Slate Money: The Space Bees Edition

Date: March 24, 2018
Host: Felix Salmon
Guests: Tim Fernholz (Quartz writer and author of "Rocket Billionaires"), Anna Rothschild

Episode Overview

This edition of Slate Money delves into three main themes:

1. The privatization of space and the role of "rocket billionaires."
2. The Facebook and Cambridge Analytica scandal, exploring how data misuse intersected with business models and regulation.
3. Robo-advisors and recent controversies, using Wealthfront as a case study.

Throughout, the team maintains a light, witty tone while offering sharp insights into the intersection of technology, finance, and regulation. The titular “space bees” serve as a memorable example of the unexpected legal and technical challenges that come with commercial activity in space.

Key Discussion Points & Insights

1. The New Space Race: "Rocket Billionaires" (00:36–18:52)

A. Evolution from State to Private Space Exploration

• Space, once dominated by governments, is now a site for private enterprise.
• Tim Fernholz explains, “[Space] is definitely at a weird transition point where it’s cool because a lot of different outcomes could happen right now.” (03:10)

B. Apollo and Public Spending

• Apollo represented geopolitical, not economic, value:

  “It was arguably very geopolitically valuable and scientifically important. But ... loss, economically, because it wasn’t intended to be profitable.” – Tim (03:51)

• The shift began as technological advancements reduced costs and billionaires like Elon Musk and Jeff Bezos gained wealth and developed personal interests in space.

C. Private Companies' Business Models and Public Dependency

• SpaceX and Blue Origin stand out, but Musk’s success leans heavily on NASA support.
• “In the very early days, it was almost all NASA contracts ... But now ... they are dominating the commercial launch market and making a lot of money from private companies, too.” – Tim (06:18)
• The old marketplace lacked innovation due to incumbents’ guaranteed contracts. Musk disrupted this by pushing for lower costs and successfully forcing government competition.

D. The Potential and Pitfalls

• Primary profit is still in Earth orbit—communications and imagery (09:18).
• The next phase: Moon prospecting—water and fuel for further missions, and space tourism.
• Concerns include a lack of global legal framework, possible “colonial style land grab” as in Antarctica, and the “geosynchronous orbit” crowding and resource grab (11:13–12:19).

E. Notable Quote

• Fernholz’s book thesis:

  “There is a revolution in space technology ... led by private companies ... giving individuals and private companies the opportunities to do stuff in space that has never before been possible and maybe even is kind of frightening.” (08:51)

2. The Tale of the Space Bees (13:39–18:52)

• "Space Bees" as a Legal and Technical Quandary:
  • Swarm Technologies, led by Sara Spangelo, launched clandestinely tiny satellites (smaller than a 10-cm cube) from India, defying the U.S. FCC, which had denied permission over tracking concerns.
  • “It’s more like the Uber of space because it works, but it may just not be legal.” – Tim (14:49)
  • Root legal issue: Small satellites may be undetectable by standard radar, raising collision risks (16:23).
  • The industry sees both rapid innovation and legal gray areas; "weird twist" is startups building radar to track tiny satellites (17:20).

3. Facebook & Cambridge Analytica: Data, Ethics, and Fallout (18:52–32:00)

A. Scandal Mechanics

• Cambridge Analytica enticed ~275,000 users with quizzes, accessing their data and that of ~50M friends under outdated Facebook terms, then used this data for political ad targeting (20:20).
• Key issue: Users did not consent to friend-data harvesting. “That feels like a Facebook fuck up.” – Felix Salmon (22:15)

B. Business Model Critique

• The real outrage: Revelations that Facebook’s normal business model involves extensive, poorly regulated data sharing (22:59).
• Anna notes, “I think this is less about what Cambridge Analytica did or did not do ... and more about this year of people getting angrier ... at tech companies.” (23:16)

C. Market Effects and Regulation

• Facebook stock fell ~10% ($50BN). Investor fear is not just immediate fallout, but anticipated regulation and waning user growth (23:53–24:37).
• EU’s tighter data regulations loom large, possibly preventing Facebook from using already-collected data (27:20).

D. Questioning Effectiveness of Targeted Ads

• Panel debates whether targeted ads, and thus the entire model, actually work. “Does targeted advertising or even advertising work at all?” – Tim (28:15)
• Multiple references to Cathy O’Neil’s skepticism about ad impact.

