Axios AM

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October 04, 2017

Good Wednesday morning. Situational awareness: "Russia has opened a new battlefront with NATO ... by exploiting a point of vulnerability for almost all allied soldiers: their personal smartphones," The Wall Street Journal reports. The sophisticated equipment used to compromise soldiers' phones, including drones carrying surveillance gear, suggests state-level coordination.

And per NBC, "Secretary of State Rex Tillerson was on the verge of resigning this past summer" because of "fury at Trump." But Vice President Pence intervened, and other administration officials urged Tillerson to stay at least until the end of the year.

1 big thing: Evan's almighty moment

It's been a bumpy 2017 for Snap Inc. and 27-year-old CEO/founder Evan Spiegel:

  • His IPO didn't snap or crackle — it popped, opening in March at a peppy $24, but sinking to half that in August. It has bounced back a bit (closing yesterday close to $15), but has missed market expectations.
  • Spiegel has struggled mightily to tell the Snap story to Wall Street, bumbling the stock's narrative and investor expectations, and leaving even his advisers frustrated with comms skills.
  • Facebook/Instagram has ruthlessly copied his hottest product innovations and poached chunks of his ideas — and audience.

Spiegel, making a rare public appearance at Vanity Fair's New Establishment Summit in Beverly Hills yesterday, admitted the market debut was harder than he thought, but insisted that he's got a great story to tell and will put a lot more effort into telling it:

  • "[I]nvestors are fearful ... we can never be profitable, or they're fearful that ... competition will kill us," he told interviewer Walter Isaacson. "But I think those are kind of normal fears, really, for any startup. ... [T]he really successful companies just grow through that."

That's why investors who know him best remain very high on him as a CEO and Snap as an authentic, long-term Facebook threat:

  • He confessed his comms skills — internally and externally — need work. One of his advisers told me it took months to get him to this realization and admission.
  • He filled in his pitch as Snap as both tech and hardware company — with the camera, not the phone, as the central communications and creativity device.
  • But his offerings still lack the simplicity and drama of a Steve Jobs product.
  • It's becoming clear that Snap alone (with its closed publishing system) didn't get played by the Russians like Facebook/Google/Twitter did. Publishers are flocking to Spiegel's platform, and his team is racing to make the monetization opportunities more appealing.

Be smart: Evan is six years younger than Zuck; has 166 million daily users — with half of the new ones under 25 — most of them hyper-addicted to his product. Imagine if he could figure out the hardware part, perhaps a camera with a keyboard and phone attached, instead of the other way around.

Be smarter: Spiegel's biggest threat is Facebook and its Instagram Stories, which in April passed Snapchat in daily active users, now at 250 million. He needs a fierce response and strategy to combat Facebook's ability to leverage billions of user and billions of dollars to steal his best innovations.

2. Trump flies to Vegas today

On the day after, investigators learned that the Las Vegas horror was the result of extensive, meticulous planning:

  • "As he fired round after round during an 11-minute stretch from a suite on the 32nd floor of the Mandalay Bay Resort and Casino, Paddock used video cameras to keep an eye out for police storming his hotel room," the WashPost reports.
  • "Paddock hid one camera in the peephole of his suite and two more in the hall, at least one of them disguised on a service cart."
  • "At one point, he shot numerous rounds through the door, wounding a security guard. Paddock eventually put a gun in his own mouth and pulled the trigger as SWAT officers closed in."
  • "[I]n the weeks before the attack, Paddock transferred a large amount of money — close to $100,000 — to someone in the Philippines, possibly his girlfriend."

"The trigonometry of terror: Why the Las Vegas shooting was so deadly" — L.A. Times: "From a perch 320 feet above ground in a hotel whose base was about 1,050 feet from the concert venue, Paddock was firing down the 1,098-foot hypotenuse of a right triangle — and would have to adjust his aim for the arc of the bullet over that distance."

