Speaker 1: Welcome to tech Stuff, a production from iHeartRadio. Hey there,
Speaker 1: and welcome to tech Stuff. I'm your host job and Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and how the
Speaker 1: tech are you? You know? Since we're wrapping up my
Speaker 1: run as host of tech Stuff, I thought it might
Speaker 1: be a good time to revisit one of the guiding
Speaker 1: principles of this show, that being critical thinking. I've always
Speaker 1: said Tech Stuff really has two guiding principles, critical thinking
Speaker 1: and compassion. That only with both of these can you,
Speaker 1: in my opinion, live an accountable and decent life. You
Speaker 1: need to have compassion so that you're not a total jerk,
Speaker 1: and you need to have critical thinking so you're not
Speaker 1: a total dip. And critical thinking is absolutely important in
Speaker 1: all aspects of life. I like to bring it up
Speaker 1: within the context of technology because tech is both incredibly
Speaker 1: complicated and it also touches our lives every single day
Speaker 1: in hundreds or thousands of ways. And if we don't
Speaker 1: think critically, we can make some pretty darn huge mistakes,
Speaker 1: either through incorrect assumptions or because someone has led us astray.
Speaker 1: Tech is one of those disciplines that is well suited
Speaker 1: for misunderstanding and for misdirection. Because of that complexity, there's
Speaker 1: stuff we can do in tech that seems almost magical,
Speaker 1: and the jargon around tech can be really difficult to
Speaker 1: parts like. That's not to say that all the jargon
Speaker 1: or the terminology is inherently bad. That's not really the
Speaker 1: case either. There are lots of terms that are very specific,
Speaker 1: and the reason why we use them is so that
Speaker 1: we communicate clearly what we mean and we avoid ambiguity.
Speaker 1: But then there's the flip side of it, where if
Speaker 1: you laiden something down with enough jargon, it becomes indecipherable.
Speaker 1: You can't even understand what's being said. I think the
Speaker 1: ultimate expression of how jargon can become gibberish is the
Speaker 1: humorous script for the fictional turbo incabulator. This was a gag.
Speaker 1: This was just a fake thing, a fake piece of technology,
Speaker 1: with a script that was intentionally made to be comedically
Speaker 1: dense with jargon meaningless jargon. So I did an episode
Speaker 1: about this ages ago. But let me do a quick
Speaker 1: excerpt from that script. So here's how it typically starts.
Speaker 1: And there are multiple versions of this online. By the way,
Speaker 1: if you search turbo incabulator on YouTube. You should come
Speaker 1: up with quite a few different versions of it, and
Speaker 1: they are all variations on this same theme. So here
Speaker 1: we go. For a number of years now, Yorick has
Speaker 1: been proceeding in order to bring perfection to the crudely
Speaker 1: conceived idea of a transmission that would not only supply
Speaker 1: in verse reactive current for use in unilateral phase detractors,
Speaker 1: but would also be capable of automatically synchronizing cardinal grameters.
Speaker 1: Such an instrument is the turboincabulator. Now, basically the only
Speaker 1: new principle involved is that instead of power being generated
Speaker 1: by the relative motion of conductors and fluxes, it is
Speaker 1: produced by the modial interaction of magneto reluctance and capacitive directants.
Speaker 1: The original machine had a base plate of prefamulated emultes
Speaker 1: surmounted by a malleable logarithmic casing in such a way
Speaker 1: that the two sperving bearings were in a direct line
Speaker 1: with a panametric fan. Now the piece goes on from
Speaker 1: there a little bit longer, and you get the point. Though.
Speaker 1: This is a send up of those technical manuals that
Speaker 1: would have so much jargon in them as to become
Speaker 1: almost meaningless that you can't really parse what is being said,
Speaker 1: and you feel like you have to look up every
Speaker 1: other word just to try and figure out what the
Speaker 1: meaning is, and you might ultimately come to the conclusion
Speaker 1: that even the person who wrote it doesn't really know
Speaker 1: what the meaning is. That's the joke, but it's based
Speaker 1: in reality. You know, there are those technical manuals out
Speaker 1: there that are so jargon heavy as to be almost
Speaker 1: a self parody, and this opens up opportunities for people
Speaker 1: who have underhanded motivations to try and mislead folks in
Speaker 1: an attempt to get something out of them, usually money.
Speaker 1: That's typically what it is, is that you have someone
Speaker 1: who is leaning on ignorance to pull one over on
Speaker 1: a victim. So I've really been thinking again about scam
Speaker 1: artists and investment schemes. Now that's something that spans well
Speaker 1: beyond the tech sector. It's not just tech that sees
Speaker 1: these sorts of things, but I think it's safe to
Speaker 1: say the tech world is particularly prone to such shenanigans,
Speaker 1: largely because a clever huckster can convince people that something
Speaker 1: that is implausible or perhaps even impossible, is actually achievable
Speaker 1: just through the wonders of technology. And again it's easy
Speaker 1: to understand how this could happen, how people could fall
Speaker 1: for these kinds of things, because consider the technology that
Speaker 1: you interact with on a daily basis. Our computers are
Speaker 1: phenomenally powerful these days. You can have a computer that
Speaker 1: has processors in it that allow it to do AI
Speaker 1: processing on your machine. That is something that was unthinkable
Speaker 1: only a few years ago. And most of us carry
Speaker 1: a small computer around in our pockets, and you can
Speaker 1: use that computer to do everything from make a phone
Speaker 1: call if you're an old fuddy duddy like me, or
Speaker 1: use it to look stuff up online. Or you can
Speaker 1: use it to take photos or video. You could even
Speaker 1: edit those images and those videos and then upload them
Speaker 1: to social platforms. You know, there's a lot of cool
Speaker 1: stuff you can do with that one device. Or you
Speaker 1: can jump in a car. Now, your typical modern car
Speaker 1: has remarkable technology in it, and depending on the car,
Speaker 1: it might even be able to drive itself under specific conditions.
