Facebook establishing a venture arm to invest in startups • Hacker News Board

Re: Facebook establishing a venture arm to invest in startups

#31

Post by Mikeb85 » Sat, Jun 13, 2020, 5:22 PM UTC

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

> They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to.

I mean, this wouldn't be insider trading since anyone can do their own legwork to get this information. Insider information would be things that aren't (yet) disclosed to the public, not things that can be ascertained through thorough research.

> Since startups aren't publicly traded, I don't think insider trading laws apply to trading their securities.

Yup. Insider trading laws are designed to prevent the public from being at a disadvantage. Private firms don't need to disclose anything publicly, they can choose their investors, etc...

Re: Facebook establishing a venture arm to invest in startups

#32

Post by normalnorm » Sat, Jun 13, 2020, 5:23 PM UTC

jasonvorhe wrote: post #19

hogFeast wrote: post #4

So will this use data harvested from their malware apps (Onavo)?

I wasn't aware that installing something by yourself that provides you with a promised benefit could be considered malware. Your accusation even conflicts with the basic definition of malware: > Malware is any software intentionally designed to cause damage to a computer, server, client, or computer network. I know what you're getting at, but why chose such a loaded term that doesn't fit?

You forgot to include some more details from the Wikipedia article (https://en.wikipedia.org/wiki/Malware) from where you borrowed your definition:

> A wide variety of types of malware exist, including computer viruses, worms, Trojan horses, ransomware, spyware, adware, rogue software, and scareware.

It specifically mentions spyware, so let's take a look at that definition:

"Spyware is a type of malware that aims to gather information about a person or organization, without their knowledge, and send such information to hack another entity without the consumer's consent."

Re: Facebook establishing a venture arm to invest in startups

#33

Post by travisjungroth » Sat, Jun 13, 2020, 5:26 PM UTC

Mikeb85 wrote: post #31

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

> They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. I mean, this wouldn't be insider trading since anyone can do their own legwork to get this information. Insider information would be things that aren't (yet) disclosed to the public, not things that can be ascertained through thorough research. > Since startups aren't publ…

Insider trading laws aren’t about fairness. They’re about the misappropriation of information. Knowing things others don’t and acting on it is fine. Acting on information that you have as a responsibility to someone else, or got from someone where that’s the case is not.

Re: Facebook establishing a venture arm to invest in startups

#34

Post by wolco » Sat, Jun 13, 2020, 5:27 PM UTC

a13n wrote: post #28

kgraves wrote: post #23

Facebook is the modern day internet gangster cartel, they are not even trying to hide it any more. This is an obvious trap that is easy to avoid. Sadly, I doubt there is any company that can take them on.

How does investing in startups make you an internet gangster cartel?

Invest/purchase/block new competitors from ever reaching scale.

Cartel doesn't apply. Facebook, Google, Apple coming up with an agreement to keep workers salaries lower is.

Gangster.. that term applies.

Re: Facebook establishing a venture arm to invest in startups

#35

Post by p49k » Sat, Jun 13, 2020, 5:27 PM UTC

jasonvorhe wrote: post #19

hogFeast wrote: post #4

So will this use data harvested from their malware apps (Onavo)?

I wasn't aware that installing something by yourself that provides you with a promised benefit could be considered malware. Your accusation even conflicts with the basic definition of malware: > Malware is any software intentionally designed to cause damage to a computer, server, client, or computer network. I know what you're getting at, but why chose such a loaded term that doesn't fit?

> Your accusation even conflicts with the basic definition of malware

The very source you pasted this definition from (Wikipedia) goes on to list spyware as a type of malware, and the page for spyware lists Onavo as an example.

Re: Facebook establishing a venture arm to invest in startups

#36

Post by alasdair_ » Sat, Jun 13, 2020, 5:27 PM UTC

a13n wrote: post #28

kgraves wrote: post #23

Facebook is the modern day internet gangster cartel, they are not even trying to hide it any more. This is an obvious trap that is easy to avoid. Sadly, I doubt there is any company that can take them on.

How does investing in startups make you an internet gangster cartel?

"I'm gonna make him an offer he can't refuse..."

"... one billion dollars in cash and stock."

Re: Facebook establishing a venture arm to invest in startups

#37

Post by a13n » Sat, Jun 13, 2020, 5:28 PM UTC

Mikeb85 wrote: post #31

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

> They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. I mean, this wouldn't be insider trading since anyone can do their own legwork to get this information. Insider information would be things that aren't (yet) disclosed to the public, not things that can be ascertained through thorough research. > Since startups aren't publ…

> anyone can do their own legwork to get this information

Can they though? My point is that FAANG companies are uniquely positioned by having access to this data that the public couldn't possibly have access to.

Re: Facebook establishing a venture arm to invest in startups

#38

Post by objclxt » Sat, Jun 13, 2020, 5:29 PM UTC

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

> Since startups aren't publicly traded, I don't think insider trading laws apply to trading their securities. FAANG is legally allowed to use their access to information to make better investing decisions than other companies are able to

Insider trading laws apply to all companies, be them public or private. It is illegal to trade based on undisclosed material information the other party doesn't have - the law doesn't care whether the stock you're buying is private or on an exchange.

Here's an example: suppose you have a startup that's been going a long time, and some employees want to sell their stock on a secondary market. To avoid this, the startup offers to buy back employee stock, using the most recent valuation of the company to price it. However, the CEO knows that since that valuation was carried out the company is doing much better than expected - and the real value of the stock is much higher. This isn't disclosed to their employees.

This is classic insider trading, and the SEC has taken enforcement action against private companies for doing this sort of thing.

FWIW, I don't think Facebook actually has a large amount of material data in this case - a lot of what they possess (number of active users, platform engagement, etc) is already going to be known by the other party.

Re: Facebook establishing a venture arm to invest in startups

#39

Post by gimmeThaBeet » Sat, Jun 13, 2020, 5:34 PM UTC

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

That's not really insider trading. Matt Levine pops up here all the time, and one of the really distilled mantras he has: inside trading isn't about fairness, it's about theft.

Like the people who track flights to speculate on M&A, or use satellite and aerial imagery to look at parking lots. Gathering information isn't a crime, in fact gathering and acting on that information is explicitly what you want at an aggregate level. What you don't want is entities stealing or misappropriating information that doesn't belong to them. I think all the mentioned data categories are basically Fb's line of business, so if it's usable it seems like its pretty fair game.

Re: Facebook establishing a venture arm to invest in startups

#40

Post by ThrustVectoring » Sat, Jun 13, 2020, 5:35 PM UTC

malux85 wrote: post #30

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

Yeah, and Google has this with Google Analytics. Is Google Analytics free out of the kindness of their heart? NO. It's free because you can spot up and coming winners.

Google Analytics is free because it is a complementary good to advertising spend. If the director of marketing tell the CEO "this $1000 campaign on Google drove $50,000 of sales at a 10% profit margin", the CEO is going to okay a lot more advertising spend. This winds up in Google's pockets.

The same logic applies to why Amazon develops open-source software that makes developing cloud applications easier.