This Week in Tech 467 (Transcript)

Leo Laporte: It’s time for TWIT. This Week in Tech. Ben Thompson from Stratechery joins us, Dan Gillmor and me as we talk about the week’s tech news. Those big layoffs at Microsoft, revelations about the security of the iPhone, even iOS7 and why Netflix seems to have it all wrong about me. Honestly it’s wrong. It’s all coming up next on TWIT.

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This is TWIT, This week in Tech. Episode #467.  Recorded July 20, 2014

Netflix Thinks I’m a Bronie

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It’s time for TWIT, This Week in Tech, the show where we cover the week’s tech news in obsessive detail and usually have a little bit of fun doing it.  So glad you’re here and glad to have our guests.  Dan Gillmor, journalist, Dangillmor.com, you’ll see his columns in the Guardian as well as elsewhere.  He also teaches right now at Walter Cronkite’s School of Journalism for mass communication where he tries to beat digital media literacy into the heads of the students of Arizona State University.  How’s that going for you?

Dan Gillmor: Good to be with you!

Leo: I think promoting entrepreneurship is an easier thing to do with young people today.  I think they realize if they don’t make a job they’re not going to have a job in any case.

Dan: Yep

Leo: Thanks for joining us Dan we appreciate it.  Also here from Stratechery, one of the most insightful analysts, I’m quoting him all the time.  On the scene today, Ben Thompson.  Good to have you Ben and welcome

Ben Thompson: Good to be here!

Leo:  @Monkbent on Twitter

Ben: That’s me

Leo: Is there a beat for Stratechery. I know you do newsletter, that’s kind of your bread and butter. But you’re not aiming it at investors or anything like that particularly are you?

Ben: I think it’s a great service for investors. It gives a lot of context, what’s happening.  But I don’t give specific advice or anything like that.  Wish they didn’t limit how much I could charge as well. No I think, the way I think about is, I’ve been doing Stratechery for about a year and a half now and giving pretty contextual analysis of what’s happening in tech and what the newsletters does is that every day, three items, not as long as the articles on Stratechery, but much more direct and to the point.  This is what’s happening, and why I think it’s happening.  Things to think about. 

Leo: Most value added, there is so many voices with tech news and tech stories. But there is so few talking about what it means and I think Dan and Ben are really adept and that’s why we have you on TWIT.  That is what TWIT is all about. Trying to understand what’s going on.  The biggest story, Satya Nadella dropped the other shoe and is firing 14% of Microsoft employees. The largest layoff in the history of Microsoft.  They announced this on Thursday, but Nadella telegraphed that it was coming in a couple of cryptic emails in which he implied that we are realigning the company.  Most of these employees, like 12,500 were Nokia employees.  I think, while it is a huge layoff, it does seem to me that of the 18,000 jobs the vast majority really are redundant people that were acquired when they merged with Nokia.  Ben is this a sign that Microsoft is in trouble? Or it Microsoft doing the right thing?

Ben: It’s funny because I’ve actually been on vacation for the last week, which is unfortunate that this came down at that time, because…

Leo: This is your natural beat isn’t it?

Ben: Yeah, one thing I’ve written about probably more than anything else is Microsoft specifically.  The challenges their facing, how they need to align themselves going forward and I thought the first memo in particular was very encouraging. 

Leo: He got you too.

Ben: I think a lot of the criticisms focusing on word length and that sort was…

Leo: 3,000 words

Ben: When you’re dealing with a company of 130,000 people, it’s easy enough to sit on the side and say it ought to be like this.  Without appreciating, this is how it works in a very large corporation with tons of people who are going to be hanging on every word.  You were keeping the company moving.  There’s a lot that goes into these emails.  I agree in a vacuum, it would be great if they could be short, succinct and punchy with a comedic twist towards the end.  That’s not how these communications work.  Actually, for communications for a Microsoft in particular, I thought it was pretty clear.  It was we’re going from a company that just a year ago had their CEO saying everything is about Windows. Windows matters.  Windows, Windows, Windows.  To a yes, very long email that said word Windows, at least in the context of the PC operating system one time.  They said the word Nokia one time. People focusing on that, there is no change.  In my opinion, could not be more wrong.  It was a complete refocusing of the company.  It was very clear there were further shoes to come down.  Obviously one of them came down this week.

Leo: That is what John Sculley said, this is a typical email from a CEO.  I know, I used to be president of Apple.  You don’t want to be too specific.  But you want to be able to say, point to the email and say I warned you we were going to be laying people off.  I told you. 

Ben: The layoffs were, I think they were quite clear in the email.

Leo: It was obvious.  When they acquired Nokia it was obvious.  Nokia has what, 25,000 employees?  There was a lot of overlap.

Ben: That’s probably the most disappointing thing. The fact that post-Nokia they’re still larger than they were pre-Nokia.  I’ve actually been writing and suggesting that they’re going to need more layoffs.  I believe they needed layoffs before the Nokia think even happened.

Leo: Yeah

Ben: I do still think is the case if you’re talking about being a productivity company where you’re not one of the major platforms.  You don’t need 105,000 people.  It would have better in my opinion to have cut deeper and to try and have done it just one time because I’m not sure that this is going to be enough.

Leo: It’s pretty clear the stock market likes, well the stock market always likes cut jobs.  That means lower costs theoretically higher profits.  Stock market reacted pretty well, Microsoft stock took a fairly big jump

Ben: Microsoft stocks have been sailing, they are up, they were somewhere between 25-30 for a decade.  They’ve been in the 40s for quite a while.  I don’t think that’s because for anyone that is serious about it.  There have been very clear shifts.  I wanted to write some things, I was looking for the right analogy.  I was trying to find how long does it take to turn a super tanker.  Something like 8 hours.  Once you start the turning process, it takes, it doesn’t happen right away.  This is the thing with Microsoft, if ever they were a supertanker in tech, it’s them for better or worse.  To me that first memo was saying, ok turn starboard.  The actual process of turning to starboard to then express disappointment that it hasn’t yet turned around is, I can’t think of the word for it.  It’s not a nice word.

Leo: You remember it, you don’t want to say it. Dan does it feel like we’re only talking about Microsoft because historically they’ve been important?  Is Microsoft still relevant in a world where everyone is using smartphones and tablets and the cloud?

Dan: Of course it’s still important.  Everyone’s using those things but, a few hundred million people are also using PCs and Windows.  They’re clearly important.  Their document formats are still largely standard.  Their doing a lot of stuff that is going to be with us for a long time to come.  I agree on that memo, it was certainly wordy and certainly all over the place.  You had to read it in the context as a state of union address. Where every department in the government is fighting to get some language in.  Where it’s almost always a giant mess.  Most presidents go on way too long when they give it.  I think it’s in that category.  I agree with Ben that this is a significant shift.  I still don’t quite understand why they bought Nokia in the first place.

Leo: In fact they’re retrenching a little bit because the Nokia X devices were for Android phones, looks like some of them are going to be Windows phones again.

Ben: Sorry just to jump in but this is one thing that really irks me about this is people saying blame.  I don’t know Nadella, but to blame him for Microsoft’s state as a lot of this criticism does

Leo: Oh he inherited it He’s doing the best he can to dig out from years of mismanagement.

Ben:  It wasn’t just the years of mismanagement though.  What Ballmer did on his way out of the company with reorganizing and then buying Nokia, compounded to a significant degree all the problems that Microsoft had.

Leo: Ballmer left him with Windows 8, a giant Nokia acquisition, and a whole new goal devices and services.

Ben: Well it’s not a goal, it’s a tactic. A tactic that makes no sense

Leo: Has Nadella abandoned devices and services?

Ben: Yes, that was the best thing about the memo.  He very explicitly moved on from devices and services.  He is like this is nice, but we need to move on and this is what we’re going to do instead.

Leo: I would have like to have been at that board meeting.  See Ballmer still on the board, Bill Gates is on the board.  I’d like to be a fly on the way.  Satya says, by the way we’re going to change, you know the devices and services thing?  We’re not going to do that.

Ben: I have it right here.  I have a quote from the memo, it says, More recently we have described ourselves as a devices and services company.  While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy.  That is corporate speak for good bye to the previous guy.  All this stuff now is about unpacking Steve Ballmer’s last six months.  At the time I wrote, lots of people wrote it.  It still boggles my mind, that he could have done all that on the way out the door.

Leo: Patterson in our chatroom says all CEO’s have to remodel the kitchen.  Is this kitchen remodeling or this is going a little deeper?

Dan: Its way deeper and it’s pretty clear that when the board hired this guy for the CEO job they knew what was coming.  Microsoft is not an incompetent company, their board is a bunch of smart people.  Plainly he said, here’s is what I’m going to do if you make me CEO.  They said fine.  I’m certainly willing to believe that Steve Ballmer was not thrilled with that but he’s one guy on the board at this point and owns a lot of stock but that’s not enough.  I think this is an important shift.  I don’t know where it’s going to go but Microsoft certainly was running along in place.  Keep in mind, when they run in place they’re still printing money.  At a spectacular rate.

Leo: But, you have to plan for the future.  You know that is not going to continue forever.  IBM is still around whether they are as relevant I don’t know but at some point you have to make a shift.  The good news that strikes me, the reason that Nadella got the job because he was running the Enterprise side and the cloud side.  The good news the future is really a cloudy future.  A cloud based future.  Microsoft is well positioned with Azure to do that.

Ben: The other thing, Nadella opposed the Nokia acquisition.  He is absolute, 100% cleaning up a mess that he didn’t create.  That acquisition, yes, they are smart people on the board but I do think, there will be changes there over the next year.  To see just how much change the company is willing to think about and go forward with

Dan: The devices thought, I’ve never been believing that devices were their future in particular, but I have to say when they really put their minds to making some good hardware they do a good job, a hell of a job.  The Xbox is terrific.

Leo: Well, Xbox 360 not so terrific.  Xbox One was good.  They’ve stumbled a few times.

Dan: They have, but they’ve also gotten some stuff right.  They created a real platform with the Xbox.  The Surface, the new one looks really nice to me.  I’m not saying this is, there’s an element of lets beat Apple and some of the newer stuff but that’s obviously not going to happen and I think they had to act on that one quickly.  On the phones because they’re not going anywhere with those.