Speaker 1: We've also got things like home automation, and then they're
Speaker 1: scary stuff like targeted advertising. We've got things that can
Speaker 1: be either cool or scary, depending upon how they are
Speaker 1: made and what they're supposed to do, like drones and
Speaker 1: all sorts of other things that you know. Back when
Speaker 1: I was a kid, I would have thought belong in
Speaker 1: science fiction, But today they're commonplace. So we've become used
Speaker 1: to technology being able to do incredible things. So it's
Speaker 1: understandable that if someone were to come to us with
Speaker 1: an extraordinary claim about tech, we might be tempted to
Speaker 1: believe in the dream right from the start. I mean,
Speaker 1: when I was a kid, I certainly didn't think I
Speaker 1: would see a day where I would be carrying a
Speaker 1: computer around with me everywhere I went. So why can't
Speaker 1: we have a device that's the size of a desktop
Speaker 1: printer that could run more than one hundred medical tests
Speaker 1: on the tiniest drop of blood. That, of course, was
Speaker 1: the point of Thernose, the biotech company that was purporting
Speaker 1: to create a desktop medical analysis machine, one that ultimately
Speaker 1: could end up being sold to consumers. Not just something
Speaker 1: that would be found in clinics or whatever, but you
Speaker 1: could own one of these things and you would take
Speaker 1: a very tiny pinprick of blood, and then you could
Speaker 1: run tests that not only would tell you if there
Speaker 1: was anything currently wrong with you, but also analyze your
Speaker 1: blood to look for potential things to look out for
Speaker 1: down the road, right conditions or diseases that you might
Speaker 1: be prone to developing in the future, so you could
Speaker 1: be on the lookout for that kind of stuff, like
Speaker 1: you could say, hey, you know, you could be pre
Speaker 1: diabetic or something along those lines. The problem was, of course,
Speaker 1: it just didn't work. It certainly didn't work the way
Speaker 1: it was being advertised. Even while it was under development,
Speaker 1: the company Theranose was found out to be using other
Speaker 1: companies technologies to analyze blood samples. They were taking larger
Speaker 1: samples of blood than what they were supposed to do,
Speaker 1: because again, it was supposed to be a microdrop of blood,
Speaker 1: but they couldn't get that to work. So they would
Speaker 1: take larger samples of blood or sometimes small samples, and
Speaker 1: then they would dilute it with water, hoping that that
Speaker 1: wouldn't mess things up too much spoiler alerted mess things
Speaker 1: up too much. Then they would run those samples through
Speaker 1: other companies analytic technology, not their own one. They would
Speaker 1: make it seem like it was in their own technology,
Speaker 1: but it really wasn't. They never really cracked the code
Speaker 1: on this, and in fact, there were plenty of people
Speaker 1: who were concerned that it was inherently impossible. That people thought, well,
Speaker 1: of course technology should be able to do this, without
Speaker 1: really taking the time to understand the limitations of the
Speaker 1: technology they were talking about. And there still stands a
Speaker 1: question to this day as to whether the founder, Elizabeth Holmes,
Speaker 1: whether she truly believed in the technology or if she
Speaker 1: was aware early on that she was running up against
Speaker 1: a brick wall, but of going because at that point
Speaker 1: she already had huge amounts of investment behind her. This
Speaker 1: was one of those examples of the fake it till
Speaker 1: you make it strategy, where you come up with an idea,
Speaker 1: you think the idea is really cool, you don't have
Speaker 1: the foggiest notion of how you're going to make that
Speaker 1: idea reality, but you go ahead and you create a
Speaker 1: business around it, and you get investment behind it, and
Speaker 1: then you figure somewhere along the way, we'll figure it out.
Speaker 1: We'll get the smartest people, We'll put them to work
Speaker 1: on this problem. They'll engineer a way out of it
Speaker 1: and will be good. In the case of THERAPNHOS, that
Speaker 1: just didn't happen. Instead, it was a business built around
Speaker 1: an ideal, but it was also built around lies and
Speaker 1: smoke and mirrors, and ultimately it all came crashing down.
Speaker 1: And that's kind of what I wanted to talk about.
Speaker 1: That's why I want to talk about critical thinking, because
Speaker 1: critical thinking would have saved a lot of people a
Speaker 1: lot of money if they had been willing to ask
Speaker 1: the right questions to the right people and to really
Speaker 1: heed those answers, could have, you know, saved themselves millions
Speaker 1: of dollars of losses. And I don't particularly feel the
Speaker 1: need to cry over rich people losing some percentage of
Speaker 1: their mass amount of wealth. It doesn't really bother me
Speaker 1: that much. But when it falls to people who can't
Speaker 1: afford to lose money, that's where I get really concerned.