E. International Perspective

• “In a lot of countries around the world, Facebook is the Internet ... if Facebook goes away or if its model changes entirely, what happens to those communities?” – Tim (31:18)

4. Robo-Advisors & the Wealthfront Debacle (32:00–44:21)

A. Wealthfront’s Controversial Change

• Wealthfront, a leading robo-advisor, unilaterally shifted >$100k client accounts into its own costly, proprietary fund (35:19), raising red flags for both increased fees and potentially circumventing US fiduciary rules.
• Panel criticizes the lack of transparency and the opt-out (not opt-in) format, especially given the target demographic’s preference for hands-off investing (35:19–36:15).
• “You’re forcing people to make an active decision about how their money is managed, when your entire unique selling point ... has been you do not need to make active decisions.” – Felix (35:46)

B. Passive Investing vs. Complexity

• Discussion about whether robo-advisors add value versus simple Vanguard target-date fund investing.
• Anna: “I think sometimes people think [passive products] are all the same and ... all low risk. And that’s not necessarily the case.” (36:26)
• Passive investing still considered the gold standard for most individuals.

C. Notable Quotes

• “The gold standard is and always has been, just buy a Vanguard target date fund and end the story.” – Felix (44:07)

5. Numbers Round (45:27–51:10)

(46:05) Tim’s Number: ~$60 billion
Represents the Trump administration’s target for recouping losses from alleged Chinese IP theft, kicking off a trade skirmish through tariffs.

(47:20) Felix’s Number: 2,202
The number of deaths from the Fukushima evacuation (not radiation), suggesting overreaction and unintended consequences of mass evacuations.

(49:59) Anna’s Number: $7.1 billion
Turkey’s current account deficit in January, tied to credit downgrades and local conspiracy theories about Moody’s motives.

Memorable Moments & Quotes

• “Who knew that space bees were going to be a running theme on Slate Money? But space bees are a running theme on Slate Money.” – Felix Salmon (00:43)
• “The fundamental design [of Virgin Galactic] is flawed or very challenging to get off the ground. He’s been able to raise a lot of money ... from Middle Eastern sovereign wealth funds.” – Tim (07:57)
• “[Swarm Technologies] couldn’t get permission from the FCC ... and they launched them anyways. From India. Because it’s pretty cheap to launch tiny satellites in India.” – Tim (15:24)
• “I just want to get rid of all targeted advertising altogether. ... It’s deeply undemocratic, especially when it’s political advertising, but it’s damaging in a whole bunch of ways.” – Felix (27:44)
• “The efficacy of a lot of political advertising ... is often measured as just canceling out the other sides.” – Tim (30:06)
• On Wealthfront’s abrupt change: “This is basically a way for Wealthfront to increase the fees it’s getting from those taxable customers by 40% overnight on an opt-out basis.” – Felix (39:17)

Notable Segment Timestamps

• Space privatization and Fernholz’s book: 01:52–08:51
• Legal/technical issues with space ‘bees’: 13:39–18:52
• Cambridge Analytica/Facebook breakdown: 18:52–32:00
• Robo-advisors/Wealthfront controversy: 32:00–44:21
• Numbers round (trade war, Fukushima, Turkey): 45:27–51:10

Tone and Style

The conversation is lively, irreverent, and insightful. The hosts regularly interject humor—“Slate Money does math”—and pop culture references while dissecting complex issues. They probe not just the mechanics but the philosophy and unintended consequences of new tech models in both space exploration and financial advice.

Summary: Value for the Listener

This episode is a whirlwind primer on the current state of private space ventures, the importance and pitfalls of oversight (from both regulators and algorithms), and why both matter for our economic and social lives. The “space bees” parable exemplifies the unforeseen risks in both space and tech. Meanwhile, the Facebook segment grounds the conversation in pressing questions about privacy, ethics, and regulation. The Wealthfront discussion is a cautionary tale on the difference between innovation and faithful service—timely for anyone with assets or data in the digital ether.

For more:

• Rocket Billionaires, Tim Fernholz’s book (officially praised for its subtitle debate)
• The full “binary options” nerd-out in the Slate Plus bonus segment

End of summary.