrepreneurs may leave the U.S. for friendlier markets.

“I got a message for all the guys in Washington. We want these people. Bezos can live anywhere else in the world,” Draper said, referring to Jeff Bezos, founder of Amazon.

Draper, a backer of Elon Musk’s SpaceX and Tesla as well as Skype and other tech firms, is also a big believer in bitcoin.

Zuckerberg appeared before a joint Senate committee on Tuesday and the House Energy and Commerce Committee on Wednesday.

Former Qualcomm chairman Paul Jacobs is assembling a group of buyers to take it private

Paul Jacobs

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Paul Jacobs

Paul Jacobs, who was ousted as Qualcomm’s chairman in March, is talking to strategic investors and sovereign wealth funds to chip in for a fully financed bid to take Qualcomm private in the next two months, according to people familiar with the plan. He would run the company after it’s gone private.

One of the potential investors is mobile chip designer ARM, which SoftBank bought in 2016 for more than $30 billion, these people said. ARM’s technology forms the basis for most processors used in smartphones and tablets, including Qualcomm’s processors.

ARM denied that it has talked to Jacobs about a possible acquisition involving Qualcomm. ” “There have been no discussions between Arm and Paul Jacobs on any potential acquisition of Qualcomm,” a spokesperson said.

Jacobs has hired two banks and lawyers to work on the deal, the people said. When the deal is completed, he is hoping for fewer than ten owners to be involved. Economic ownership might not align with control of the company. Jacobs, himself, owns less than 1 percent of Qualcomm.

Control will remain in the United States under Jacobs’ plan, which he believes would allow the deal to avoid the kind of scrutiny that sank Broadcom’s attempt to buy Qualcomm for around $120 billion. President Trump blocked that deal in March after the Committee on Foreign Investment in the United States expressed concerns over potential national security risks. Broadcom was based in Singapore, but has since re-domiciled to the United States.

Still, Jacobs has been working with CFIUS behind the scenes to address potential problems, which theoretically could arise if a large amount of the economic ownership comes from foreign sovereign wealth funds. The SoftBank-controlled Vision Fund includes a major investment from Saudi Arabia’s main sovereign wealth fund.

A person familiar with his thinking says Jacobs does not believe Qualcomm should be carved up, but he believes he can only implement his plan for it as a private company, because that plan will require significant investment and things that public shareholders would not like.

Jacobs’ father, Irwin, was a co-founder of Qualcomm, and Paul Jacobs rose through the ranks to become CEO from 2005 through 2014. Steve Mollenkopf has been CEO since then, while Jacobs served as chairman. The board removed him in March after Jacobs informed them of his desire to take the company private.

The company has been involved in a complicated high-stakes legal dispute with Apple, which licenses core wireless technology from Qualcomm. Apple claims that the company overcharges for licenses and has sued it for patent infringement, while Qualcomm has sought to have Apple phones banned from China, among other things. Jacobs plans to settle the dispute with Apple and rely on his strong relationship with Tim Cook, the people said.

Jacobs plans to maintain Qualcomm’s license business, unlike Broadcom, which would have shut that piece down, the people said. Jacobs feels the licensing business is actually the strongest part of Qualcomm if operated correctly, the people said.

Disney launches ESPN+ streaming service with live sports and a show from Kobe Bryant

Disney’s ESPN is rolling out ESPN+ on Thursday, its first ever direct-to-consumer service in the United States.

The service will feature 10,000 live sporting events in its first year, including Major League Baseball and NHL Hockey, as well as exclusive studio programming that won’t be available on the network’s linear channels, a library of on-demand programs, and past sporting events.

One show ESPN expects to be popular is a basketball analysis show called “Detail,” written, produced and hosted by Kobe Bryant, where the former basketball star breaks down NBA games played the day before.

The service will cost $4.99 per month or $24.99 per year.

Disney’s Direct-to-consumer and International Chairman Kevin Mayer said ESPN+ has a “bulletproof and robust technology” that he expects to be a real bottom-line contributor, although there are going to be a “number of years where it is in a loss-making position but it will be profitable in the not too distant future.”

Mayer said there isn’t enough space for all the sports on linear television, so fans who have been underserved will now have access to what they’ve been missing out on.

“We have been a wholesaler in the past, and now we are going to be a retailer. … We are going to be able to capture a lot of value for shareholders,” Mayer told reporters this week.

Although the app will be launching with a robust amount of content, ESPN President Jimmy Pitaro said the company will be adding more on a regular basis.