Speaker 1: And I also just worry that the complacency, the tendency
Speaker 1: to accept things at a surface level, trickles down economics.
Speaker 1: I don't think trickle down properly, but ignorance certainly can.
Speaker 1: And that's where the opportunity comes in for scam artists,
Speaker 1: whether they are purposefully attempting to fool victims into handing
Speaker 1: over large amounts of cash, or they've actually deluded themselves
Speaker 1: into believing in an unproven technology. The tech world is
Speaker 1: complex and amazing enough to provide the perfect environment for
Speaker 1: a con. So in this episode, when we come back
Speaker 1: from this break, we're going to talk about a couple
Speaker 1: of notable examples of cons and scams that have happened
Speaker 1: in and around the tech industry and why critical thinking
Speaker 1: is so very important. But first, let's take a quick
Speaker 1: break to thank our sponsors. So a lot of scams,
Speaker 1: not just in the tech world but elsewhere, follow a
Speaker 1: pattern like the pyramid scheme, or more specifically, the Ponzi scheme.
Speaker 1: The Ponzi scheme is named after a guy who was
Speaker 1: named Charles Ponzi scheme. Oh no, I'm sorry, it's just
Speaker 1: Charles Ponzi. He was not the first to come up
Speaker 1: with this particular scheme. By the way, there was a
Speaker 1: woman who pulled essentially the exact same thing, but you
Speaker 1: know what, she had the gall to be a woman,
Speaker 1: So obviously we need to name the scheme after a
Speaker 1: dude who did it years later. That's just me being
Speaker 1: a little snarky, But anyway, the basic concept is you
Speaker 1: convinced people to invest in your business idea and then
Speaker 1: they're going to get some sort of insane return on
Speaker 1: their investment, typically on a very aggressive timeline. So Ponzi,
Speaker 1: for example, claimed that people who bought into his business
Speaker 1: proposition would start getting a fifty percent return on their
Speaker 1: investment within a month and a half, like forty five days.
Speaker 1: That's a crazy amount of return. And the way he
Speaker 1: would guarantee this, the way he would cover those returns
Speaker 1: because like his business wasn't a business, it was just
Speaker 1: robbing Peter to pay Paul. Essentially, he would use money
Speaker 1: from subsequent rounds of investors to show his earlier rounds
Speaker 1: of investors how well the plan was going. So let's
Speaker 1: break this down with a really simplified explanation of what
Speaker 1: was going on. So let's say that you are a
Speaker 1: low down, no good crook and you have convinced me
Speaker 1: to put one hundred of my American dollars in our
Speaker 1: business proposition. And in the meantime, after I have already
Speaker 1: put one hundred dollars in, you then turn to convince
Speaker 1: other people to give you money in a subsequent round
Speaker 1: of investments. And forty five days after you hooked me,
Speaker 1: you say, hey, good news, Johnny boy. Your investment has
Speaker 1: a fifty dollars return on it. Already do you want
Speaker 1: your payout. Do you want to get your fifty bucks
Speaker 1: and keep your one hundred dollars in as your initial investment.
Speaker 1: And what you're counting on is what a lot of
Speaker 1: people actually would do. I see an opportunity to get
Speaker 1: filthy rich, Right, I just got fifty dollars back on
Speaker 1: a one hundred dollars investment. That's still good. The investment
Speaker 1: is still in the business. The fifty dollars is like
Speaker 1: a dividend being paid out to me. So what I
Speaker 1: say is, oh, you know what, No, no, no, just
Speaker 1: hold on to that fifty dollars, reinvest it back into
Speaker 1: the business because I'm thinking, well, now I'm going to
Speaker 1: have one hundred and fifty dollars invested. I'm going to
Speaker 1: get even more money because the returns are going to
Speaker 1: keep coming in. Meanwhile, you're looking for your next round
Speaker 1: of investors to help cover the returns of not just me,
Speaker 1: but the people you fooled in investment round number two.
Speaker 1: And this goes on and on until it doesn't because
Speaker 1: these schemes ultimately reach a point where there's just no
Speaker 1: way to get enough people to join in order to
Speaker 1: cover everybody who is already bought into the scheme, and
Speaker 1: folks then might start to worry that something might be
Speaker 1: up and they might start to try to pull their
Speaker 1: money out of this business. And then you have to
Speaker 1: figure out, well do I pay out? And if I
Speaker 1: do pay out, how much do I pay out? Before
Speaker 1: I need to just pull up stakes, move out of town,
Speaker 1: change my name, and hide all my wealth away or
Speaker 1: you get nicked by the coppers, you know, and then
Speaker 1: you're put before a judge and then you're fine to
Speaker 1: timbuck to and back and then thrown in the whoscal
Speaker 1: for good measure. So in the tech space, these pyramid
Speaker 1: schemes happen fairly regularly, particularly in realms like cryptocurrency. You
Speaker 1: got blockchain and crypto evangelists out there who will try
Speaker 1: to convince greedy people to pour money into a system
Speaker 1: only to lock down that money and then run off
Speaker 1: with it. And that's just rampant. It's not I'm not
Speaker 1: making a wild accusation here. You can actually go to
Speaker 1: the website DFPI, dot CAA, dot gov and just look
Speaker 1: at their cryptoscam tracker, or you know, just search cryptoscam tracker.
