“In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices...We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion.”
The fine isn't particularly interesting on its own—Facebook can afford to pay $5 billion. What's fascinating is whether the FTC's forthcoming decision will set a precedent for regulating big tech.
First, let's unpack the fine, and why it won't phase Facebook. Facebook reported $15.07 billion in revenue in Q1 of this year, up from $11.96 billion in Q1 of 2018. It made enough money in a single quarter to eat the expected fine while maintaining profitability and continuing to move forward. Facebook's stock even surged through the news, peaking at a nearly 8% increase the following morning.
While $5 billion is a big number, it's not make-or-break for Facebook. The question of whether the FTC will regulate the way Facebook collects and uses user data, however, is.
Advertising was responsible for 99% of Facebook's Q1 revenue. If the FTC does anything that would make Facebook's ad platform less powerful—like changing the way Facebook can use user data for targeting, for example—it will be a blow at the core of its businesses. With companies like Google that are similarly reliant on monetizing user data, most of Silicon Valley is watching for the FTC's final decision—and the precedent it will set.
Why you should stop hiring with "grit" interviews
When you look at the great tech leaders of history—Sheryl Sandberg, Elon Musk, Oprah Winfrey—what is the one quality that unites them?
Grit is a concept invented by Angela Lee Duckworth in her bestselling book, Grit: The Power of Passion and Perseverance. The basic idea, as Duckworth describes, is that “grit—a combination of passion and perseverance for a singularly important goal—is the hallmark of high achievers in every domain.”
Since grit rolled onto the pop psychology scene, startups have quickly added it to their hiring criteria. “Grit" interviews, designed to gauge how well a candidate may fare in the face of adversity, have become staples for many companies.
The problem is that grit—at least as Duckworth defines it—is a pretty poor hiring signal. Work ethic and perseverance are good traits, but standard grit interviews are fundamentally ineffective.
As ideas start to grow into actual businesses, the number of tools and services you need to keep operations running smoothly grows as well. Take Product Hunt, for example. Its team uses 39 (!) products to keep things moving.
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