Ben: The phones they’re cutting though, they’re cutting all the feature phones and the low end phones.  They’re keeping the Luminas and the problem I have with the devices, the Luminas are very nice and the Surface is very nice, the most recent version, the problem though is the way you sell a device for a premium is because it’s differentiated. You differentiate it most effectively with your own services and your own software on top of it.  The problem is the motivation to do that is exactly opposite the motivation to be a great services company full stop.   The services company work on all devices. Needs to work on IOS devices, Android devices, these will work all over the place.  What’s encouraging is Microsoft is making great strides there.  Office for IPad, obviously the most visible part of this.  It’s problematic for the company to have these two diametrically opposed incentives going on.  Especially given its history of being a platform company and being the Windows company.  It actually strikes me, I think I’ll write about his for tomorrow, so you’re getting a preview.  Maybe now, especially with Nokia this would be the time to think about would it be better of being two companies?

Leo: Didn’t Nadella say pretty explicitly I’m not going to get despite the fact that were moving away from devices and services, I’m not getting rid of Xbox I think he implied were not getting rid of Nokia? We’re not going to spin off or stop Surface.  He did put the kibosh on the Mini Surface and Windows RT. 

Ben: Yeah it’s hard to say though because he put those way down in the memo and barley mentioned them.  If you want to get into corporate memo criminology, as a former employee...

Leo: They’re not on top, they’re not drivers but they’re not gone

Ben: That’s true but it doesn’t suggest a hide, you can go either way with this.  Reasonable people can completely disagree.  I suspect Nadella personally is not a fan of this strategy.  He is very attuned to the incentive argument that I just laid out, especially with his background.  It’s one of those things, that’s a pretty, he’s done a lot that’s going to take more than six months

Leo: You know what might be most important to do is to change the toxic corporate culture.  It strikes me and I’m not an insider obviously. But when I talk to insiders they say that one of the issues for years with Microsoft was you had all these divisions were really fighting against each other.  The Office division was going to make damn sure there was no Office in the iPad because that would under mind Office regardless of whether it was a good strategy. Nadella made sure Office on the iPad came out even before Office had a touch version for Windows.  One of the things he needs to do is get rid of this toxic culture.  The way they were stack ranking employees, things like that.

Ben: That was Windows, not letting Office be on other platforms. 

Leo: Right.

Ben: Because they wanted that to differentiate.

Leo: That’s right.

Ben: That was a reason to buy Windows.

Dan: It’s too bad they didn’t break up the company about 15 years ago. 

Leo: that’s what Dvorek always called for.  He said there should be three Microsofts, you’d triple the value because each company has value.  But they have different goals.  There is no sense in having it all be one.  I suppose Nadella could still do this but it seems that moment has passed.

Ben: It’s funny because I’m sympathetic to both arguments on that.  Back when the justice department thing was, they’re having their legal troubles.  Even then it was still a very cohesive positive feedback cycle for the company. Windows supporting Office, supporting servers, supporting Office.  Today, what is Windows really doing for Microsoft’s cloud services?

Leo: It feels like Windows is legacy and Nadella recognizes this.  He’s saying we’re going to be cross platform

Ben: The problem is you can say that, the CEO can say that, and it gets into the corporate memo stuff and changing culture stuff, but to actually have that trickle down through the bureaucracy and to actually have people act differently.

Leo: Right, that’s my question. Is he prepared to reinvent this toxic culture that has held Microsoft back?

 Dan: You know the saying that’s pretty true is that culture eats strategy for breakfast.

Ben: Totally, the thing about a toxic corporate culture it’s not usually toxic per say, it’s usually more like rancid.  It’s like food that was very good.

Leo: I think that is much more apt.  Microsoft is not toxic it’s rancid. It’s gone bad.

Ben: It’s gone bad.  It’s not appropriate for the current environment and to me that’s the worry.  Everything is to support Windows, everything must support our platform and our phone.  That’s the Microsoft, that’s worked for them for 25 years and now that’s exactly what they need to not do.  I’m not sure that they can be done.

Leo: Talking about toxic corporate culture we’re going to talk about toxic customer service.  The customer service call heard round the world.  Coming up in just a moment.  We got a call from Ryan Block’s mother apparently yesterday saying Ryan does not want to be known for this. Sorry Ryan.  Too late.  Just as Kevin Rose is known as a raccoon thrower, Ryan Block now is known as he who slays Comcast customer service. We’ll talk about that in just a minute.

Ben: Put a link to the raccoon throwing video on.  I forgot about that

Leo: We got Kevin on the next day.  We tried…

Dan: You really sure you want to go to a commercial, what makes you believe you need to go to a commercial right now? Why do you do that? Give us reason

Leo: I want to go to a commercial, please I beg you.

Dan: We need a better reason than that.

Chad Johnson: You’ve interrupted the #1 technology nut cast online.  Why would you want to interrupt this?

Dan: We can’t allow this, you have to give us a better explanation.

Leo: I’m sorry, I’m still suffering from post-traumatic stress syndrome from listening to that call and you do this now.  Dan Gillmor is also here, great journalist and writer at the Guardian and now professor for some lucky students at Arizona State who are getting him in the Walter Cronkite School of Journalism.  But first a word from our friends because I’m going to go to a commercial I don’t care what you say.  From Citrix who do GoTo meeting. Citrix GoTo meeting is the way if you’re doing, if you’ve got a team that’s spread out, who doesn’t now?  We have people all over the world that work for us.  If you’ve got clients, people you’re pitching spread out, of course because you’re a global entity, there is really not another way to meet with this people in person.   You still got to meet, you still have to pitch, you still have to present, you need Citrix GoTo meeting.  The #1 way to do this.  You share the same screen so you’re all on the same page literally.  You turn on the HD video conferencing, you’re literally seeing each other face to face.  It’s better than meeting in person and it’s a lot better than a teleconference.  Whenever we’re going to do a voice conference, we started GoTo meeting because that way you have all those features available. You can even present from an iPad or your mobile too.  You can be mobile, you can be joining a meeting, you can be presenting.  Start your 30 day free trial of Citrix GoTo meeting by visiting gotomeeting.com. Take a look at the features.  We’re talking very nice HD video.  You can have those faces at the top of the screen or the side of the screen.  You can see the screen that the present is showing, the PowerPoint presentation, the spreadsheet, the document you’re collaboration on. It really is the best way to meet from the convenience not only of your computer but also you’re mobile device, your smartphone and your tablet  The best part is you pay one low flat monthly rate, you meet as many times as you want as long as you want with anyone, from anywhere in a single virtual space.  I know teams that keep GoTo meeting running all day. Share screens, present in real time, turn on those webcams, you’re going to love it GoTo meeting if you are in a distributive environment, a distributive work force, if you work with clients elsewhere, you got to try this, visit gotomeeting.com click the try it free button and all we ask is use the promo code TWIT.  30 days free. GoTo meeting. One of the things and we’ve played this, it all started Monday or Tuesday, I saw Veronica Belmont post on Google+, she said, were moving, and we wanted to replace Comcast with Astound.  They’re lucky they live in San Francisco, there are other choices.  Most of the country, about 80% only has a choice between the cable company and the phone company.  We called Comcast and tried to cancel.  Veronica is on the phone for 10 minutes, Ryan her husband is listening. Of course, Ryan we all know, both of them have been on the show many times.  Ryan is listening and hears Veronica becoming increasingly frustrated. Fortunately he starts a recorder and the whole world heard the customer service call from hell. I’m not going to repeat because you probably all heard it by now.

Ryan Block: You have to fill out the form that’s fine.  Please proceed to the next question and we’ll attempt to answer that if possible

Leo: Maintains his cool

Service Rep: Being that we are the #1 provider of internet and TV service in the entire country.  Why is that you’re not wanting to have the #1 rated internet service and #1 in TV service available?

Leo: You just want to punch the guy now.  That’s only minute 12. Its goes on and on.  Ryan says on the sound cloud post of the audio that he had already given the guy the reasons. It wasn’t that he was withholding the reason, they guy didn’t want to hear the reasons.  What we’ve learned since, I’ve received, Jeff Jarvis has received, others have received messages, emails, posts from former Comcast representatives, current Comcast customer service folks, 3^rd party Comcast customer reps and all of them pretty much agree that the issue is the corporate culture that Comcast in effect pays these guys a certain amount and every time someone cancels on their watch, they lose money.  At some point they can get down to minimum wage if enough people cancel on their watch. In fact, you’ll hear the rep very early on say, can’t you just go to the Comcast store and cancel there?  That’s not because he’s trying to keep Ryan from canceling, he’s trying to keep Ryan from canceling on this phone call.  This is another issue that I didn’t know about, this is from Pastebin post that went to Jeff Jarvis.  The big issue with Comcast, this is a guy that is a Comcast rep, the big issue Comcast reps face is systems we use are broken.  As Comcast has essentially bought its way to the top the computer programs haven’t been upgraded.  I always thought this, you’re on the line and there’s long pauses.  He says frequently I have to restart my computer with a customer on the phone but I’m not allowed to tell them that.  Comcast doesn’t want the customer to know that their systems aren’t perfect.  Time is money if Comcast can push the blame onto the customer as fast as possible that’s the best result.  He says the whole system, this is a toxic culture. Comcast apologized to Ryan and said were going to look into this, this is never going to happen again. Ryan Block very rightly so said on Twitter, I don’t want you to fire the guy I want you to reinvent yourself  so that you’re not the company that promotes this kind of behavior.  Who hasn’t had this happen to them?  In fact, Ryan works at AOL, which was notorious for this kind of customer retention.  Have any of you had calls, customer service calls like this?

Dan: Who hasn’t’?

Leo: Who hasn’t?

Dan: Getting a new customer is a lot harder than keeping an old one.  Or it should be. These guys as it’s quite clear their incentive financial and otherwise is to not let anyone go, if at all possible.  We just, speaking of San Francisco, we were getting the San Francisco chronicle Sunday edition and finally decided after they killed a section we particularly liked reading, there wasn’t enough to get it anymore and I’ve spent 15 minutes trying to be polite to a guy who kept lowering the amount that I’d have to pay if we would just keep it.  We’re not, when you make a decision, you’ve made the decision. It’s really odd and companies need to know how to take no for an answer.  To just move on, they probably would be better off not having people annoyed with them all the time.

Leo: I think there’s ample evidence now that treating the customer better is in the long run better.  Look at Amazon.  Here’s a company that’s customer first, you call to send something back, they’re happily exchange it.  Zappos is another example.  Now an Amazon company.  I think the evidence is strongly in favor of having a better customer relationship and not worrying so much about customer retention. Do you agree Ben?

Ben: Well, I love that we’re discussing this story right after Microsoft actually.  For two reasons.  One is, it really emphasizes or really shows off how powerful incentives are. Right? I’m happy to give this customer representative the benefit of the doubt that has a nice guy, he’s a great guy, he goes out with his friends and he doesn’t insist that he buy them a beer for 30 minutes. 