Speaker 1: It'll pull it right up. That tracker lists dozens of
Speaker 1: cases in which victims have been parted from their hard
Speaker 1: earned assets. The stories are pretty similar. Usually it involves
Speaker 1: someone being convinced to put a significant amount of money
Speaker 1: into some sort of crypto scheme, only to have that
Speaker 1: account locked off. Like usually there are steps to it
Speaker 1: where first they're told, hey, in order to do anything
Speaker 1: with this money, you actually need to increase the investment
Speaker 1: by x amount, So like you might put five thousand
Speaker 1: dollars worth of assets into an account and it says, well,
Speaker 1: we need three thousand dollars more in order to really
Speaker 1: do anything with it. Then you might start getting notifications
Speaker 1: that hey, you're your account's doing really well, like its
Speaker 1: increased your wealth by x amount. But you find out
Speaker 1: when you try to withdraw that you're locked out. And
Speaker 1: then next thing you know, the website doesn't even exist
Speaker 1: anymore and someone has made off with your money. This
Speaker 1: happens a lot in the crypto world, and again it's
Speaker 1: understandable why con artists are drawn to crypto. You have
Speaker 1: bitcoin that's trading at near one hundred thousand dollars per
Speaker 1: coin these days. I think today it's down to ninety
Speaker 1: five thousand. It had been flirting with one hundred thousand
Speaker 1: last week. And it's absolutely true that if you had
Speaker 1: bought into bitcoin in the very early days and you
Speaker 1: were able to keep track of your digital wallet and stuff,
Speaker 1: then you would be wicked wealthy today. Let's say that
Speaker 1: you have bought like a dollar's worth of bitcoin back
Speaker 1: in twenty ten, Holy canoli. You know, bitcoin was a
Speaker 1: fraction of a dollar back in those days, so you
Speaker 1: would have a huge amount of wealth represented in bitcoin today. Now,
Speaker 1: set aside all the other stuff about bitcoin that I
Speaker 1: personally find very concerning, like the environmental impact and the
Speaker 1: prevalent use of bitcoin to do stuff like launder money
Speaker 1: and fund a legal activities and that kind of thing.
Speaker 1: The fact is bitcoin made a few people very, very wealthy,
Speaker 1: so it's understandable that people want to jump on some
Speaker 1: other perceived opportunity. And cryptocurrency is complicated enough that a
Speaker 1: con artist can count on a victim's ignorance to do
Speaker 1: a lot of the work for them. The average person
Speaker 1: doesn't really understand how cryptocurrency works, whether it's a proof
Speaker 1: of work or proof of stake system. The average person
Speaker 1: just sees number go up, you know, or sometimes number
Speaker 1: go down. But to the average person, cryptocurrency might as
Speaker 1: well just be a black box. You put money into
Speaker 1: it and then a whole lot more money comes out
Speaker 1: of it. That's an ideal situation to run a scam.
Speaker 1: People see this as an easy way to increase wealth.
Speaker 1: They understand that there's risk, but most people don't think
Speaker 1: that the bad stuff's going to happen to them. You know,
Speaker 1: most people don't live their lives that way, and a
Speaker 1: lot of people can't even imagine that a bad outcome
Speaker 1: will happen. They've seen the evidence of Hey, bitcoin made
Speaker 1: people into billionaires, why not me? NFTs fall into this
Speaker 1: category two. Now, that's not to say that NFTs have
Speaker 1: absolutely no legitimate use cases. I think that NFTs have
Speaker 1: potential use cases. The problem is the incredible saturation of
Speaker 1: the market back in like twenty twenty to twenty twenty two,
Speaker 1: combined with rampant speculation, created a ridiculous bubble that inflated
Speaker 1: so fast and bursts so spectacularly that to this day,
Speaker 1: NFTs are digging out of the hole that was left behind.
Speaker 1: You know, a ton of NFTs that at one point
Speaker 1: or another were being touted as the next big asset
Speaker 1: are now worthless, not virtually worthless. They're literally worthless. So
Speaker 1: let's just talk about NFTs for us a moment to
Speaker 1: refresh ourselves. So NFT stands for non fungible token. It
Speaker 1: is a digital token. It's built on top of the blockchain,
Speaker 1: and purchasing an NFT creates a digital record, and that
Speaker 1: record proves that you are the owner of this digital asset.