“We are going to learn, we are going to examine the data daily, and make changes both on the product side and also on the content side, look and see what’s working, what’s not, what’s resonating what’s not, and go out there and try to secure additional rights,” Pitaro said in an interview with CNBC.

What’s included?

The live events will include more than 180 MLB games and NHL games throughout the season (MLB.tv package will be available for an additional $24.99 per month), the entire MLS Live out-of-market schedule with more than 250 games, and thousands of college sports from swimming to track and field to volleyball.

College sports will range from 20 different athletic conferences across the country and other live sports include rugby, cricket, boxing, tennis and golf. The app will also have a built-in DVR function so fans can record sporting events to watch later.

With the service’s launch, ESPN will also be releasing a new “30 for 30” documentary titled “The Last Days of Knight” exclusively on ESPN+. The platform will be home to the entire archive of over 100 “30 for 30” documentaries and will be the only place fans can access the entire library.

ESPN will also be producing daily studio shows exclusively for the app that will not be available on its linear channels. In addition to Bryant’s “Detail,” ESPN will produce a nightly NHL highlight show called “In the Crease” and a daily soccer news show called “ESPN FC.”

Disney and ESPN say the focus of building ESPN+ has been on the consumers, so the new service will have a limited ad experience. There will be no display ads or preroll ads throughout the entire experience on all connected devices, though there will be ads during game breaks as you would see on television.

One risk is that ESPN+ could cannibalize the network’s existing multichannel business, which Pitaro says the company will continue to invest in.

But Pitaro said it would be “complementary and additive to the existing cable and satellite model. That model has been very good to our business and we expect it to continue to be so. We are continuing to invest in it, we are embracing it.”

With CBS Sports recently launching CBS Sports HQ, and Turner Sports planning to roll out its own direct to consumer service, Bleacher Report Live, the competition in the sports streaming market is heating up.

Pitaro says he likes his hand against the competitors. “When you combine the actual product with the broad array of rights and then the ESPN brand, which is the most beloved brand in sports, we feel really optimistic.”

Not everyone is as optimistic. Evercore ISI analyst Vijay Jayant cited his concerns in a recent note, saying that ESPN+ is “unlikely to gain traction beyond a small cohort of sports super fans.” But he thinks the ability to monetize will make it a sound strategic move for Disney.

Netflix shares rise after Deutsche Bank says it’s been wrong on the stock and upgrades to buy

Reed Hastings, CEO of Netflix

Deutsche Bank upgraded Netflix shares to buy from hold, saying it had misjudged how to value the high-flying stock and the potential for international growth.

“What’s evolved with respect to our view on the stock is that Netflix has changed the industry in a profound way and in doing so has given itself a significant lead, making it very difficult for the traditional media companies, or even other big tech companies, to catch up,” analyst Bryan Kraft wrote in a note to clients Friday entitled “Upgrading To Buy: Catch Netflix If You Can.”

Netflix shares closed up 2.4 percent Friday.

The analyst raised his price target for Netflix shares to $350 from $240, representing 13 percent upside to Thursday’s close.

Kraft predicts Netflix will add 23.7 million international subscribers this year versus the Wall Street consensus of 19.6 million. He also projects the company will reach 217 million subscribers in international markets by 2025.

Netflix had 63 million international subscribers at end of 2017.

“Netflix continues to capitalize on this lead by reinvesting in content, marketing, and the user experience; which is growing subscribers and making it more of a magnet for talent, further extending the company’s lead,” he wrote. “Netflix’s lead and competitive advantage gives the company more levers than ever to pull in order to drive revenue and cash flow growth over the course of time.”

The company is one of the best-performing stocks in the market this year, up 61 percent through Thursday versus the market’s roughly flat return. Netflix’s stock performance ranks No. 2 in the entire S&P 500.

Post office rate hike could cost Amazon up to $1.8 billion more per year: Credit Suisse

 

A letter carrier holds Amazon.com packages while preparing a vehicle for deliveries at the United States Postal Service (USPS) Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington, D.C.

Andrew Harrer | Bloomberg | Getty Images
A letter carrier holds Amazon.com packages while preparing a vehicle for deliveries at the United States Postal Service (USPS) Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington, D.C.

President Donald Trump’s recent focus on what the post office charges Amazon for delivery may cost the e-commerce retailer a significant amount of money, according to one Wall Street firm.

Credit Suisse ran the numbers on how much more it will cost Amazon if the United States Postal Service raised its rates by 15 to 20 percent.