3. Russia targeted swing states

"Russian-linked Facebook ads targeted Michigan and Wisconsin," by CNN's Manu Raju, Dylan Byers and Dana Bash:

  • "Some of the Russian ads appeared highly sophisticated in their targeting of key demographic groups in areas of the states that turned out to be pivotal."
  • "The ads employed a series of divisive messages aimed at breaking through the clutter of campaign ads online, including promoting anti-Muslim messages."

Today at 12:15 p.m., Senate Intelligence Chairman Richard Burr (R-N.C.) and Vice Chairman Mark Warner (D-Va.) will hold a press conference "on the status of the Committee's inquiry into Russian interference in the 2016 U.S. elections."

  • The committee on Monday received a thumb drive of Russia-linked ads from Facebook, which today begins an advertising campaign promoting the company's nine-point plan to deter "election interference."

Bonus: Pic du jour

In honor of the victims in Las Vegas, flags fly at half-staff at the foot of the Washington Monument, as the sun rises over the U.S. Capitol dome yesterday.

4. The conversation

Why a swath of Americans want to keep their guns:

  • Peggy Noonan, Wall Street Journal columnist and speechwriter for President Reagan, on "Morning Joe": "There is a sense that society is collapsing — the culture is collapsing. We're collapsing in crime. The world is collapsing. Crazy people with bad haircuts have nukes. Everything is going bad — terrorism, etc. They want to be fully armed on their hill, at home. ... They're Americans, and they want to go down fighting."
  • Joe Scarborough: "A lot of things brought us Trump. Maybe this is the net result of people ... over the past 15 to 17 years ... seeing one failure after the other: 1999, impeachment; 2000, the recount, where we can't even elect a president the right way; 2001, 9/11; ... 2002, WMDs; 2003, Iraq; 2005, Katrina; 2006, the meltdown in Iraq; 2008, the meltdown of the stock market."
  • Scarborough: "Where confidence in this government has been shattered, ... perhaps that's what leads to the paranoia that you're talking about. 'They're not going to protect me. ... They're not going to defend me. I've got to defend myself and my family.'"

N.Y. Times columnist Thomas Friedman, "If Only Stephen Paddock Had Been a Muslim":

If only Stephen Paddock had been a Muslim … If only he had shouted "Allahu akbar" before he opened fire … [N]o one would be telling us not to dishonor the victims and "politicize" Paddock's mass murder by talking about preventive remedies. No, no, no. Then we know what we'd be doing. We'd be scheduling immediate hearings in Congress about the worst domestic terrorism event since 9/11.

Sen. John Thune (R-S.D.), the third-ranking Republican in the Senate, suggesting that little could be achieved through legislation in preventing gun deaths: "I think people are going to have to take steps in their own lives to take precautions. To protect themselves. And in situations like that, you know, try to stay safe. As somebody said — get small." (N.Y. Times)

5. Trump to Puerto Rico: "You can be very proud"

"Trump suggested that the government debt accumulated by bankrupt Puerto Rico would need to be wiped clean to help the island recover from the devastation caused by Hurricane Maria," per Bloomberg:

  • "We are going to work something out. We have to look at their whole debt structure," Trump said in a Fox News interview. "You know they owe a lot of money to your friends on Wall Street. We're gonna have to wipe that out. ... [Y]ou can say goodbye to that. I don't know if it's Goldman Sachs but whoever it is, you can wave good-bye to that."
  • Trump in Puerto Rico yesterday: "Every death is a horror, but if you look at a real catastrophe, like Katrina, and you look at the tremendous, hundreds and hundreds and hundreds of people that died, and you look at what happened here with really a storm that was just totally overpowering, nobody's sever seen anything like this. ... You can be very proud."

6. Mattis contradicts Trump

Defense Secretary Jim Mattis signaled a shift in administration position by saying the United States should consider staying in the Iran nuclear deal:

  • Mattis was asked at a Senate Armed Services Committee hearing whether he believes it is in America's "national security interest at this time to remain" in the Iran nuclear deal. After a lengthy pause, Mattis replied to Sen. Angus King: "Yes Senator, I do."
  • His "view was far more positive than that of Trump, who has called the deal agreed between Iran and six world powers in 2015 an 'embarrassment.'"(Reuters)
  • Why it matters, per N.Y. Times: "The comments were the latest example of how Mr. Trump's instincts on national security — to threaten North Korea with destruction and tear up an Iran accord that most experts and allies say is working — are running headlong into opposition from his own National Security Council."