Speaker 1: But that asset is effectively a receipt like it's not
Speaker 1: a specific thing. Like if I bought an NFT that
Speaker 1: represents a digital photograph, the NFT isn't the photograph. The
Speaker 1: NFT is a token that represents the photograph. So you
Speaker 1: could think of it as I've got a certificate that
Speaker 1: proves on the owner. That's kind of what it is. However,
Speaker 1: an NFT doesn't mean that you actually control the asset itself,
Speaker 1: nor does it mean you can prevent someone else from
Speaker 1: making endless copies of that asset. So if I did
Speaker 1: buy an NFT that represents a digital photograph, and that
Speaker 1: photograph is up on the web somewhere, nothing stops people
Speaker 1: from making copies of that image. They can make them
Speaker 1: all day long. Plus I don't own the copyright to
Speaker 1: that image. Necessarily unless that was part of the NFT agreement. Otherwise,
Speaker 1: I just own a copy of this photo. I don't
Speaker 1: own the copyright to the photo itself. The original photographer
Speaker 1: or the company representing that photographer owns that. So let's
Speaker 1: say someone minted an NFT representing a digital copy of
Speaker 1: a novel. If I bought the NFT, would that mean
Speaker 1: I actually bought the novel itself? Would the novel belong
Speaker 1: to me? Would I have ownership of its IP? No,
Speaker 1: of course not. It would be similar to me going
Speaker 1: out to a bookstore and buying a hard print copy
Speaker 1: of the book. If I go out and buy the
Speaker 1: latest Stephen King novel at a bookstore, I don't suddenly
Speaker 1: own the intellectual property. I just own a copy of
Speaker 1: a book. That's it. Which is why I, like a
Speaker 1: lot of other people, got really confused when a crypto
Speaker 1: group called Spice dao. DAO actually is an initialism. It
Speaker 1: stands for a decentralized autonomous organization. That's something else we
Speaker 1: could talk about as far as the potential for scam dao.
Speaker 1: Not that all DAOs are scams, they're not, but that
Speaker 1: because they are a little tricky to understand, they are
Speaker 1: a good breeding ground for scams. There's the ignorance you
Speaker 1: can feed off of. Well. Spice DAO got famous because
Speaker 1: this group pulled together a couple of million dollars from
Speaker 1: its various members, and their purpose was to buy a
Speaker 1: copy of a book. It was a book that detailed
Speaker 1: the failed attempt of Alejandro Jodorowski's film adaptation of the
Speaker 1: science fiction novel Doune, and that production failed spectacularly, and
Speaker 1: this book detailed that failure and the vision of that
Speaker 1: original adaptation. Well, the DOAO intended to purchase this book
Speaker 1: and then sell NFTs representing parts of the book, essentially
Speaker 1: slicing the book up into digital segments and selling NFTs
Speaker 1: representing those segments, and then they were going to to
Speaker 1: actually burn the physical copy that they had purchased. So
Speaker 1: their thought was the digital NFTs would be the only
Speaker 1: remnant of this rare book. But here's the wild and
Speaker 1: wacky thing. They didn't realize that buying the book only
Speaker 1: meant that they were buying a physical copy of this book.
Speaker 1: They wouldn't have the right to do what they were
Speaker 1: planning to do. In fact, they expressly did not have
Speaker 1: the right to reproduce the book in such a way,
Speaker 1: because that violates copyright and they wouldn't own the copyright,
Speaker 1: So they ended up spending more than one hundred times
Speaker 1: the estimated value of the book in an effort to
Speaker 1: carry out the scheme that they ultimately couldn't follow through on. Also,
Speaker 1: to add insult to injury, you could actually already access
Speaker 1: the contents of that book online for free. So you
Speaker 1: know that was a huge missed swing right there. Now,
Speaker 1: that particular whoopsie was due to a misunderstanding of copyright
Speaker 1: law more than NFT technology. But the hoopla around NFTs
Speaker 1: fueled the frenzy that led to that goof in the
Speaker 1: first place. People were so excited about the potential for
Speaker 1: NFTs to get rich. Most people were just looking at
Speaker 1: as a way to get rich quick. They weren't asking questions,
Speaker 1: they weren't pausing to say, wait a minute, does this
Speaker 1: make sense? And if they had, they might have come
Speaker 1: to the conclusion of, oh, no, this doesn't. This would
Speaker 1: be an enormous waste of our money, and the auction
Speaker 1: house would be getting way more cash than they were expecting. Again,
Speaker 1: I don't necessarily feel hurt by rich people losing or
Speaker 1: gaining lots of money at the expense of each other.
Speaker 1: If the rich want to eat each other, that's fine
Speaker 1: by me. And by the way, this is why I
Speaker 1: cautioned people not to get swept up in hype for
Speaker 1: things that surround technology. Like it's good to be excited
Speaker 1: about stuff and to be passionate about stuff, but you
Speaker 1: have to also temper that with critical thinking. I'll talk
Speaker 1: about that more in just a moment, but first let's
Speaker 1: take another quick break. Okay, before the break, I was
Speaker 1: talking about how you know, passion is good, being excited
Speaker 1: for stuff is good. It can be a lot of fun,
Speaker 1: but that you should maintain critical thinking in order not
Speaker 1: to get carried away. I think that's really important to
Speaker 1: remember right now. I mean, it's it's probably not as
Speaker 1: prevalent as it was a couple of years ago. I
Speaker 1: think the NFT thing really took a lot of steam
Speaker 1: out from some other movements, but those movements are still happening.