In recent weeks Trump repeatedly blasted Amazon on Twitter, sparking a decline in the company’s share price. The president criticized the e-commerce retailer over taxes and claimed it has not paid the post office adequately for its delivery services.

Trump also issued an executive order on Thursday to set up a task force to study the post office’s financial position and recommend reforms. Amazon was not directly referenced in the order.

“Instead of spending time debating whether changes to the USPS shipping rates have any merit, we would rather think through relative scenarios and impact to Amazon’s shipping costs,” analyst Stephen Ju wrote in a note to clients Friday. The firm’s “sensitivity table suggests incremental shipping expenses for 2018 in the range of ~$1b to $1.8b based on the aforementioned range of price hike possibilities under the assumption of the USPS accounting for 40-50% of costs.”

The analyst downplayed the long-term impact from any post office pricing changes, as Amazon can shift shipping volume to its own delivery services.

“And as it continues to do with the ongoing rollout of Prime Now and its Flex Driver program, Amazon continues to decrease its dependency on the USPS – we hence believe that while the potential exists for near-term profits to be negatively impacted, the long-term thesis remains unchanged,” he wrote.

As a result, Ju reiterated his outperform rating for Amazon shares and his $1,750 price target, representing 21 percent upside to Thursday’s close.

GoFundMe used to charge US personal campaigns, but doesn’t anymore. Here’s why the CEO thinks it’s a good model to follow

GoFundMe CEO Rob Solomon

CNBC
GoFundMe CEO Rob Solomon

GoFundMe CEO Rob Solomon says the crowdfunding site’s business model is “completely insane” — but it’s still working.

Back in November, the site announced it would no longer take a 5 percent fee of funds raised on personal campaigns in the U.S., opting instead for what amounts to a virtual tip jar. That model has since expanded to Canada and the U.K.

“My board of directors thought I was nuts when I wanted to change the model, but we listened to our customers, we listened to the market and that was the right way to go,” Solomon told CNBC’s Jon Fortt for the Fortt Knox podcast.

GoFundMe is now funded largely by donations — users are presented with a voluntary option at the end of a transaction to send a few extra dollars to the site. The site’s fee structure still indicates a 5 percent fee on “certified charity campaigns, and all campaigns created outside the United States and Canada.”

Solomon said the “effective rate” of user donations is enough to keep the business profitable.

“A lot of feedback over the years has been, we love GoFundMe, we love what you do, the 5 percent is fair, but we want all of the money to go to the cause,” he said.

“And in hearing about that, we decided that there’s such good sentiment around GoFundMe the brand that we could remove the platform fee, and rely on the generosity of our donor community,” Solomon added.

Since its launch in 2010, GoFundMe has shepherded more than $5 billion to local and national causes. Single campaigns, like the recent fund for the March for Our Lives organized by survivors of the Parkland, Fla., school shooting, have alone raised several million dollars.

Solomon said the sheer volume of donations allows GoFundMe to perfect its own fundraising efforts.

“Since we’ve launched, we’ve had hundreds of millions, close to a billion dollars, flow through the platform,” he said. “And you understand the patterns pretty quickly. And you know the magic of the Internet is that you get to test different ways to present information.”

The site is also building out donation software to eventually license to nonprofits, Solomon said.

Early interest by consumers in Japan bodes well for Netflix in Asia, says RBC’s Mahaney

Greg Peters, president of Japan at Netflix Inc. to become Chief Product Officer in July.

Netflix stock is set for even more gains with budding interest from consumers in Asia, RBC Capital Markets advised clients on Thursday.

Top technology analyst Mark Mahaney told clients that the firm’s research in Japan and other Asian nations revealed a growing willingness by consumers to pay for premium content.

“The sun appears to be finally rising in Asia,” Mahaney wrote to clients. “Japan, which Netflix entered in October 2015, is one of the largest markets the company has ever entered and one of the most significant. … Of our Japan survey respondents, 63 percent indicated that they were ‘Extremely’ or ‘Very satisfied’ with the service vs. 65 percent last year. This remains lower than the results we’ve seen in other countries, but is a material improvement from 52 percent two years ago.”

Shares of Netflix fell 0.82 percent Friday.

Japan represents a crucial first step in Netflix’s broader expansion throughout Asia, Mahaney said. During a fourth-quarter earnings call, Netflix CEO Reed Hastings commented on the company’s performance in Asia.

“We definitely are seeing success, as you all know, and your channel checks and other things tell it in the different markets,” Hastings said at the time. “And when we compare it to Latin America several years ago, we’re very pleased with the progress that we’re making through India, through Southeast Asia, through Japan.”