Leo: Why won’t you buy me a beer I’m the #1 friend you will ever know.  You’re never going to get a better friend, you should buy me a beer! 

Ben: The whole point is this isn’t natural human behavior but he is being heavily incentivized to act in a certain way and that is not his responsibility that is Comcast’s responsibility.  Incentives are incredibly powerful things that act mostly on a subconscious level.  That’s why I worry for Microsoft if they have misaligned incentives, not because there are bad people there that are dumb.  Because people respond to incentives whether they realize they are doing it or not.  This is just an extreme example of that.  Point two is, if I think the Comcast services suck, what am I going to do?

Leo: That’s why this exists, it’s a monopoly.

Ben: Exactly.

Dan: A cynic might look at this particular situation and say Comcast in the throes of basically trying to gobble up what’s left of the broadband industry apart from them.  One might think that if one was really cynical, that this is all a setup so they can say to the world.  See we have competition, people want to leave us. 

Leo: Ryan Block has a choice.

Dan: That’s unlikely, but it is odd there so panicked about one guy leaving.

Leo: We invited Ryan to come on the show and talk about this.  He is declining to do all media interviews because he wants it all to go away.  You know what Ryan you did everybody a service, this is the shot heard round the world.  David Letterman played it, the networks played it, and it was on the news everywhere.  It got a lot of play because it resonated with everybody listening to it, we’ve all been on that call.  I have to think this is going to have some serious impact on Comcast, perhaps on the Comcast-Time Warner merger.  This is a company, maybe they’re not alone.  Maybe a lot of companies act like this.  It is pretty clear this is a company that is mistreating its employees and its customers.  Really should they be allowed to grow any bigger?

Ben: I presume…

Leo: 5 million views, 5 million listens on sound cloud

Ben: I don’t think it will impact though, like I said, what are you going to do?  I’ve already disgusted with Comcast.  How much more disgusting can I be and I’m still going to be a subscriber because I value high speed internet more than I value my integrity.  I don’t want to give my money to you.

Leo: It’s so true.  Stockholm syndrome.  We are held hostage, I’m a Comcast internet customer.  I have a tale very similar, on Friday I was late for dinner because I was on the line with Comcast.  I actually pay Comcast twice for internet.  I upgraded to Comcast business but I cannot for the life of me get them to turn off the consumer internet.  I’m afraid if I do that they’ll turn off everything and I can’t afford to be without internet, they have me.

Dan: At home we have 2 services, we use Comcast as well as Sonic.net for DSL.

Leo: Sonic is awesome there is an example of a beautifully run company.

Dan: If we had actual competition for very high speed broadband, by the way Comcast, fastest service is not really all that high speed compared to what people in other countries are getting,

Leo: Compared to what we’re getting in this country it is

Dan: Absolutely, but it’s still laughable when you think about what’s possible.  That’s the real issue here. We don’t have serious competition for actual broadband and the way congress is going it doesn’t look like we ever will. That is going to be tragic for the future of this country and innovation and communication.

Ben: We’ve been having a few connection issues with me here, I’m actually in the U.S. this time, last time I was in Taiwan.

Leo: Welcome home by the way

Ben: Just for the summer, every time I come back to the States its jarring,

Leo: It’s better in Taiwan?

Ben: How poor, infinitely better, I have like 100 down and 40 up and I pay like $30 a month

Leo: Is it government run? Or is it a private industry?

Ben: The whole net neutrality thing and competition thing is very complicated in the U.S. but in Taiwan it is like it is in Europe and other countries.  There’s a separation between owning the wires and providing the service.  There’s a lot of ISP that offer service over the same wires.  The other thing too, because it’s densely populated.  DSL is actually more of a viable solution. If you’re within a mile or two of a switch it can be very high speed.  There’s more competition on the cable wire and there’s more types of connections, which make it easier

Leo: Who owns the wire? Does the government own the wire?

Ben: That’s a good question,

Leo: I bet it does

Ben: I think it’s the national, I’m not sure, I shouldn’t say anything because I’ll probably be wrong.

Leo: I’m really torn on the net neutraility issue and this comes down to that.  A lot of people, including Alexis Ohanian and many people and at EEF and others think that the solution is for the FCC to declare telecommunications, broadband providers, covered by Title II of the Telecommunications Act that they are common carriers, or utilities, hence should be regulated by the FCC. On the other hand I’ve heard from other people that is the last thing you want. Even at the EEF, I’ve talked to John Perry Barlow, it’s said among the board at the EFF, While yes we want a free and open internet, many of us think the worst thing is for the government to start intervene on how the internet is run.  Title II could be in fact the worst thing to happen to the internet and it’s hard for us to know ahead of time.  I think that everyone agrees on, the real key to this is having true competition.  One way to do it is to have the government own the infrastructure and then open up the internet providing on top of it to a total competition.  The reason we have monopolies or a duopoly is because it so expensive to put the cable in the ground that the FCC said to the cable companies you can have a regional monopoly to pay for the cost of trenching.  Maybe the time is to give that up.  I do feel like completion is a solution.  Is that even viable in the U.S.? We have such a mess going on right now. It just seems like it’s better than Title II which has huge inherit risks.

Ben: I’m very mixed as well for many of those reasons.  There is a lot of stuff going on here. First off the government did give, remember this started with community access television which was basically a shared antenna, which is how cable got started.  In this case, because government didn’t want to pay for the installation they made a deal.  Yes the government provided lots of value, particularly in imminent domain, but the actual cost of putting the cable in the ground was born by shareholders.

Leo: I noticed that as soon as we start talking about this stuff, the internet goes to hell.  We’ve lost both Dan and Ben.  You know who our provider here in the brick house studios?  Comcast.  I think they pulled the switch.

Ben: I know, they’re mad at us.  I’m back now.

Leo: I don’t think it’s you guys because it’s happening here.  The worst company in the world

Ben: I’m here, can you hear me?

Leo: Say it again, I hear you Ben.  We’re going to take a break, we’ll continue this conversation while we attempt to get our internet back in order.

Ben: It’s a good thing, neutrality is a very big private hole we may never come out.

Leo: Every show we’ve had in the last six months has ended up in this net neutraility discussion. I’m just more and more coming into the opinion, competition is the solution.  Whatever we can do to do to foster competition is going to be better than having heavy handed government regulation of the internet because all of a sudden I don’t want to adhere to FCC rules at TWIT.  That would be the worst possible thing to happen

Ben: I think it’s a little overdone.  You’re right on it’s another incentive issue.  We need to have the right incentives in place.  The incentive should also be to keep building infrastructure.  Marc Andreessan had the best statements in this whole thing, the problem with comparing the internet to the sewage system is we don’t crap 10 times more in 10 years.

Leo: Yeah, Comcast, there is some legitimate concern from the internet service providers that we’re using a lot more bandwidth all the time.  There’s a back and forth over Netflix right now. Verizon released a very deceptive diagram that clearly shows using colors, the problem is all Netflix’s.  Because Netflix is red and everything else is green.  A lot of people looked at the diagram, and said it’s obvious.  Level 3 chimed in and said that’s a little misleading.  The real issue is not how much bandwidth is inside of Netflix’s network, how much is inside our network, how much bandwidth is inside Comcast.  In all 3 cases there is plenty, it’s the interconnects, what level 3, which is one of Comcast’s backbone providers, has said again and again.  We are willing to give money to Comcast to upgrade their interconnect, their interconnect is not fast enough.  We are providing them with bandwidths in a giant pipe and they have a little bitty pipe and they consistently refuse Verizon, Comcast, the five big ISPs in the U.S. refuse to upgrade that pipe.  We’ll even pay for it.  The reason is, they want to put the screws to Netflix.  You see, it’s all Netflix’s fault but it’s really that little pipe, in this case, Verizon has attached. It’s a mess, it’s one of the subjects to have to have expertise in technology, politics, inside information on how the backbone is working.  No one really, no senator, no congress member could possible fathom this.  No member of the court system, no technology journalist, it’s something so hideously complex.

Dan: It’s not actually Leo.

Leo: Good, cut through this. 

Dan: The technology and the back is complex, but you had it right the first time.  You separate the provision of the access, which is the service, from the content inside the service.  That’s not easy to do at this point because we’ve let these people create these mega companies that combine it and we’ve given them permission to decide what goods get delivered.  That doesn’t have to be.  They can make plenty of money by being the providers of the pipe and selling access to the people who then in turn provide it to the rest of us.  It’s really, Title II is a problematic thing to do, but it can be done with a very light touch that could encourage competition.  I think we’re trying to think about the horribles that might happen when we can see right in our face things that are going on and going to get much worse in the near future if we don’t do something. 

Leo: I agree

Ben: Very well put

Leo: Bob Frankston, one of the creators of VisiCalc.  He’s a big promoter of community internet.   He says local comminutes should use imminent domain to take over these infrastructures that the phone and cable companies have put in.  Thank you very much, nice job, you’ve amortized your investment, glad about that, now we’re going to take over and we will lease them back to providers.  As many providers as we possibly can to provide competition.  This is public infrastructure.  This is the gas, the sewer, the water and we’ll run it and we’ll let many companies float over it.  For sure, if you do that there we’ll be one company that were not going to in anyway restrict what you do.  We’re not going to packet sniff, one company.  Sonic that is a good example of an independent service provider, who for a long time said, we’re not metering, we’re not shaping, we’re not doing anything, you get all the bits you want.

Dan: The costs of providing the bits is dropping like a stone

Leo: Right

Dan: The arguments from the telecoms, all this stuff that is being used, well the cost of providing is dropping and their ability to get more and more in the same lines is expanding at a pretty rapid rate too.  I’d hope we get this right.

Leo: I despair.  There is no way

Ben: Now were getting into the lobbying, the money and government

Leo: It’s just crazy, none of this is ever going to happen.  We get the internet we deserve. 

Ben: You are going into the next topic with a very depressing tone. 

Leo: Let me lift you up.  Surely there is a great tap dancing kid who can do great yo-yo tricks that we can just show that video for a few seconds and everyone will forget their troubles.  Chad you must have something like that.

Ben: That will work perfectly

Chad: Let me look into my bag of tricks.

Ben: We need Kevin Rose throwing of the raccoon. That will work perfectly.

Leo: Kevin Rose throwing a raccoon. Anything like that that we can?

Dan: Well you could play that call again.

Leo: No that’s depressing too. We need really to have a little bump or something that can drop in.  That’s what YouTube is for. YouTube is to distract us from the grim reality of our lives.  I believe that’s in their charter.