WashPost columnist David Ignatius, "Sand in the presidential gears":

  • "What might Defense Secretary Jim Mattis do if he received an order from President Trump to launch a nuclear attack on North Korea in retaliation, say, for a hydrogen bomb test that had gone awry?"
  • "Certainly, Mattis could try to talk the president out of the attack, if he thought the action was unwise. He could request delays to prepare for contingencies or gather intelligence. He could even, perhaps, argue that the action raised legal questions, because it might cause disproportionate civilian casualties in North and South Korea and thereby violate the laws of war."
  • "Yet, in the end, legal experts argue that Mattis would have to follow the orders of his commander in chief."
  • But, but but ... "Research reveals some fascinating instances when another erratic president, Richard Nixon, was checked by his subordinates. ... As the Nixon stories show, even the most willful presidents usually end up listening to Pentagon advice."

7. Yahoo breach affected 3 billion

"New revelations that a 2013 security breach at Yahoo affected all three billion of its [accounts] has triggered a sharp rebuke from the U.S. Senate, which now plans to drag company representatives back to Capitol Hill for a hearing in the coming weeks," Recode's Tony Romm writes:

  • "The ... Senate Commerce Committee and its chairman, Sen. John Thune, announced ... that they aim to grill representatives from Yahoo, now owned by Verizon, along with executives from Equifax, a credit-reporting agency whose 2017 security incident affected the most sensitive information of more than 145 million Americans."
  • The new Yahoo estimate is triple the company's earlier estimate of 1 billion accounts — which already was the largest data breach in history.

8. A tech equalizer?

LiftIgniter, a San Francisco-based AI startup, says it has devised a predictive algorithm that allows smaller players to perform one of the main functions that make Big Tech so financially successful — forecasting in real time what a user wants to click on next, and then provide it.

  • This "flywheel effect" is what keeps people returning to click on Google and Facebook, CEO Indraneel Mukherjee tells Axios' Steve LeVine.
  • How it works: The program that Mukherjee's team built takes account of a user's search habits, along with those of a lot of other people who have clicked on the same thing, and quickly assesses what that person wants to see or read next.
  • The company's main clients are media organizations, which can keep suggesting new headlines to hold onto the person, and earn more ad dollars.

9. The downside of Big Data

"The Downside of Baseball's Data Revolution — Long Games, Less Action: After years of 'Moneyball'-style quantitative analysis, major-league teams are setting records for inactivity, prompting talk of rule changes," by Wall Street Journal's Brian Costa and Jared Diamond (subscription):

  • "Games this season saw an average gap of 3 minutes, 48 seconds between balls in play, an all-time high. There were more pitcher substitutions than ever, the most time between pitches on record and longer games than ever": 3 hours, 5 min. — up from 2 hours, 46 min. in 1987.
  • Why it matters: "That makes baseball, whose early use of big-data strategies was embraced by the business world in general, a case study in its unintended consequences."
  • "The search for competitive edges in a growing trove of information has also resulted in the kind of game MLB didn't intend to create."

Be smart: In your organization, be wary of the possible collateral effects and unintended consequences of what you measure — the behavior that the metrics reward, and the signal they send your colleagues about what you value most.

10. 1 fun thing

In ancient Rome, the nosebleed level of the Colosseum were the cheap seats, since they were farthest away from the spectacle.

  • Today, the top two levels of the 171-foot high Colosseum offer priceless views of the stadium, as well as the nearby Roman Forum, Palatine Hill and the rest of Rome.
  • Officials yesterday showed off the newly restored fourth and fifth levels, which are opening to the public for the first time in 40 years, with guided tours starting Nov. 1. (AP)