In light of the potential for growth in Asia, Mahaney increased his price target on shares of the video streaming company to $350 from $300, representing 9 percent upside from Thursday’s close.

Source: Google Trends, RBC Capital Markets

RBC research also found that Google Search Trends in Japan, South Korea, Thailand and several other Asian nations have all seen steady increases in the frequency of “Netflix” queries.

“On the whole, results were very positive, showing consistent upwards trends over the course of 2017 and into 2018,” Mahaney said. “2017 appears to have been an early pivot year for Netflix in Asia and 2018 is showing good momentum so far.”

Amazon is hiring a former FDA official to work on its secretive health tech business

Amazon.com founder and CEO Jeff Bezos.

Amazon’s Grand Challenge team, its equivalent of the Google X lab for moonshot technologies, has made its latest high-profile health care hire.

The company has quietly scooped up Taha Kass-Hout, the former U.S. Food and Drug Administration chief health informatics officer, according to a source with knowledge of the hire.

Kass-Hout will serve in a business development role focusing on health care projects. He will work alongside Amazon Grand Challenge chief Babak Parviz, a former director at Google X who joined Amazon in 2014 as a vice president.

Amazon has remained secretive about its health care ambitions, with a few exceptions.

It did announce a collaboration with J.P. Morgan and Berkshire Hathaway to bring down health care costs and improve quality for its own employees. But it hasn’t said much about how that will work, or who will run it.

Amazon’s Grand Challenge team has also been referred to internally as 1492. Like Google X, it is focused on very big bets that would potentially create a new category for the business. The multi-trillion dollar health sector is a major focus for the group.

Amazon did not immediately return a request for comment.

“Empowering consumers”

Kass-Hout left his previous role at Michigan’s Trinity Health in May of last year, and hasn’t updated his LinkedIn profile since then.

At Trinity, where he served as a senior vice president, his role involved “leadership and oversight over data, analytics and digital health initiatives,” according to his profile.

Prior than that, he worked in senior government roles at the Centers for Disease Control and Prevention and the FDA as its first executive focused on health informatics. He’s also a Harvard-trained physician.

Amazon’s cloud to announce health care deal with Cerner   12:11 PM ET Wed, 22 Nov 2017 | 00:27

His expertise is in health information technologies and digital health, as well as in navigating government regulation.

Most interestingly, he describes his mission on LinkedIn as “empowering consumers via sustainable health data ecosystems.”

That suggests Amazon might be looking to help consumers get easier access to health records. Both Apple and Alphabet have launched initiatives to help consumers gain access to their medical information, which is currently scattered across various health systems.

It’s a big problem — and a big opportunity for technology companies. More than 250,000 people die every year from medical errors, often resulting from a lack of available patient-data on hospital computer systems. Amazon hasn’t revealed its own ambitions in this space, but CNBC reported that it’s looking at opportunities to push and pull data from legacy electronic medical systems.

Medical experts say that it’s also possible that Kass-Hout will help Amazon through various facets of the regulatory process, especially if it brings new health hardware or software to market.

“It’s not clear either way, but it does at least give them the option,” said Stephen Buck, a former co-founder of GoodRx, which gives consumers a platform for cheaper medicines. Buck did not have any inside knowledge of the hire.

“It’s smart of Amazon to bring in people well versed in health care data and how connectivity is vital to improving results,” he added.

Amazon has various teams working internally on a wide variety different health projects, some of which may never reach production.

For instance, it has teams focused on bringing its Alexa voice assistant to health care, figuring out whether it can disrupt the drug supply chain, and selling medical supplies to hospitals. Amazon Web Services is working to serve its customers in the health care sector with cloud technology, and has a deal with Cerner to help better use their data to make health predictions about patient populations.

In addition to Kass-Hout, Amazon this year also scooped up Martin Levine, a prominent Seattle-based geriatrician with an expertise in innovative care delivery models.

Only 13 percent of government employees take personal responsibility for cybersecurity, survey finds

Public sector employees in the U.S. have little concern about their personal cybersecurity responsibilities, according to a survey.

Just 13 percent of government employees believe they have complete personal responsibility for the security of their work devices or information, the report carried out by analytics firm YouGov and published by security firm Dtex Systems said.

Forty-eight percent of those surveyed said they had no responsibility at all, believing the securing of data to be squarely the remit of IT professionals. Roughly half of respondents believed that being hacked was inevitable no matter what protective measures they took, while 43 percent simply didn’t believe they could be hacked.