Dan: Until, Comcast throttles.

Leo: Yeah, until Comcast throttles.

Chad: Here you go, I have the next best thing.

Leo: Okay, ladies and gentleman, pause for this word from

Chad: From a child with spoons on his eyes. 

Leo: Thank you very much child

Child with spoons: oh hello, I didn’t see you there. I was too busy blocking out the hangers.

Leo: Thank you YouTube, our show today brought to you by…

Dan: That was awful.

Leo: It doesn’t matter.  It cheered you up.  If you are managing a giant project, a giant software project and you are daunted by the challenges posed. Surely, you have heard of Atlassian and their great product Jira.  If you haven’t, try it right now! Jira is one of the most powerful, customizable issue and project management systems.  We were talking about how important software systems are in a company like Comcast. Where the systems don’t work then the reps can’t do their job and the customer service suffers.  Having great systems can transform what you’re doing and Jira is an example of that.  It can capture you’re workflow, and organize and prioritize what you’re doing, take action on what’s important, stay up to date with the activity going on around you.  You can capture, organize, and prioritize.  All the issues of the tasks, the features, the bugs in your giant project, give your team a very easy to use interface and lets them collaborate in real time.  Actually, play a video on that Atlassian Jira site because it really is if you’re in this situation, you know you need this.  You can integrate all the documents from all the different places, your back logs, your issues, in fact that allows the team to follow the code all the way from development to delivery.

Chad: I didn’t realize this, but I’ve actually been using Jira for years. 

Leo: What?

Chad: Let me see if I can find it.

Leo: You’re not a programmer

Chad: No but I’ve been using it because Minecraft’s bug tracker has been a Jira product they are using.  It’s wonderful because I have intimate knowledge of everything because I’ve issued a few bugs. They do these amazing things with it.

Leo:  You can see the activity stream on the right,

Chad: You can see the activity stream on the right.  This is kind of amazing. These are the bugs that are created and the bugs that are resolved.

Leo: That is looking good.

Chad:  It shows off the known issues. 

Leo: Is this something Mojang uses?

Chad: Yes, Mojang uses this, the creators of Minecraft.  There are a lot of really nice features like you can merge if one topic is posted and posted a second time by another user that didn’t realize it was posted, so you can merge topics.  You can easily add screen shots and crash reports and there’s comment history and you can close and open tickets.  It’s just amazing. 

Leo:  It’s funny you’ve been using it.

Chad:  I’ve been using it for years! And I kept thinking this is such a great system.  Whoever built the system is so good.  It was Jira Atlassian this whole time

Leo:  What’s nice is I’m sure Mojang is added to it.  They make it very easy to add for your specific situation, it’s flexible and easy enough for a five person start up but reliable enough for a 100,000 people that’s why NASA uses.  70% of the fortune 100 use it and 25,000 companies including MOJANG.  If you haven’t tried Jira you can go to atlassian.com and try it now.  Monthly plans are very affordable as little as ten dollars a month for ten users but we’ve got it free for thirty days and I think you will be pleased.  Systems make such a difference in large projects.  If it’s just you, you don’t need it, but if you’ve got a team, Atlassian.com/twit and try it for free for thirty days and we thank you for your support.   Big thinkers are watching this show and that’s good news. Okay, we are not going to talk about net neutrality.  We’re screwed and it’s over.  No, I don’t know what’s going to happen but we will find out.  You mentioned that we expected to see the Microsoft Word change to a little to reflect Satya Nadella’s goals for the company.  Google is doing a little of that.  I see that Alan Mulally who just left as CEO as one of the most respected CEO’s in the U.S. Truly a genius who not only turned Ford around but made sure it was protected and they never took government loans when all the other big three did and they don’t have the problems that GM is going through right now.  Mulally retired as CEO he was briefly mentioned to be considered to be CEO of Microsoft but that was never in the cards. He wanted to have some time with his family but he has taken a job as a Google director and will be on the board of Google.  I was looking at the board of Google directors and here is an example of a company that has created a board of directors that very much signify the direction the company is interested in and of course Larry and Sergey the founders are on it, and Erick Schmidt is the chairman.  John Doerr investor and I think is part of the investment that got the seat.  Diane Greene, founded VMware, so there’s your cloud and your software folks.  John Hennessey who is president at Stanford, so there’s actually two academics on the board.  President of Princeton as well is on the board.  Then Pau Otellini, formerly CEO of Intel is on the board.  This is all Google.  Ann Mather is on the board.  She worked at Shutterfly and Netflix.  You’ve got a board that really reflects, and Mulally going to the board of course is automotive, all of the interests that Google has, former Amazon guy Ram Shriram, right now Microsoft’s board is really a hodge podge.  You’ve got John Thompson who is very active, former IBM guy.  You’ve got Bill Gates, Steve Ballmer, Satya Nadella, and the rest of them seem like place holders.  I can imagine a reinvigorated Microsoft board, would not only help the stock market understand what Microsoft is up to but help Satya Nadella forge his vision.

Ben: It’s not the most attractive job in the world though.

Leo: You get a lot of money don’t you?

Ben: You do, most people who are considered for these positions don’t need the money.

Leo: It’s a prestigious, hey I’ll volunteer, I can help

Ben: The interesting piece on the Microsoft board is they have the value act

Leo: The activist investors got a seat.

Ben: Right, that will be interesting to see how that plays out.  I think the Bill Gates question is still out there.  Obviously, it’s going to be more involved under Nadella.

Leo: You don’t see any evidence that Bill is advising Satya Nadella at all.  Where is Bill’s hand in any of this?

Ben: I’ve heard he’s been on campus more frequently.  I did hear that a few months ago, I don’t know if that has continued to be the case.  In general, Microsoft’s board will always be weak as long as he is on it

Leo: Sure, because if Bill stands up and says no, we’re going to do this.  People are going to listen.

Ben: Yeah, the thing with Google, their board is way weaker.  They can’t do anything because the way Google’s shares, corporate government is set up.  Sergey and Larry Page and Eric Schmidt have complete control.

Leo: Oh really

Ben: The board is really just there, but they can’t actually do anything.  Facebook is the same way.  It’s interesting for lots of reasons.   A lot of people, obviously on Wall Street and finance are concerned about it.  There’s obviously plusses and minuses

Leo: I would think at least you use the board even if they have no literal power in an advisement capability.  They have very smart people. 

Ben: Absolutely, if anything else the Google board is spot on and I think that’s what they’re doing

Leo: Very impressive, all of them man, these are good people and they can be very helpful in guiding you even if you, Larry Paige, are making all the decisions

Ben: That’s also a much more attractive job.  You’re on a company that’s going in the right direction, so there’s not much pressure.

Leo: Right. Apple has teamed up with IBM.  I’ve got to find the picture of Steve Jobs flipping off the IBM sign.  Back in the early days, here’s the image.  He very famously, they were just starting out. They were young, they were full of vim and vigor.  He went to the IBM building in New York and very famously flipped it off.  For many years IBM was the hated, evil empire.  In the 1984 commercial it was pretty obvious who the woman holding the hammer was throwing it at.  It was IBM.  Things have changed a little bit in the modern era. IBM and Apple are teaming up for a huge Enterprise push.  Ben, I figured you’d understand.  Is this a big deal or is this PR material?

Ben: No this is huge deal and it’s a really brilliant deal.  It really came out of left field.  I haven’t heard anyone talking about this previously.  The reason it’s a big deal, Apple is succeeding in the Enterprise in a way they never have almost by accident right now.  They have done work on the product side for IOS to make it work well in the Enterprise especially is IOS 8 it has quite a bit, for the first time, the WWDC Keynote had and devoted to the enterprise.  They have a slide

Leo: A slide

Ben: They spend a little bit of time talking about it. Obviously, it’s a very big market, Blackberry has traditionally dominated it but IOS is becoming the default device there.  From that perspective, they’re well shaped from a product perspective.  Microsoft knows what lots of Enterprise companies know is and it’s hard to build an Enterprise company is that Enterprise the product is one very small piece of the whole puzzle.  It’s the support, the working with IT, developing needs, developing application that are specific to Enterprise, its working with their system, with their backing systems, with their cloud whatever that might be.  All of that is messy, it’s dirty, you go in and listen to the customer and tell them what they want to hear and you respond to their needs.  It’s very counter to Apple’s philosophy and way of developing products and this is why Apple is always disdained in Enterprise, not because there is not money there, there’s a ton of money there.  Because it would poison the culture that they have around building the best possible products

Leo: Well in some ways it was Enterprise that always disdained Apple right?

Ben: Absolutely, for good reason. There was mutual hatred on both sides.  Both well deserved to be perfectly frank.  Now what Apple is basically getting is IBM is going to do all of that.  They don’t need to develop all that messiness and worry about it.  I would imagine from IBM’s perspective, IBM is probably getting a very good deal out of this.  Apple is going to go get the device money which is all they want in the end anyway.  They might get a little extra for support, but IBM even Enterprise deal the product is only a small part of the total cost. The service on top of that is where most of the money is made.  I imagine, for both companies it’s a massive win-win.  Apple can sell much more effectively, way more devices. And IBM has a marquee product to base their Enterprise strategy around.  It’s a brilliant deal.  It’s very hard to see any downside to it to be perfectly honest. 

Dan: it’s not the first time IBM and Apple have worked together though.  They go back to the Power PC, the Telligent project

Leo: Right

Dan: Thinks like that but Apple was a lot smaller, in those periods

Leo: That’s a good point.  Pink, the whole IBM, by the way, which never emerged.

Dan: No, it was classic vapor work. There was a joke in the 90s when people were talking seriously about Apple and IBM and at one point there was a rumor that IBM was going to buy Apple.

Leo: I remember that

Dan: There was a riddle that came out of that, what do you get when you combine Apple and IBM?  The answer was IBM. 

Leo: That would change today wouldn’t it?

Dan: It sure would.

Ben: The difference is those, both Power PC and Telligent were products.  They were working jointly on a product.  In this case the lines of division are very clear.  Apple provides the product and IBM provides the service.  Because IBM doesn’t build products anymore, to me that gives the partnership a much greater chance of success.  Going back to incentives, the incentives are very well aligned for this and that’s the key to making any partnership work well.

Dan: I’m pretty sure IBM will end up getting some small cut of the hardware price too.  It’s a very smart deal for both companies

Ben: Pretty likely

Leo: Is it targeted against Microsoft or Google or both?

Dan: Yes.

Leo: Microsoft has a very compelling enterprise strategy, right? If you’re in the enterprise, already you love Microsoft, and it seems with Windows Phone there’s a pretty nice unified platform there.