Speaker 1: So if you encounter stuff like people talking about Web
Speaker 1: three point zero, I would be cautious. Now, that's not
Speaker 1: to say that some aspect of some version of Web
Speaker 1: three point zero won't eventually become a really big thing,
Speaker 1: maybe a crucially important thing, But I would be skeptical
Speaker 1: of any grandiose claims around Web three points oh or
Speaker 1: like something like the metaverse, which is often conflated or
Speaker 1: presented in conjunction with Web three point zero. I'd be
Speaker 1: careful about anything like that, especially people who are claiming
Speaker 1: that it's going to be the future of the Internet
Speaker 1: or maybe even the future of computing itself. Be careful
Speaker 1: around those types of claims. Maybe they're gonna turn out
Speaker 1: to be true. But I feel like a lot of
Speaker 1: people who really push the narrative on things like metaverse
Speaker 1: or Web three point zho are the same people who
Speaker 1: have already heavily bought into those ideas. They have sunk
Speaker 1: a great deal of their own personal wealth into these ideas,
Speaker 1: and their realization on their investment is entirely dependent upon
Speaker 1: other people also buying into it, so they have an
Speaker 1: incentive to get other folks excited about these things, whether
Speaker 1: or not the things are worthy of being excited about,
Speaker 1: Like there might not be enough there for it to
Speaker 1: really be, you know, a viable concept, but that's not
Speaker 1: really important if you're just trying to get people to
Speaker 1: buy in so you can make your money back. So
Speaker 1: to me, things like web three point zero and metaverse.
Speaker 1: They are vague, they are poorly defined because no one
Speaker 1: has really made these things yet. There's been a lot
Speaker 1: of talk around them, and some discussions of some points
Speaker 1: of common threads among the different variations that are presented
Speaker 1: to people, but there's no firm definition for either web
Speaker 1: three or metaverse, which means you have ambiguity. And when
Speaker 1: you have ambiguity, that's a recipe for confusion and potential deception.
Speaker 1: That's when you have to employ that critical thinking. You
Speaker 1: have to ask questions, and if you get non answers,
Speaker 1: like if it starts sounding like a political debate where
Speaker 1: a candidate has asked a question and then they just
Speaker 1: spend the next minute not answering that question and talking
Speaker 1: around it, I say it's best to just get the
Speaker 1: heck out of that conversation and keep your money safe.
Speaker 1: Maybe it means you'll miss out on an opportunity, that
Speaker 1: is a possibility, but I think more often than not,
Speaker 1: it means that the only opportunity you missed out on
Speaker 1: was saying goodbye to your money. So let's talk about
Speaker 1: some more investment scams that involved the world of tech,
Speaker 1: and one of these actually is not an investment scam.
Speaker 1: It was a bookkeeping scam. And it was interesting because
Speaker 1: it was a tech company, a telecommunications company, that was
Speaker 1: guilty of this. And in part this act was in
Speaker 1: an effort to not just fool external partners like stakeholders,
Speaker 1: shareholders that is, but also people within the company itself.
Speaker 1: I'm talking about WorldCom. This was a wild story from
Speaker 1: the early two thousands. I actually remember when this happened.
Speaker 1: It wasn't that long after Enron, which was another huge
Speaker 1: scandal when it came to finances. So, once upon a time,
Speaker 1: the telephone system had companies that were in charge of
Speaker 1: handling long distance phone calls. You remember when that was
Speaker 1: a thing. That's something that a lot of us haven't
Speaker 1: had to think about for a very long time these days.
Speaker 1: But in the early two thousands, world Com was the
Speaker 1: second largest long distance telephone company in the United States,
Speaker 1: and it became headline news due to a massive accounting scandal,
Speaker 1: and it was made to look like the company was
Speaker 1: doing really well, when in fact it was already starting
Speaker 1: to spiral out of control. But they didn't want the
Speaker 1: outside world to know that they were spiraling. They being
Speaker 1: certain leaders at world Com and so they came up
Speaker 1: with a plan to make it appear as though world
Speaker 1: Com was doing quite well when it wasn't, and even
Speaker 1: folks within the company had no clue about what was
Speaker 1: actually happening until an internal audit brought up some very
Speaker 1: sticky questions. And when I say that people didn't know
Speaker 1: what was going on, that included people who were engaged
Speaker 1: in the activities themselves of like covering stuff up because
Speaker 1: they were being told by their bosses to do specific things.
Speaker 1: They didn't understand why they were being told to do it,
Speaker 1: So it was one of those you know, I was
Speaker 1: only following orders kind of situations where you don't even
Speaker 1: really understand why you're doing what you're doing and you
Speaker 1: only find out later that it was part of a
Speaker 1: fraudulent scheme. So, leading up to the early two thousands,
Speaker 1: WorldCom was actually doing pretty darn well. It was leasing
Speaker 1: phone lines from AT and T for really, you know,
Speaker 1: cheap prices. Then it was turning around and taking these
Speaker 1: least phone lines and offering them to customers for really
Speaker 1: competitive rates. So you know, they're they're charging more than
Speaker 1: they're paying because otherwise you go out of business, right,
Speaker 1: But they're not charging a whole lot more, and so
Speaker 1: they're trying to scale up and get lots of customers,
Speaker 1: and it worked. They got a lot of cash, which
Speaker 1: they then started to use to acquire other companies at
Speaker 1: a pretty incredible pace. And when you buy up companies,
Speaker 1: you accrue a lot of debt in the process. You
Speaker 1: typically have to take out loans to do this, and
Speaker 1: WorldCom was buying lots of companies. Now, keep in mind,
Speaker 1: this is around the same time that we saw lots
Speaker 1: of inflation in the tech sphere because the dot com
Speaker 1: bubble was inflating. So WorldCom was spending a whole lot
Speaker 1: of money, and arguably it was spending more money than
Speaker 1: what the acquisitions were actually worth in some cases because
Speaker 1: of that inflation of the dot com bubble. Now, WorldCom's
Speaker 1: finances initially looked pretty darn good, but then you had
Speaker 1: the dot com bubble burst in two thousand and two
Speaker 1: thousand and one, and very quickly it was clear that
Speaker 1: WorldCom was over extended. And as a publicly traded company,
Speaker 1: that means it would be in danger of having a
Speaker 1: massive dip in its stock price, and that would be bad.