Few people surveyed seemed to take seriously the likelihood and frequency of cyber threats — one in three employees believed they were more likely to be struck by lightning than have their work data compromised.

When looking at what government employees feared most, the survey said: “Only 14 percent report being afraid of someone infiltrating their organization and stealing files, trailing far behind potential scenarios such as a government collapse or food poisoning, and ranking it just three percentage points higher than alien invasion.”

Unprecedented threat from cyber attacks

This apparent apathy comes despite a staggering increase in cyberattacks in the past few years, and frequent reports of cyber threats from domestic and foreign actors in news headlines.

Cyberattacks at both commercial and governmental levels are more of a threat than they’ve ever been before — in 2016, the U.S. government spent $28 billion on cybersecurity. That’s up from just $7.5 billion in 2007, and it’s expected to increase in 2018.

Research from software firm Symantec revealed that one in 131 emails contained malware in 2017. Ransomware attacks increased 36 percent on the previous year.

“We’re all — as individuals, as organizations and as a country — facing near-constant security attacks from trusted insiders, malicious cyber criminals or nation-state actors,” said Christy Wyatt, CEO at Dtex Systems.

“With the increasing regularity and broad scope of insider-related incidents and breaches, it is critical that public sector organizations improve security protocols and double down on intelligence-based, user-centric technology investments.”

Security experts have repeatedly stressed the urgency of keeping data safe and adopting a culture of cyber security literacy in the private sector and in government. Being aware of attack techniques and threats like phishing links, and using a number of different passwords that are changed frequently, are important steps.

The report, entitled “Uncovering the Gaps: Security Perceptions and Behaviors of Today’s Government Employees,” collected responses from more than 1,000 public sector employees in the U.S. with security clearances working at a federal, state or local level.

Facebook suspends Cambridge Analytica for misuse of user data, which Cambridge denies

Mark Zuckerberg, chief executive officer and founder of Facebook Inc.

Facebook has suspended Cambridge Analytica, a political data analytics firm that worked on Facebook ads for President Donald Trump during the 2016 presidential election, saying that it lied about deleting user data sent to it by the makers of a popular psychology test app.

In a blog post that went up late Friday night, Facebook explained that a University of Cambridge psychology professor, Dr. Aleksandr Kogan, created an app called “thisisyourdigitallife,” which asked users to answer questions to build a psychological profile.

According to the social network, Kogan “lied” to Facebook by passing that data along to Strategic Communication Laboratories (SCL) and Cambridge Analytica — an SCL affiliate — without informing users.

The net effect allowed the firm to turn innocuous page “likes” and other Facebook user data into information that was mined for political use.

“In so doing, [users] gave their consent for Kogan to access information such as the city they set on their profile, or content they had liked, as well as more limited information about friends who had their privacy settings set to allow it,” Facebook said.=

While Facebook didn’t mention the 2016 election or reference Trump in the blog post, there’s no escaping the connection. The Trump campaign paid Cambridge Analytica more than $6 million to target Facebook ads based on voter data it had collected in the run-up to the election, according to Federal Election Commission records cited by Reuters.

According to Facebook, about 270,000 people downloaded Kogan’s app, and gave consent for the creator to access information such as the city they set on their profile, or content they had liked.

The social network said it banned the app in 2015, and Cambridge Analytica said that it had deleted all data from it. However, Facebook said it recently received reports that the company had not in fact deleted all the information, leading it to suspend SCL and Cambridge Analytica until further notice, pending an internal investigation.

On Saturday, Cambridge Analytica issued a statement disputing Facebook’s allegations. The firm “fully complies with Facebook’s terms of service and is currently in touch with Facebook…in order to resolve this matter as quickly as possible.”

Playing out in the background of Facebook’s dispute with Cambridge Analytica is the wide-ranging probe into Russia’s meddling in the 2016 election. As part of Special Counsel Robert Mueller’s investigation, a federal grand jury recently indicted 13 Russian nationals and three Russian entities for waging “information warfare” against the U.S.

Facebook and Twitter were perceived as critical to Trump’s surprising victory over Hillary Clinton, something not lost on the president. Trump has already named Brad Parscale, who ran the campaign’s digital operations, as campaign manager for his 2020 reelection bid.

Cambridge Analytica was founded in 2013 and has offices in the U.S., U.K., Brazil and Malaysia, according to its website. In addition to Trump, the organization has worked on campaigns supporting Republicans Ted Cruz, Ben Carson and Thom Tillis, a senator from North Carolina.