Ben: They don’t actually.

Leo: They don’t?

Ben: This is the one thing about using Windows Phone is Windows Phone is, the most recent version has kind of added some basics like some must haves when it comes to enterprise, but they’ve been way behind iOS when it comes to enterprising.

Leo: Interesting. I would just assume they would pay attention to enterprise; it plays such a big part of Microsoft’s business.

Ben: Well Windows Mobile was for sure, but Windows Phone they reset, and it was very split to consumer product and in my mind, that was really the nail in the coffin for the whole thing. Had they kind of granted Apple and Android the consumer space and said okay when the ships sails in 2010, we are going to be the enterprise phone, take over for Blackberry.

Leo: That would have been a smart move.

Ben: Yeah. I think they would be in a much stronger position.

Leo: Clearly the iOS has taken over for Blackberry, not because it’s got such a great enterprise store, but because that’s what the users wanted. B-Y-O-D they brought their own devices and it’s always an iPhone.

Ben: It has the best enterprise support of all the major platforms.

Leo: It does.

Dan: Android has been pretty messy, the Samsung and others are actually doing some pretty heavy lifting to try and make Android more enterprise friendly.

Leo: Samsung has Knox, which is a secure platform.

Dan: Right.

Leo: Although at Google IO they did announce they were going to allow you to have the mullet of phones; your Android Phone will have a party in the front, business in the back, or was it the other way around? You have your business stuff, and it would be separated from your personal stuff.

Dan: Which is easy to do now for all kinds of reasons, including the fact you can pack so much storage into a tiny device.

Leo: Interesting: A story coming out of HOPE, the Hackers On Planet Earth conference in New York City this week, a slide deck from Jonathan Zdziarski, I hope I’m saying your name right, Jonathan, identifying back doors, attack points, and surveillance mechanisms in iOS; we had talked quite a bit on our security show, Steve Gibson had looked into the White Papers Apple had put out about security first, on IPhones, particularly on the newest iPhones, and came away quite impressed. I don’t know, I forwarded this document to Steve and we will talk about this on Security Now on Wednesday but holy cow if you read these PowerPoints, I guess the big take away from this is that Apple has all sorts of services; well this is it: Apple has worked hard to make iOS devices reasonably secure against typical hackers, but they have put all sorts of stuff in to allow law enforcement access to this data, and in fact, all iOS devices are currently running a packet sniffer that allows these devices, with the appropriate software, to look at everything that’s going on over the network entirely. In fact, the iPhone is terrifying. There are undocumented services that bypass encryption. You may assume if you have an iPhone, when you shut it off and you have the lock screen on, that your data is encrypted; not in fact the case. If they device hasn’t been rebooted, all the data that has been encrypted can be accessed, easily, with….all of Apple’s software gives up its information immediately, completely easily, it’s really quite a surprise, now we haven’t heard Apples’ response to this yet, but I would most particularly like to hear about this lock down D and packet sniffer that is apparently running, I mean a PCAP D, Zdziarski asked why we need a packet sniffer on six hundred million personal iOS devices?

Dan: Because it’s there.

Leo: It’s there!

Dan: Look, all of mobile is a horror story now when it comes to privacy and security , it’s all a gorror story now.

Leo: Well I get that’s the message; that those of us who thought foolishly, “oh, Apple is protecting us,” we now know that’s not the case. Is that right?

Dan: I don’t know why anyone trusts any of the major technology companies, when it comes to things like this because the laws are basically against us ever finding out. They get served with these national security letter or other secret government orders and they can’t tell us about it. I think they need to do a better job of fighting for us but this is going to take a while to fix, for sure.

Leo: This is what Jonathan says: he says, “com dot apple dot pcapd immediately starts libpcap on the device, dumps network traffic and response data travelling into and out of the device, it does not require developer mode, it is active on every iOS device, it can be targeted via wifi for remote monitoring, so you can use wifi to get into somebody’s phone and monitor the network with it, there is no visual indicator to the user that the packet sniffer is running, and it’s on every single iOS device. Now again, this is Jonathan’s presentation. He is a very credible security researcher, he does offer an example from iOS seven one point two the current version of iOS, of a hex dump that he got from a phone, it’s pretty terrifying. You tie that with Edward Snowden’s conversations, most recently with Daniel Ellsburg at HOPEX, HOPE was a good conference to go to, I’m sorry I missed it.

Dan: I was actually there yesterday and Friday.

Leo: Where you?

Dan: And just got back; it’s a really fabulous conference. Think of it as Defcon for people with social responsibility. It’s pretty wonderful.

Leo: It was started by Emmanuel Goldstein of Twenty Six Hundred, was it not?

Dan: I believe so.

Leo: Is it still run by them or?

Dan: They are still involved. It’s a wonderful gathering.

Leo: Did you go to the Snowden event?

Dan: I actually missed that, but it was so crowded nobody could find you in the room.

Leo: Pretty popular.

Dan: Well actually it was so crowded, most people couldn’t get into the room. Actually, a lot of people got in, but most people didn’t. Or a number of people didn’t, anyway.

Leo: Snowden’s been saying some interesting things, I have to say. For instance, he says if you want privacy, don’t use Dropbox. Dropbox is the most anti-privacy of all the services. He points to the fact that Condoleeza Rice, the former Bush official security Advisor who he says was very instrumental in privacy reversals during the Bush administration, is on the board of directors. He recommended an alternative, which we have recommended as well before…

Dan: SpiderOak

Leo: SpiderOak, yeah I’ve used SpiderOak for some time, your data is encrypted prior to its transfer up to the servers. Dropbox, as we know, encrypts your data, but everybody at Dropbox has access to it.

Ben: I missed this paper, like I said, I’ve been on vacation.

Leo: You’ve got some reading to do, Ben.

Ben: I do. Were all these, I’m a little confused by the packet sniffer on a phone thing. The phone is running its own OS, isn’t that by definition of packet sniffer? Is all of this about having local access to the phone or…

Leo: No. Because he points out you can get wifi access to the phone and then sniff it, and law enforcement can turn it on. You know what, I am not an expert on security, you might want to go to Jonathan’s website:  Z-D-Z-I-A-R-S-K-I dot com. He says he published this in a paper months ago, but it wasn’t until he put it in a PowerPoint slides at HOPE that anybody talked about it, which doesn’t really surprise me. But we’re talking about it now, and I think it is worth probably paying more attention to it.

Dan: You know mobile privacy in general is such a joke because of permissions that the applications all demand and I’ve just moved my two phones to Cyanogenmod which is a third party Android variant that has much better privacy built in, but I don’t take for granted that even that is going to be sufficient. This is a problem that I’m not sure the market itself is going to be able to solve because in part of the concentration among a few carriers that are practically married to the government when it comes to push to shove so we really have a big, big difficult problem to solve here.

Leo: At least Cyanogenmod is open source, so it presumably could be monitored. What we learned with True Crypt is that you could have access to your source code, it doesn’t mean it’s secure, it means you have access to your source code and we’re all, those of us who are unable to look at the source code and really, truly vet it, just hoping somebody is doing that.

Dan: Well the Windows version is still binary, so that was always one of the issues, was that Windows version of True Crypt no one really knew what was going on but even they said, basically don’t trust any of them.

Leo: Yeah

Dan: That was the implication.

Leo: Yeah. They’ve given up.

Dan: Well there is a project that may come together, if they can find a way to do it, to get the True Crypt Lennox code and work with that for a new project. But there are ownership issues.

Leo: Of course the Johns Hopkins researcher who raised money was on Indie Go-go to do a True Crypt audit is continuing on with his audit, I guess he has access.

Dan: Matthew Green.

Leo: Matthew Green, that’s right.

Ben: There is, I think, a silver lining here, which is law enforcement now, according to the Supreme Court, does need a warrant to access your phone. So at least from that perspective, in all likelihood, that’s going to be a legal protection.

Leo: Well it helps you on the ground; it helps you if you get pulled over in a traffic stop and the cop takes your phone and plugs it into a device and takes a data dump. You can’t do that anymore, without a warrant, but it doesn’t help you against the NSA in the least.

Dan: No.

Ben: That’s another thing.

Dan: And then there are these systems police have working in lots of places around the country, to basically scarf up everything, and fake out the tower and pretend that they’re one of the cell phone towers…

Leo: Yup

Dan: And that’s where the traffic goes. And they’re making deals with the manufacturers to keep it secret and the government is ordering, the federal government has ordered several cases that the locals not tell anyone what they are doing. This is, again, if we had a Congress that actually did its job, I would hope that some of this stuff would change.

Leo: Can we get that kid with the spoons on his eyes again? I’m getting pissed. Now I have to read a commercial.

Dan: Yeah, we need something.

Leo: This is the most depressing TWiT ever. So I want to know more about HOPEX, I love the name: Hackers On Planet Earth equals HOPE, and it sound like it was a great conference, so maybe you can tell us a little more about it when we come back, Dan, how about that? Our show today brought to you by Audible dot com; we’re going to talk a little later on about Amazon’s new Kindle. That’s nice but I tell you I like to listen to books, hint, hint, Amazon. Right now I’m a huge fan of Audible dot com; you know that I have been since the turn of the century. I think I got my Audible account in two thousand one and I’ve got over five hundred books in my Audible Library. That’s one of the neat things about Audible is that once you buy a book on Audible dot com it’s yours forever; you can go back and listen to it. One hundred fifty thousand titles; they’ve got fiction, nonfiction, they’ve got wonderful thrillers, Mark Russinovich, Rouge Code, in fact the trilogy, the Jeff Aiken Trilogy is all on Audible, wonderfully read by Johnny Heller, if you like. This is kind of cyber, a new style of fiction, kind of a cyber thriller. Zero Day I think was the first one, Trojan Horse, and now the latest just came out, Rouge Code. I’m going to tell you how to get two books, free. So that’s why I mentioned Audible, and maybe mention a few titles. There are so many great choices. There is this one I keep getting recommended I don’t know why Audible thinks I want to read The Art of Fermentation: An In-depth Exploration. Actually, I can’t wait; I do want to read this book. Because bread making, beer making, a lot of what we do, kimchee making, involves fermentation. 

Ben: Just be careful it doesn’t become rancid.

Leo: That’s right. We’re stewing, but we don’t want it rancid. And kid’s books, you bet. Now one of the things that…

Ben: I’m going to get you in trouble with your advertisers.