Speaker 1: Stakeholders expect a stable and growing company, well on paper.
Speaker 1: That was what seemed to be happening. WorldCom seemed to
Speaker 1: be doing pretty darn well. But it turned out that
Speaker 1: paper stuff was just paper. It was just creative accounting,
Speaker 1: which is another way of saying lying. It was outright falsehoods.
Speaker 1: So essentially, a group of leaders within WorldCom directed that
Speaker 1: operating expenses be listed as something else on the books.
Speaker 1: One term that kept popping up in the books was
Speaker 1: a term called prepaid capacity. And you might say, what
Speaker 1: was prepaid capacity? What did that mean? Well, it turns
Speaker 1: out it didn't mean anything. It was essentially code for
Speaker 1: hide to operating expenses here so that they look like
Speaker 1: capital expenses. Okay, but what's the difference there. What's the
Speaker 1: difference between operating expenses and capital expenses? This is something
Speaker 1: that I think a lot of people just don't know,
Speaker 1: including me, Like I have to look it up every
Speaker 1: now and then because I'm not a business guy. But
Speaker 1: it's actually pretty straightforward. So operating expenses are recurring, short
Speaker 1: term costs. These are the costs of doing business. So
Speaker 1: that can include stuff like paying rent for office space,
Speaker 1: paying your utility bills, paying out salaries, that kind of thing.
Speaker 1: So you deduct operating expenses from income whenever you're doing taxes,
Speaker 1: so that you can say, like, all right, well we
Speaker 1: made this much money, but it cost this much to
Speaker 1: do business, so we have to look at the difference there.
Speaker 1: You can't just tax me on the income. You have
Speaker 1: to take into account how much it cost to run
Speaker 1: the business. Capital expenses are different from operating expenses because
Speaker 1: capital expenses are investments. So a capital expense represents something
Speaker 1: that is intended to generate revenue for a business in
Speaker 1: the long run. It may be a long term investment,
Speaker 1: so it still costs money, but you don't count it
Speaker 1: against income, So your income looks bigger if something is
Speaker 1: a capital expense rather than an operating expense, because you
Speaker 1: don't deduct the capital expense from the income. And capital
Speaker 1: expense again represents an investment that's at least ideally going
Speaker 1: to pay off sometime down the line. So essentially leaders
Speaker 1: at WorldCom were directing their accountants to classify operating expenses
Speaker 1: as capital expenses in an effort to make it look
Speaker 1: like the company was actually performing much much better than
Speaker 1: it really was, and they used the term prepaid capacity
Speaker 1: to mask it. And what they were hoping was that
Speaker 1: no one would bother to ask what exactly prepaid capacity was.
Speaker 1: They were relying on prepaid capacity to be vague enough
Speaker 1: and official sounding enough that people would just accept it
Speaker 1: and move on and not ask any questions. Like, you
Speaker 1: don't want to feel like you're the ignorant one by
Speaker 1: saying what does this actually mean? It's kind of like
Speaker 1: an emperor wears no clothes sort of thing. Right, You
Speaker 1: don't want to be the one to admit you can't
Speaker 1: see the meaning of something, because then it makes it
Speaker 1: seem like you're not as intelligent as everybody else, Right, Like,
Speaker 1: if you ask a question does this mean, well, that
Speaker 1: shows that you didn't know. And if you didn't know,
Speaker 1: then that's because you're not Smart's the that's the feeling.
Speaker 1: It's not true. By the way, not knowing things is
Speaker 1: not a bad trait. I don't know lots of stuff,
Speaker 1: but I ask questions so that I can learn. Learning
Speaker 1: and curiosity that's important. And you know, curiosity is all
Speaker 1: about trying to push back the barriers of our ignorance.
Speaker 1: So WorldCom leaders were thinking, prepaid capacity, that's going to
Speaker 1: be enough to keep people from asking too many questions.
