Turns out the Facebook/Zuckerburg thirst for a Facebook hardware product may cost them $3 billion. Lack of Due Diligence, bad Employment Agreements and more may have made the perfect storm in this court case. So much so, the Zuck has come out of his extended hiding and flown to Texas for court.
The financial services industry has been co-operating with each other to help stop cyber-crime, but they’re obviously getting tired of being sued. So, instead of beefing up their operations to lessen the odds of being sued it looks like they’d much rather just pass the responsibility onto the Feds — who can’t be sued when there’s a hacker attack. Also, why the inevitable financial services attack would mean an increase in mortgage failures along with civil unrest.
All in all, a busy Craig Peterson Tech Sanity Check today.
Oculus’ controversial founder to take stand in intellectual property trial
[VIDEO] How FinTech companies can prepare for a large-scale cyber attack
Fintech Innovation Lab
More stories and tech updates at:
Don’t miss an episode from Craig. Subscribe and give us a rating:
Follow me on Twitter for the latest in tech at:
For questions, call or text:
Below is a rush transcript of this segment, it might contain errors.
Airing date: 01/19/2017
Zuckerburg Occulus Rift Admissions in Court – the Financial Services Community Wants to Abandon You
Craig Peterson: Craig Peterson here. Thanks for listening. Today we are going to talk about the trial of the decade. Well this month anyways, we’re gonna talk about what’s happening with Facebook and VR. Very big news coming out of there and it’s interesting. We’ll talk about the VR. Why people are excited about it? And a little bit about what was said because Facebook’s founder who has been kind of in hiding for the last 6 weeks or so, he went all the way to Texas to testify. So what’s going on there? Why? What can we learn from it? And by the way, there’s quite a few little lessons there. And then we’re also gonna talk about Fintech. Fintech is a company that is in the financial services industry. But they’re not a financial services company. They are a leading edge tech provider. Well they got a bit of a conference going on. They’re very concerned about cyber tax. They’re very concerned about maybe getting government involved in cooperation amongst various businesses. So we’re gonna listen to exactly what the CEO of MasterCard and the CEO of Microsoft had to say about that and why. As we kinda break it apart here with a little bit of TechSanity. Stick around. Here it goes.
You know this dry weather here in the Northeast, this winter weather is still kinda bothering me. I’ve still got a little bit of, I don’t know, phlegmy stuff going on and I find that kinda annoying. So anyhow, let’s talk about what’s going on. Mark Zuckerberg has no operating system. Mark Zuckerberg, of course, the CEO of Facebook. And they don’t have anything like iOS. They don’t have anything like android. They don’t have any devices out there. Facebook is entirely you talking to your friends, right? Your circle of friends and acquaintances and sometimes if you’re a business you can talk to people who like your products or wanna talk about your products. But that’s really all is about. They’ve bought some companies in the past. Let a few companies in the past. But they’ve all been kind of related to playing games online or maybe going to a little bit more communications. You know, kind of the WhatsApp type things. They’ve never had a physical product before. Now they’ve tried a couple of things. They’ve dabbled a little bit in cellphone business and they’ve tried to do something now that they hoped is going to be the next platform. They really want to be an Apple when it comes to hardware.
So Mark Zuckerberg was all excited about virtual reality and frankly continues to be. And the idea is if you’re talking with your friends, you can do it in a 3D environment where you’re wearing these goggles and you can see them. You can have a nice discussion with them. Heck, you can even attend a meeting. Go to a wedding. Have some fun with friends at a party. All using, hopefully, Facebook 3D technology. Better 3D camera into some device or, you know, plug it in. Whatever you might wanna do. And then you are able to now broadcast that. Your friends can watch it. They could be at the inauguration. They could be anywhere virtually.
So Zuckerberg was really, really excited about it. And what’s been interesting is I’ve read up on how Zuckerberg acquires companies. Now he’s not like what Microsoft used to do where they would beat them about the head and shoulders drive their value way, way down. 2 pennies on the dollar. And many times just, just, just totally destroy a company in order to acquire it. And that happened to competitors and others out there. A lot of allegations about that over the years.