Leo: You already are. No, no, no, no rancidity here, just pure fermentation. One of the great things about Audible is that they have books for young adults and children too. You might say, “Well I like to read to my kids,” well of course you do. You know the studies have shown that kids who listen to audio books read faster, read earlier, they want to pick up the books and look at them; how about The Wind in the Willows read by Shelly Frasier, the classic Kenneth Grahame book, what a great book that was. Little Women, Treasure Island, read by Alfred Molina, the great actor, Alfred Molina. Audible has the best books, but also the best readers; they bring these books to life. I think more than any movie, more than any play, more than certainly reading a novel, listening to a novel, there is something that happens, it just comes alive in your brain. Sometimes I’ll go see a movie that I’ve listened to on Audible and I’ll say, “I already saw this, and actually it was better, it was better in my brain.” Visit Audible dot com, pick a couple of books, there are many to choose from. The latest Steven King, Mister Mercedes, is out. I finished, some months ago, Michael Lewis’ Flashboys, that’s fascinating; they have a lot of nonfiction and technology fiction on Audible dot com. Go to Audible dot com slash twit two and sign up for the platinum account and they will give you two books, or credits, plus the daily digest of the New York Times or Wall Street Journal. You can cancel any time in the first thirty days and pay nothing, but those books will be yours to keep. See Dawn of the Planet of the Apes: The Official Movie Novelization. You now, there are books, movies like MASH, which started as books, and became movies, and I’ll tell you , if you haven’t read the book MASH, I bet you most of you haven’t, it’s great! If you love the movie, you’d love the book. Hot Lips Hooligan, Tapper John, they are all in there. Audible dot com slash twit two, get your two books absolutely free, you will thank me later, I promise you, at the gym, in the car if you have a commute, walking the dog, doing the dishes, I listen to Audible all the time. Audible dot com slash twit two, actually, Lisa and I, it was kind of fun, listened to a book together. We listened to The Martian together. Actually, Brian Brushwad inspired that. It was so much fun, you know, we said, okay, we’re going to listen now, and we were driving in Hawaii, We listened, it was so much fun. So it’s something you can do with a friend, too. Audible dot com slash twit two, we thank them for their support of This Week in Tech. Dan Gillmor is here, writes for The Guardian, professor at the Cronkite School at Arizona State University, where he teaches kids entrepreneurship, and how to think for themselves, damn it! Dan Gillmor dot com, G-I-L-L-M-O-R dot com, and you’re at Dan Gillmor on the Twitter, right?

Dan: That’s right.

Leo: Also from Stretechery, Ben Thompson, great analyst, and you worked, I didn’t realize you worked at Automatic, I guess you mentioned that the last time you were here, and what did you do with Automatic?

Ben: I was working on growth stuff, growth and marking type stuff. So I know enough programming to work there, which is a prerequisite, but mostly working on Word Press dot com, specifically, helping us get more users, retaining the users we have, so…

Leo: I love Matt Mulligan, the creator of Word Press. What he’s done with automatic is smart, because they have the nonprofit, open source Word Press, but they also have the commercial side, which supports development. And that’s a great way to keep something like that alive, and vital and fluent.

Ban: Well Word Press is a huge community and works the dot org a lot as well so, I have to say that because I know Matt always hates when it comes across as the dot com does everything, but no, it was a real honor working there and obviously, my business is built on Word Press, and lots of people’s are, so it’s really an amazing product.

Leo: I still use Word Press for my personal blog.

Dan: I use it for () and I admire Matt and those people a great deal.

Leo: yeah, yeah.

Dan: They have walked the walk in ways that almost no one else have ever done.

Ben: Well especially being in journalism, I mean, the impact of blogging generally, and the fact that there are no more gatekeepers when it comes to publishing content. More than anything, I mean, along with the infrastructural issues with journalism, and being digital and all that sort of stuff, but along with that has had such a huge impact, and really changed what it means to be published, to be out there, it’s now easy to be published and that changed it for me, that’s for sure.

Leo: On that note, maybe I’ll mention that the blogger conference, that’s coming up in San Jose, we have some people here in the studio audience who are here for Blogher, B-L-O-G-H-E-R fourteen, Blogher was always about women bloggers, right? But bloggers in general, and it really a great organization, so, is the conference this week? How exciting.

Dan: It’s their tenth anniversary, and they’re amazing people. Lisa and her team, they’ve really done a great job.

Leo: Yeah. Lisa Campbell-Hart, Paige and their team have really helped foster not only bloggers, but you know as we always say, we pay a lot lip service to getting women into technology, they’ve really done it. Without being demeaning in any way, I hope it’s not demeaning to say that. But we don’t want it to be a boy’s club, that’s a bad thing. Amazon has decided it’s going to do a Netflix for books, ten dollars a month, it’s called Kindle Unlimited, and it is lunching, I’ve seen it on the front page of Amazon, I briefly considered it, and then I saw that none of the books I wanted to read were part of it. I like the idea, but it’s not the entire Amazon bookstore, and I’m sure as long as publishers have anything to do with it, it won’t be. What do you think, The Verge says, “Amazon’s Netflix for books might be doomed before it’s started.” Is this a good idea, bad idea? This isn’t the first Netflix for books; Oyster Books has been doing this for about six months or so, maybe a year.

Dan: You know, first I have to do a disclosure: I own a small amount of Amazon stock, but I have to agree with you, I’m not going to pay for this. It’s too expensive for not enough. I suspect, and I have absolutely no knowledge or further insight into what they’re doing internally, but I’ve got to believe they are going to end up with tiers of service like other companies and that maybe it will be three dollars or something for a part in the catalog and onwards so if you want to read all self-published books it will be a lot cheaper than (Unintelligible)…

Leo: Well that’s how Netflix (Unintelligible)

Dan: But they don’t want to be part of it yet, and it’s very unclear, by the way, as an author, I have to tell you, it’s very unclear to me whether this is a good deal for me as an author, I’m not sure.

Ben: There’s a few, several problems why: One, this is interesting, and two, why I don’t think this particular one is going to work. First off, for Amazon, specifically, it doesn’t seem, it’s probably not the best idea to be raking over the publishers and trying to extract every last penny from their pocket even while you need their support to launch a new kind of service. Perhaps as part of these notorious negotiations that Amazon has been undergoing with publishers to get the support, but regardless, you need publisher support to do this. And right now they don’t have it and I don’t think it’s complying for that reason. Two, though, I think this is a very interesting way where they’re actually, the publishers ought to figure out someone, or among themselves, a way to do this, because I think it is very compelling to have a Kindle alternative, like a big problem is because they insist on (Unintelligible) around the publishers do, that locks everyone into Kindle, and there is no real alternative and that’s why they are kind of behind the eight ball in these negotiations, and it would be very interesting to see if they could, if there could be a real alternative to Amazon that would kind of break the Kindle’s power over e-books, by using this model as an alternative to the Kindle model. The problem though, from publisher perspective is that there are a few whales, when I was at Microsoft, I worked under the publishing category for the (Unintelligible) store and one thing you learn about the book industry is that it is a whale sort of industry. There are a few people that buy a ton of books…

Leo: Oh, is that true? I always thought when you said whale I thought oh, you’re talking about Danielle Steele, you’re talking about either big publishers or big authors, but you’re talking about big readers.

Ben: Yeah, for sure. I worked on the Kindle app for (Unintelligible), a big thing was you had to constantly test for people that had over ten thousand titles in their library. Like, it was insane. And again, it wasn’t very many people, but there are a few people who by multiple books a week and these people…

Leo: Really? Do they read them or what?

Ben: Yeah, no, there are voracious readers that are just reading constantly and they support a lot of the industry and so in particularly in reading where it is a smaller market than for music, for example, where everyone listens to music, a lot fewer people read books, and that makes this much more fraught because if those people move the description model, you’ve just given up a whole lot of revenue, and it’s not clear you’re going to make it up on the other side.

Dan: I have a really good Netflix for books: it’s called my Public Library.

Leo: Good point.

Dan: I’m very happy with it.

Leo: Fortunately, most of the whales don’t go to the public library.

Ben: No, because they want what they want right away.

Leo: They want to own it. You know, I look at this and Oyster Books and it’s very much the same list; Amazon is claiming six hundred thousand books, Oyster Books five hundred thousand, but if you look at the titles on one, it’s very similar to the titles on another. Both of them have the old, but still probably valuable Seven Habits of Highly Effective People, the big best sellers, I was looking; you know the thing that I use as a litmus test is a book I’m reading right now by Donna Tartt, Pulitzer Prize winning book called The Goldfinch, neither store has that, and that would be frustrating, if you wanted to read the current best sellers, you wouldn’t find it on either store. So in that case, in that respect it’s very much like Netflix Streaming or Amazon Prime Movies, it’s got movies, it’s got books, just not the ones you want to watch, or read. I do think it could all end into tiers, as Scott (Unintelligible) said, in that maybe if you pay five bucks more you get more. But I wonder, I do worry about authors. Do you really think Amazon wants to basically be the publisher? They did offer, for instance, and I don’t think any of the publishers took them up on it, they said, “Look, if we can’t get a book from you, can we just print it? And send it to our customer?” A print-on-demand service for publishers, I don’t know how they are taking to that. Doesn’t Amazon just want to get the publishers out of the business entirely?

Ben: No, I think Amazon sees, they’ve actually been very vocal about this, they see the publishers as being dinosaurs in kind of a, what’s the word, something of a past era, that doesn’t need to exist anymore, a relic, of a past era, and there’s reasons to be, you know, sympathetic to that. I think I mentioned briefly the upheaval in publishing that blogs have done, well, you could argue there’s no reason e-books shouldn’t have a similar effect. I think that’s where you’re going to get a (Unintelligible) questions on DRM, all the sort of issues that go into digital and you can see Amazon’s point, in a way. Then again, Dan might have a different view; I’m not a published author.

Leo: Yeah, how do authors feel about that, Dan?

Dan: It depends what author you talk to .The ones who are the big selling ones, they’re going to stick with what works for them very well, which is the traditional model.

Leo: Right.

Dan: But the economics of it have stopped making sense for all kinds of reasons, and the whole idea that we should all as authors be forced through this orifice of five big publishing companies that increasingly are indifferent to the finding of excellence as opposed to things that will sell. I’m just ready for some big changes and the fact that Amazon took such a giant market share has a lot more to do with the publishing industry letting it happen without having any counter response at all, and certainly fighting it every step of the way, on one hand and then working with it on another.

Leo: They had the same kind of schizophrenic response to the music industry.