Speaker 1: But they did not count on the tenacity and integrity
Speaker 1: of Cynthia Cooper. Cynthia Cooper headed up the internal audit
Speaker 1: department within WorldCom, and she looked into some irregularities in
Speaker 1: the book keeping, largely because of a previous scandal that
Speaker 1: another whistleblower had brought to company attention before then subsequently
Speaker 1: getting fired. So Cooper was thinking, I better look into
Speaker 1: what's going on here. So Cooper and her team gradually
Speaker 1: un covered fraud within WorldCom. She discovered that no one
Speaker 1: actually had a definition for prepaid capacity, like it was
Speaker 1: appearing on a lot of official records, but no one
Speaker 1: could tell her what prepaid capacity actually meant. As far
Speaker 1: as anyone could tell it didn't really mean anything, and
Speaker 1: yet here it was showing up in records again and
Speaker 1: again and representing billions of dollars in expenditures. Clearly, this
Speaker 1: was a huge, huge deal and she was getting the
Speaker 1: run around. Cooper and her team found enough evidence of
Speaker 1: wrongdoing that the SEC got involved and investigated world Com. Ultimately,
Speaker 1: the CEO of the company was held legally responsible for
Speaker 1: the fraud. He would end up receiving a twenty five
Speaker 1: year prison sentence. As part of that trial, he would
Speaker 1: eventually be released early due to declining health, and he
Speaker 1: would pass away not too long after that happened. As
Speaker 1: for WorldCom, it went into bankruptcy, it emerged under a
Speaker 1: new name, and ultimately Verizon acquired what had been WorldCom.
Speaker 1: But yeah, that's an example of a company pulling a
Speaker 1: scam on its own people as well as you know,
Speaker 1: shareholders in the SEC and relying on jargon to discourage
Speaker 1: anyone from asking tough questions. Cooper just wasn't putting up
Speaker 1: with any of that. So again, critical thinking absolutely something
Speaker 1: you should employ, just like Cooper did. You got to
Speaker 1: make sure that you're willing to ask the questions. Those questions.
Speaker 1: You know, maybe you're not asking a human being, maybe
Speaker 1: you're doing some research and just looking into things. Always
Speaker 1: take into account where your information is coming from. I
Speaker 1: recommend not using AI for that kind of stuff because
Speaker 1: you don't know where it's drawing its information, and may
Speaker 1: be drawing from a very biased source. It's very difficult
Speaker 1: to vet how reliable AI is on any given topic,
Speaker 1: and in fact, you may get very different answers if
Speaker 1: you ask the exact same question at different times or
Speaker 1: on different machines. So definitely take into account the quality
Speaker 1: of the source when you're asking your questions. But yeah,
Speaker 1: you know, use that curiosity, ask those questions. It may
Speaker 1: turn out that the thing you are skeptical of is
Speaker 1: one hundred percent legit and reliable, and that's great, Like,
Speaker 1: there's no reason to be upset about that. But it's
Speaker 1: always good to make sure before you start taking actions
Speaker 1: that could end up, you know, creating a bit of
Speaker 1: a loss for you, whether it's financial or otherwise. And
Speaker 1: the same goes true for like all aspects of life,
Speaker 1: as I said earlier, But really, when it comes to tech,
Speaker 1: I think critical thinking is in short supply. That's why
Speaker 1: we see things like misinformation campaigns go viral online. It's
Speaker 1: why we see people get super hyped about new technologies
Speaker 1: that have yet to actually prove their worth. I would
Speaker 1: argue that the generative AI craze kind of falls into
Speaker 1: that category that I think a lot of companies jumped
Speaker 1: way too far into generative AI, way too early before
Speaker 1: really getting an understanding of what it's capable of and
Speaker 1: what's limitations are and what applications are. This stuff happens
Speaker 1: over and over again. It becomes kind of frustrating because
Speaker 1: you think shouldn't we have learned these lessons already. I'm
Speaker 1: sure my peers over and stuff you missed in history
Speaker 1: class have a lot to say about that, because obviously
Speaker 1: they cover topics about history every single day, and I'm
Speaker 1: sure they lament the many times where someone has done
Speaker 1: something really stupid in the past, and we continue to
Speaker 1: do that stupid thing in the present, so and probably
Speaker 1: we'll continue into the future. But yeah, let's all remember
Speaker 1: critical thinking. It's a skill that you have to practice.
Speaker 1: You can forget to practice it. Certainly I have done
Speaker 1: that on several occasions. I have to remind myself to
Speaker 1: practice it. Well. I'm not some expert that just automatically
Speaker 1: applies critical thinking. So don't take this as me speaking
Speaker 1: from some high horse. My horse is low, maybe lower
Speaker 1: than your horses. Just me being concerned for my listeners
Speaker 1: and making sure that they take that lesson to heart.
Speaker 1: Critical thinking and compassion. The two will serve you well
Speaker 1: if you employ them. That's it for this episode of
Speaker 1: tech Stuff. We'll be back with more new episodes for
Speaker 1: pretty much all of December and into the beginning of January,
Speaker 1: before we do the handoff with our new hosts, which
Speaker 1: I'll talk about them more as we get closer to
Speaker 1: the handoff. But I hope you're all doing well. I
Speaker 1: hope to be able to share with you lots of
Speaker 1: other cool and fun things. I've got some potential collaborations
Speaker 1: coming up with friends of the show, so hopefully we'll
Speaker 1: be able to get those scheduled and recorded in short order,
Speaker 1: because I look forward to going out with a maybe
Speaker 1: not a bang, but at least maybe a moderate sized boom.
Speaker 1: And until next time, I'll talk to you again, really soon.
Speaker 1: Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio,
Speaker 1: visit the iHeartRadio app, Apple Podcasts, or wherever you listen
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