And so Zuckerberg started talking with the company’s CEO and the company called Oculus Rift and he did his normal thing which is let’s get warm and fuzzy. Let’s get close. Let’s become friends. Let’s get to know each other. So you can trust me and I could trust you. And he would explain things to companies he’s looking to acquire like you know, hey listen, if you really want to be billion-dollar company you can’t do it yourself. You don’t know what you’re doing. You don’t have the team, etc. Which you know frankly is true, right? I’ve grown companies well into the multi-millions of dollars. Millions and millions and millions. Tens of millions. But I don’t think I’m the guy to take something to 500 million or billion dollars, right? I’m more of a startup guy. I’m more of an entrepreneur. I like being in the trenches. Making quick decisions that, you know, pivoting quickly. Which, by the way, is something Facebook cannot do. Large companies can’t do that sort of thing. But Zuckerberg really wants to have Facebook act a lot like a small company. Be very innovative. Be very flexible. Be able to change directions at the last second. He really wants that. And he also understands that that’s hard to do.
So how do you make those two things work? Well, you work with the company you might want to acquire. And that company if hopefully somebody who has some kind of technology, obviously, that you want and is going to be successful. You get them under your wing then you start talking money with them. And in the case of Oculus Rift, what’s apparently come out, and this is the company that Facebook wanted to buy that makes 3D technology. So they make those Oculus Rift glasses if you will. It kinda looks like a real big pair of safety goggles that you’d be wearing maybe if you were doing some welding. But you remember we talked about this last year, where Zuckerberg gave one of these to everyone in the audience and gave them this virtual reality experience with the Oculus Rift. And they definitely have the best technology out there. Very, very cool stuff. So everyone is really excited about it and I think it’s kinda cool too.
So he courts them. He talks to them. He gives them a little bit of a scare. And then Oculus Rift wanted 4 billion dollars for their technology and at that point he, Zuckerberg, was able to kinda get an agreement in place and he drove them down to 3 billion dollars. Turns out that’s what the acquisition price was for Oculus Rift being purchased by Facebook. Now, you know, great. All that stuff is interesting. The thing that I thought was the most interesting that’s come out right now from that case that’s being heard today and yesterday is gonna go on for a little bit I’m sure and we’ll keep an eye on it. I’ll let you know what’s happening. But the thing that I think is the most interesting about it is the due diligence that had to be done. If you are involved in business, if you are an investor you know what due diligence is. That’s D-U-E diligence. You examine a company. You look into its financials. You look into its history. You want to find out if there are any things hanging out there in the wind that you should know about. Well it turns out that Facebook’s due diligence on the Oculus Rift company was rather short. Apparently Zuckerberg went to the lawyers there at Facebook on Friday and said I want you to do your due diligence and I want to sign a contract Monday. So that’s kind of the basics of it. They didn’t have much time for the due diligence. It turns out now this lawsuit is being brought by guy who developed some technology and had been working at a software company. That Oculus Rift apparently used some of their software. And at question here is who owned that software that now Facebook owns and who had rights to it? Who should have been selling? Who couldn’t have sold it and they’re looking for damages of 3 billion dollars. I don’t know. Maybe they’ll get it. Facebook has deep pockets but it brought Mark Zuckerberg out of hiding.
Well also we had this week a conference and it was about Fintech and on all these Fintech companies that are out there. Fintech is a financial services, services company. They provide some of the technology, some of the innovation needed here in the financial services business. And one of things they’re concerned about is security. What happens here when these companies are hacked? Because a large scale cyberattack against our financial services industry is, between you and me, inevitable. It’s going to happen. It’s going to knock banks off the air. It’s gonna make business slow to a crawl because people won’t be able to use their credit cards and nobody has cash.