Dan: Yeah, and the production cost, you know there are costs in publishing and in music but there’s some similarities and again, I’m not a typical author partly because I put my work out under creative commerce licenses, so people can download them anyway. And by the way, that does not hurt sales, which people think it’s counterintuitive, but it’s not. There’s a whole new ecosystem emerging that we’re still just getting glimmerings of. I think, my hope is, that Amazon will not dominate it as much as they have dominated it so far, because that’s just not healthy.

Leo: Yeah. Jerry Pornell loves Amazon and loves e-books, but he’s an author who has a fast back catalog. And for him, he’s a long tail author, I guess. For him, something like Amazon is a boon. No bookstore is going to carry all of Jerry’s books. Actually, they might.

Ben: Well it’s a gatekeeper thing, too, if you’re already a published author you’re already in the club so of course you love to see the club continue. It’s the same thing, like once upon a time, I wanted to be like a columnist for the New York Times, right? But I didn’t want to put in my, no offense to the journalists in the room, but I didn’t want to put in my years of covering city hall and covering meetings and things like that…

Dan: Sorry, kid, but you gotta.

Ben: Right, but what’s so marvelous about the web and about blogs and all this other stuff is I don’t need to ask permission, I can start something up and nothing is granted to me, I need to earn an audience and I need to earn people trusting me and not just to read but I don’t need to ask anyone’s permission to do it and that’s what is potentially exciting about e-books as well, is that if we can get to an area where an author can sell himself; and yes, some authors who are happy with the current system, of course they don’t want to do that because they don’t want to they don’t want to do the work, just like how a lot of journalists don’t want to do the social media stuff, because they just want to do the work, but that’s not the world anymore.

Dan: But you don’t need permission to write something, increasingly, though, you need access to the new form of distribution which is not manufacturing and putting in trucks, but rather having people know it’s there.

Leo: Which is hard.

Dan: Which is getting harder and harder to do. And that’s one issue, and I worry a lot about that in the net neutrality ballpark. But the thing that really is poisonous right now, I think, in publishing, when it comes to e-books, is the incompatibility of the design of all the formats and the fact that these guys all want to, or at least they give the appearance of wanting to, own the ecosystem for themselves. And there are residents there with some of this control stuff in other parts of the tech and communications ecosystem. We really need to fix this.

Ben: That has to do with the publishers, right? The publishers have given Amazon the hammer with which they are being hit by insisting on DRM. Like if there were no DRM for e-books, Amazon would have a whole lot, they would still have the actual hard cover book power, because they are such a huge distributor, but they would have one of their arms tied behind their back, as it were. I’m mixing metaphors like a madman.

Dan: It’s not just DRM, it’s the, part of it’s the file format that sometimes are, well you know from Microsoft, that are difficult to translate, but there’s a lot of books you can buy on Amazon’s Kindle now that are not DRM, but you can’t read that file in anything else.

Leo: It’s MOBY.

Dan: If we had some standard formats, and we do have a few standard formats, the problem is that they are not great yet at working on a variety of devices and if the big publishers were smart, they would be doing, you know, they would get together to do their own things, but also continue to work with Amazon.

Leo: Another day, when we have more time, Ben, I’ll ask you about the MOBY format because obviously you know the insides and out pretty well, having written the Kindle reader.

Ben: A bit. But I think Dan’s point is well taken and…

Leo: There’s no standard.

Ben: Right. And you can totally see Amazon following the (Unintelligible) where Office documents are now in Open Standard, they are certified as such. But no one can actually implement them the way that…

Leo: Is e-pub the way it should be? Is that the standard we should all be adhering to? Is that good enough?

Dan: The new one is pretty, it’s getting better. From my-

Leo: That’s the open Me Book standard right?

Dan: There are some better and better tools for creating electronic documents. I’m optimistic about this; I think it’s really going to come together.

Leo: I have in my hands a box that could have contained a Fire Phone, but doesn’t. At the end of the week, Amazon’s phone will come out, something that Amazon has been working on for years, was rumored to be working on for years, in fact that rumor is true. The Fire Phone, I presume neither of you have seen one, neither have I, well, I did get a box, it’s empty.

Dan: Adventures in packaging.

Leo: Weird, isn’t it? I wonder, is this just a Me Too, is this, I mean, like the Fire TV, something Amazon, it’s a placeholder, keeps Amazon in the game, or is this a game changer?

Ben: Well, I don’t think anyone is going to say it’s a game changer.

Leo: No, it’s another phone, right?

Ben: I think the charitable description of it is it’s a way to get more out of Prime buyers, it’s for Amazon’s fans, and the other thing is that it’s an experiment, and they’re figuring it out, until they can innovate in more interesting ways, particularly when it comes to pricing and things like that. The problem that I have that’s very similar to the Microsoft one in that I think it’s problematic for Amazon from an incentive perspective, the last thing they need to do is worry about supporting a device ecosystem that has a fraction of the market when they need, when their bread and butter needs to be killer on all the platforms. Like, is it Firebug or Firefly?

Leo: Firefly.

Ben: That-

Leo: That’s kind of cool. You have a button on the side of the phone, you push it, it will scan, take a picture of whatever you’re looking at and give you information about it, whether it’s a Wikipedia article, or how to buy it cheaper on Amazon.

Ben: It is cool, and they’re not bringing in a button on an iPhone.

Leo: No.

Ben: But they do have similar capabilities on the handset now, but that needs to be there on day one. More important, for the company, in my opinion, but…

Leo: We call it the showrooming button. So you can go into Best Buy, get the low down on a product, take a picture of it, and go get it on Amazon.

Dan: I might add that if they provide that service for my current phone, I might add it, but would I buy the Fire Phone? I couldn’t imagine buying that at this point.

Leo: I think it’s a shame, in a way, I mean they are entering such a mature market; I do think Firefly is cool I think Mayday is cool; they are going to add the button where you get instant help. The one that they have on their Fire tablets, within fifteen seconds some nice person comes on and you can ask her to marry you and it’s great. That’s innovative!

Ben: Except for like, the one time you get the Comcast rep who…

Leo: That would be bad, “I can see you and you’re not using the number one e-book service in America.” We’re going to take a break; a couple of final stories. Ben Thompson is here from Stretechery, Stretechery dot com; Dan Gillmor from Dan Gillmor dot com; our show brought to you today by Squarespace dot com, it’s an amazing platform, it does all the hosting, but also the software. If you’re going to start your blog, I want you to look at this. All the software is so tightly integrated in hosting that you get a very responsive site, you cannot bring a Squarespace site down, no matter how many millions of people visit all at the same time. The software is state of the art, so you’re going to get, without knowing any code, without knowing CSS or Java script or HTML, you’re going to get any one of these twenty five templates, something that you can completely customize, make your own. Its mobile responsive that means it’s going to look great on any size screen; you don’t have a separate mobile site, it’s just your site looks great on any size screen, from an iPhone to a thirty inch display. Every site, every template has commerce built in, even at eight dollars a month. Now the eight dollar a month plan, which is their basic plan, allows you to take a donation, which would be very handy for your new blog, or if you’re a nonprofit, take charity donations, you could do a fund raiser for a school or a nonprofit on a Squarespace site. In fact, you get the site for free for two weeks. So you know what a lot of people do as a wedding gift or a baby gift is they create a Squarespace site, when you register for a year, you get the domain name, at eight dollars a month that’s very affordable, design a beautiful site for the new baby, and then you give that to the new parents. Say I have registered your child’s name on the internet so he’ll have that forever, and here’s that beautiful baby’s site for you. There’s so much you can do with Squarespace, try it today, go to Squarespace dot com, click the get started button, you don’t have to give them a card or any personal information; you have two weeks to use it. If you decide to buy all I ask is you use our offer code: TWIT, you get ten percent off, just as a way to let them know you heard about it on TWiT, and a way for you to save a little bit of money. For nonprofits, for blogs, for photo-I think this is really state of the art gorgeous. And by the way, the best support in the world. Twenty four seven, from their offices in New York City, they have a Squarespace, newly designed Squarespace help site, for articles, video workshops, webinars, everything you could want, so you’re never at a loss. And if you are a developer, if you know Java script and HTML, CSS, they have a very nice developer platform, too. Which means you could actually have a business, a consulting business, setting up Squarespace sites for people. Squarespace dot com, they take care of the hosting, they take care of the software, they give you a beautiful site. Use the offer code: TWIT you’ll get ten percent off! But you don’t have to worry about that, just try it free, no credit card needed, Squarespace dot come, just click it and get started. Speaking of Netflix, hey, good news! Netflix now has a private surfing button, so I can watch My Little Pony videos and not get busted! You know it’s been a problem, you watch one My Little Pony movie, and that’s all they recommend now. It’s kind of embarrassing. Actually, it was only a matter of time; I think this is a good idea. They won’t necessarily be on your Netflix account right now; they’re rolling it out, testing it; but a Private Viewing mode on Netflix. Everybody wants a little privacy. Yes, I’m a Bronie.

Ben: I think there’s lots of ways you could take this news. The thing is, anything that depends on recommendation algorithm, I think this is particularly welcome, although there’s some funny thing about recommendation algorithms, how they tend to know you, what you say you’re interested in, can be very different from what you’re actually interested in. But I wonder…

Leo: It goes way back to TiVo, remember the thumbs up, thumbs down and that article “My TiVo Thinks I’m Gay?” I have the modern TiVo, Romeo Pro, whatever it is, and it records, it has such a big hard drive, it records like daily, every day, twenty new shows, based on what it thinks you want. I actually had to take the Spanish Language channels off the channel guide because it kept recording shows in Spanish for me, for some reason. I don’t know, I don’t understand. So you’re right. Recommendation engines… yes the dancing. I shouldn’t dance in front of my Xbox One, it’s sending that information back.

Dan: I have to ask, who is this private from?

Leo: Ah!

Dan: Clearly, Netflix knows what you’re watching anyway, right, and is this like, private from your spouse and kids, or what? I wasn’t clear on what that gets you.

Leo: That’s a very good point. I guess it’s private from the recommendation engine and that’s that.

Dan: Well that has value.

Leo: It doesn’t go in your log. So you’re right, it’s mostly, you know what? You’re right; it’s not private from Netflix. It’s not private from the NSA.  It's only private from your wife. That’s who it’s private from.

Ben: It makes you think about the cheapening of the word private. Like, what does private mean?

Leo: Right. Right.

Ben: Because there’s lots of things, I believe Chrome has a private browsing mode, and we certainly know that nothing Google related will ever be private.

Leo: Right.

Ben: (Unintelligible)

Leo: You really think that if I go into incognito mode, that it’s sending information back to Google anyway?

Dan: of course it is.

Leo: Oh.

Dan: They say it is. They don’t promise anything except that it won’t show up in the history.