Our government has made sure no one has large nominations because of “drug dealers”. I used to use thousand dollar bills to buy cars. $500 bills were common. I used them all the time. But now it’s a hundred dollar bill. And we have countries around the world now that are getting rid of anything except as low as a $10 equivalent bill, US equivalent. So they’re getting rid of currency. That gives them more control. More visibility into transactions. In other words, tax revenue and everything else. So, when this inevitable large scale cyberattack hits, we’re all out of luck. How about if you’re two months behind on your home payment, right? And you’ve been continually two months behind. You’re catching up slowly. You’ve got other bills you’ve been paying. You pulled your socks up. You’re being financially prudent now. You’re two months behind. Of course, three months is the drop dead date for foreclosures on your home. What happens if your bank gets knocked off the air? Your credit card company gets knocked off the air for a few weeks. And you can’t use your credit card. And you’re supposed to make a payment on your home. How do you make that payment? Do you have cash? Enough cash to make your home payment? No. Most people don’t. Well this is gonna have a huge impact on everyone. And we should talk another day about all of the impact stuff like this would have. But it’s absolutely huge.
So, the last part of today’s show here, that’s exactly what we’re gonna talk about here for the next couple of minutes. But I want you to hear what the president of MasterCard, Banga, and the president of Microsoft, Nadella said when they were both on the stage at this financial services conference. I think it’s kinda telling.
Ajay Banga: You need a better cooperation before, during, and after a cyberevent between government and the private sector.
(Craig: This is the head of MasterCard.)
Ajay: Some strides have been made in that space. We’re still kind of a [??] stages of getting that right.
Satya Nadella: I think both Google had asked whatever that Sony movie, I forgot the movie the North Koreans didn’t like for a while. So…
(Craig: This is Microsoft’s CEO.)
Satya: We put it up and we didn’t know what the heck’s gonna happen right? I mean… but the one fascinating thing is that the amount of DDOS attacks we got that Christmas got us all. In fact we shared. That is the one time where there was very cooperation across our tech industry.
Craig: They’re talking right now, when they’re saying DDOS, they’re talking about the Nile service attacks which can definitely bring down businesses. It was really, really bad. So here we have the CEOs of MasterCard and Microsoft saying we need more government involvement in security. They’re calling for it. And I get concerned coz I think what’s really happening here is they don’t want to be liable for cyberattacks. They want the government to accept the liability, right? That’s ultimately what many times happens here. Big business goes to government and says, hey listen. We need you to take this over. You can’t sue the government when there’s a cyberattack. And the government’s supposed to be protecting you, right? We talked a minute ago about a guy that is really late on his payments on his house. But he’s catching up. He’s doing the right thing. And he loses his house because of a cyberattack. Right now, he could sue MasterCard. He could sue his bank. And he might get his house back. And he might get some of that money back. But if Microsoft and MasterCard and these other companies that are part of this whole Fintech initiative to do something different, let’s have cybersecurity rest on the hands, arms, shoulders of the government. If that was the case, all
MasterCard would have to do, all Microsoft would have to do is point at the feds and say, well you can’t sue us. This is a federal government responsibility.
Do you see what’s happening here? That’s what’s happening. It isn’t hey, let’s all get together, hold hands, and sing Kumbaya and let each other know when there’s an attack underway. And let’s work together to stop the attack which, by the way, already happens and the CEO of Microsoft admitted it in that audio bit there, ok? And he admitted it. He said that we were all under DDOS attack and we all cooperated, right? That’s the bottom line there. So, cooperation is already happening. We don’t need the government for that type of cooperation. But what they’re looking to do is get rid of their liabilities so they don’t have to be secure. That’s what really bothers me here. That’s my opinion here. We’re getting behind the curtains. We’re trying to understand a little bit and that’s why I’ve been calling this daily show my TechSanity Check. Anyways, have a great day. Make sure you subscribe. Rate the show online. http://CraigPeterson.com/itunes. Share it with you friends throughout every day. Big show Saturday, of course. You’ll catch it on iHeart on the app as well as on iHeart Radio stations here in parts of the Northeast of the US. Have a great day.
Don’t miss any episode from Craig. Visit http://CraigPeterson.com/itunes Subscribe and give us a rating!
Thanks, everyone, for listening and sharing our podcasts. We’re really hitting it out of the park. This will be a great year!