Leo: so really, private means private form your spouse. In every case.

Dan: I think it won’t record any history, it won’t record any, I don’t know if it will save cookies, you  know it’s sort of basic privacy in the instance in the browser from someone with access to your computer, but I don’t think anything worth it.

Leo: Right. Rupert Murdoch put Time Warner in play; I think he just does it for fun. Bid eighty billion dollars on Wednesday to buy Time Warner, the content side of Time Warner, he wasn’t bidding for the cable company. Time Warner seems to have rebuffed that, but now that has put them in play with a lot of other companies, including ESPN, Warner Brothers…

Ben: Well I think Time Warner went off Time, with all the print (Unintelligible), which Murdoch just also (Unintelligible) as well…

Leo: No one wants to (Unintelligible), if you’re smart, you’re not buying magazines these days.

Ben: Right, but I think you mentioned ESPN, and what’s interesting about this is Time Warner has a decent sports portfolio, and that’s something that Rupert Murdoch was very interested in developing, he started Fox Sports One, it’s not doing very well, and (Unintelligible) ESPN drives half of Disney’s profits, it’s incredibly lucrative and very resistant to the disruptive things that come with television, because it’s live, it commands a big premium. That whole arena is certainly interesting for that reason.

Leo: I should say that Warner Brothers did not put in a bid for Time Warner, that would be weird, since they are owned by Time Warner. That was a, I misstated. Dell is accepting Bitcoin for online purchases. This is just publicity, right? Because they immediately cash it in for American dollars. Or is there something here, is there something going on? You can buy your Alien Ware Gaming Machine with Bitcoin.

Ben: I’m aiming to support Bitcoin as soon as I can on my blog

Leo: Really?

Ben: Why not?

Leo: We take Bitcoin donations. I have seven point six Bitcoins right now, thanks to our listening audience.

Ben: I would do the same thing, where it converts into (Unintelligible) cash. I mean, if people want to pay in it, by all means. I think probably the (Unintelligible) Bitcoin news is that, getting into things like fifty one percent tax, or more potential, and things along those natures, but as far as companies supporting it, I think you’re right, it’s good P.R. when they get an article written about them and (Unintelligible)

Leo: They immediately turn them into dollars, right?

Dan: But I don’t think it’s just P.R. I think that’s probably a large part of it, but it’s really worth it for these companies to be learning what they can about the new forms of currency that are coming along and more than that, the Bitcoin story, I’m increasingly convinced, is not about currency, but about the protocols, and what they’re doing is pretty stunning, when you look deeper into what Bitcoin means. I’m saying this without sufficient depth on it, I’m studying this hard now, and I’ve become convinced that Bitcoin is a huge thing, not so much because of the currency, but because of the architecture. I think this is profound and important.

Ben: I agree, I completely agree. And it’s worth noting that by the way, from Dells’ perspective, the (Unintelligible) fees make a huge difference, I mean I’ve (Unintelligible) enough in credit card fees to appreciate that there’s is a financial benefit to this as well.

Leo: What is Coin Base take? Because basically what happens is I think the transaction goes through Coin Base they turn it into US dollars immediately. But you’re saying they take less than a credit card company would.

Ben: Oh, yes, significantly less. Obviously, theoretically, Bitcoins could be free, usually to get it processed in the time, you could pay a very small fee, through a credit card, which is two percent.

Leo: Who’s your carrier, Ben? Because you’re slowly fading into the sunset.

Ben: I’m in Madison, so it’s Charter Cable.

Leo: Oh yeah. Charter, oh yeah. I think this would be a good time to wrap it up; I’m just looking to see if there are any other real huge stories. I guess there was one question I had for you, Dan Gillmor: did Newsweek ever recant its cover story about discovering the creator of Bitcoin, hiding in plain sight in Los Angeles? I think everybody pretty much agrees that was not Satoshi Nakamoto they found.

Dan: Great question, I have no idea.

Leo: They just hope nobody bring it up again.

Dan: You should ask every week.

Leo: Hey, Newsweek, is that Satoshi? Is that still Satoshi? Is it?

Ben: Well I think it is Satoshi Nakamoto…

Leo: Just not THE Satoshi Nakamoto. Hey, we never said it was THE Satoshi Nakamoto, just some guy named Satoshi Nakamoto. This was in Newsweek in March, went back to the newsstands, had stopped publishing paper issues, it was the first paper edition in a long time, they had a cover story: The Face behind Bitcoin. Leah McGrath Goodman wrote the story, said she has sources, Newsweek said, “We stand by this story,” and at this point it’s obvious they have the wrong Satoshi Nakamoto. But nobody is going to mention it. That’s it. We don’t care. March is so off the news cycle now, we don’t care anymore.

Ben: Well it’s that Newsweek isn’t particularly important.

Leo: I think it means that you can say anything you want, and if you survive a few months, you go unscathed. 

Dan: Let’s see where it is on Google.

Leo: Search for Newsweek and Satoshi Nakamoto. Dan Gillmor, there are some lucky students at the Arizona State University, he’s a Professor at the Walter Cronkite School of Journalism there and entrepreneurship, and modern creative thinking and all jazz, basket weaving, I don’t know what you teach there. They’re lucky to have you; it’s nice to have you. Are you still living in the Bay area, or have you moved down there?

Dan: No, we still live in the Bay area, I’m part time on the faculty there, and I go down there physically one week a month.

Leo: Awesome. Like I said, it’s nice to have professors who actually come from the real world, so they are very fortunate to have you. It’s also great to have you, Ben Thompson, one of the best analyzers out there, whose blog is free to read, Stretechery; but he also has a paid newsletter, you can learn more at the website: Stretechery. And how’s the podcast going? Last time we had you on here you had just launched it, is it going well?

Ben: It’s going very well, with James Allworth, a fellow from, he was at Harvard before, he used to work with Clay Christiansen, and now works for a start-up end of …

Leo: Oh I love Clay Christiansen, we’ve had him on Triangulation, Clay’s really fascinating.

Ben: Yeah, we spend a lot of time talking about more the impact of tech on society, most of the of the theoretical stuff, we spent quite a bit of time the past few episodes actually, you know, there’s all that debate about disruption and I agree in part, because I’m more of a skeptic, James is probably more of a defender, so if you’re interested in more of that business theory stuff, or tech in society, definitely check it out. Its Exponent dot FM.

Leo: Exponent dot FM, or you can get to it form the Stretechery site. Thank you so much Ben, thank you, Dan, thank you all for watching. We do TwiT every Sunday afternoon, three PM Pacific, six PM Eastern Time, twenty two hundred UTC. Love it if you watch live, we’ll see you in the chat room, it’s great to get your feedback and your input as we got through the show. You can also visit us in the studio, big studio audience today, it’s great to have you all, just email, you don’t have to, but it’s nice if you email tickets at TwiT dot TV and we’ll make sure to have a chair out for you, and you know, free food…no. Alcohol? No. Nothing like that. Maybe a balloon on your way out. I think we have, the new TwiT pens are here, you’ll each and every one of you get a pen. Hey, don’t forget, we’re having a little bit of a party. This is our third year in the brick house, we moved in on July twenty forth, twenty eleven,; we’re going to have a little open house this coming Wednesday the twenty third, if you would like to come by, there will be cake. You stick around, we can put out a little cot in the basement for you, you can stay, and you’ll get cake. So please come by anytime on Wednesday. Thanks to Chad Johnston who does such a-oh! I have more to talk about! Yes, thanks to Chad Johnston, I was going to give you a plug, Chad.

Chad: Thanks, sorry, I’m taking over.

Leo: Chad Johnston who produces the show, books the guests, he is running the board right now, he does everything to make the show happen I really appreciate it. I thought last, just the other day I was just thinking, “thank goodness I have Chad on this show.”

Chad: Aw, thanks, man.

Leo: He also pays attention to the fact that we are doing a vote right now on our next TwiT shirt. We like, Lisa says we’re going to open a regular store, but we like to do a one off thing every month where you can get the shirt, but only for thirty days. We have four designs we purchased from Ninety Nine Designs, and we would like you to do is visit those designs, pick the one you like the best, and then vote for it, and we’ll have the vote go on for about a week. What is the address for the straw poll? Just got to Inside dot TwiT dot TV, that’s our blog, that’s where you’ll see the designs, and then there’s a link there. We want you to see the designs before you vote, obviously. Don’t show the results!

Chad: Don’t show the results?

Leo: Wait, I’m getting conflicted information, Lisa is the boss, show the results. So far, you can change, oh see, it’s very close, right now it’s the brick wall that’s winning, but the Spotlight is really close; Steampunk kind of taking up the end there.

Chad: Over one thousand four hundred votes are in.

Leo: But that’s not the end of the game, vote all week long, so keep your votes coming in. Inside dot Twit dot TV that’s a Squarespace site, so go ahead, everybody go there all at the same time. Don’t all vote all at the same time, that is not a Squarespace site.

Dan: Straw Poll is very good.

Leo: Because we used to be able to bring in data, has Dan got it on the hot.

Dan: Oh yeah, they’re up to; let’s look at how many Straw Polls:

Leo: There’s quite a few.

Dan: Yeah. Over two million now.

Leo: And (Unintelligible) who designed that originally for NSW.

Dan: For NSW.

Leo: for NSW. Yeah.

Dan: Now over two million Straw Polls created.

Leo: Over two million served. Is there any, let’s see, oh this is going to be a big week for TwiT, there’s a lot of results coming in, the Microsoft Quarterly, the results, let’s see, I think Mike Elgan has a run down.

Mike Elgan: Coming up this week, another big week for earnings, Netflix reports their financial results on Monday, July twenty first, Apple, Microsoft and Verizon on Tuesday, Facebook and CallCom get their turn Wednesday, and on Friday, July twenty fifth, Amazon’s Fire Phone ships at last from AT&T, that’s all coming up this week, back to you, Leo.

Leo: Thank you, Mike Elgan. TNT, Monday through Friday, your daily dose of tech news in the morning at ten AM Pacific, that’s one PM Eastern, seventeen hundred UTC. If you want to find out what’s happening, that’s the show to watch. Or Tech New Tonight, which is at four PM pacific, seven PM Eastern. I don’t know, I can’t even do the math on UTC. Its twenty three hundred UTC. Thanks for joining us. Hey, we’ll see you next time, if you can’t be here live you can always get the show on our website TwiT dot TV wherever podcasts are aggregated: the Stitcher, iTunes, Xbox Music, and of course  our great TwiT apps, thanks to our third party developers. Another TwiT is in the can, take care!