Daily Archives: May 5, 2020

New study spotlights the dark side of venture capitalist funding – shows it’s also bad for the bottom line

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A new study from The School of Business at Portland State University suggests that the aggressive cultures of private equity firms, like , might spill over into the companies that they fund. Venture capitalists are often the hidden players in decision making, and they are funding startups like Uber, SpaceX and AirBnB.

With money, comes expectations

As a company grows through early developmental milestones, it becomes accountable to key stakeholders.

According to the study, companies often face challenges when balancing the tension between long-term socially responsible strategies and short-term demands associated with .

PSU Associate Professor of Management Theodore Khoury and colleagues published their study, “Is socially responsible? Exploring the imprinting effect of VC funding on CSR practices,” in the Journal of Business Venturing.

The study found that capitalist investors often push a business they are financing to prioritize long-term financially-based goals instead of socially responsible business ones, like fair wages, reducing carbon footprints or improving labor policies.

Venture capitalists often hold a large portion of the equity in the companies in which they invest, which gives them voting power to challenge or advocate for specific strategic directions and influence decisions that might jeopardize company returns.

The prioritization of financial success opens a floodgate, allowing behaviors such as sexual harassment at new companies like Uber to go unchecked.

“We find that venture capitalist-backed companies have poorer socially responsible practice records, which do improve over time, but at a comparatively slower rate than non-venture capitalist-backed companies,” Khoury said.

Unexpected consequence of greed

The PSU study also highlights how venture capitalists’ desires for financial surplus might end up causing more harm than good.

Uber agreed to pay $4.4 million dollars to settle federal charges of fostering a work culture wrought with sexual harassment. It’s just one of the dozens of Silicon Valley companies facing huge fines related to sexual harassment charges.

The researchers assert that socially responsible practices positively impact, rather than reduce, a company’s financial performance.

“Compared to non-venture capitalist-backed companies, venture capitalist-backed companies presented significantly lower assets, sales, tangible assets, inventories, returns on assets, profit margins and debt levels, as well as higher intangibles and current ratios,” the study said.

In addition to financial success, socially responsible practices help satisfy multiple stakeholders (like employees), enhance a ‘s market value, preempt government regulations, reduce risk, develop business resources and lower capital costs.

However, the researchers add that when venture capitalist-backed companies receive funding from firms with a responsible investment orientation and a broader stakeholder view, their socially responsible practice records are significantly better.

“Early-stage imprinting can happen from many sources, but when businesses take funding from certain investors, certain cultures, operating modes and ways of conducting business may start to take shape for the long term to affect a broader group of stakeholders,” Khoury said. “The effects of early-stage imprinting from venture capital funding can be hard to ‘undo,’ and there are social consequences.”

Source: New study spotlights the dark side of venture capitalist funding

Tesla stock rise appears to qualify CEO Musk for $700 million payday – and the chance to buy loats of Tesla stock at low prices

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Shares of Tesla Inc (TSLA.O) jumped more than 8% on Monday, putting Tesla’s market capitalization at $141.1 billion at the close. More importantly for Musk, Tesla’s stock market value reached a six-month average of $100.2 billion, according to an analysis of Refinitiv data.

Hitting a six-month average of $100 billion triggers the vesting of the first of 12 tranches of options granted to the billionaire to buy Tesla stock as part of a pay package agreed in 2018. Musk has already met two other requirements by hitting a growth target and far exceeding a one-month average $100 billion market cap.

Each tranche gives Musk the option to buy 1.69 million Tesla shares at $350.02 each. At Tesla’s closing stock price of $761.19, Musk would theoretically be able to sell the shares for a profit of $694 million.

Musk on Friday said on Twitter, “Tesla stock price is too high imo,” using an abbreviation for “in my opinion”.

That tweet sent Tesla’s stock tumbling 10%, shocking shareholders. Tesla, whose California factory is closed as part of the state’s coronavirus-related lockdowns, posted its third quarterly profit in a row last week.

Musk, who is also the majority owner and CEO of the SpaceX rocket maker, receives no salary or cash bonus, only options that vest based on Tesla’s market cap and milestones for revenue and profit growth.

A full payoff of all tranches would surpass anything previously granted to U.S. executives.

When Tesla unveiled Musk’s package in 2018, it said he could theoretically reap as much as $55.8 billion if no new shares were issued. However, Tesla has since issued shares to compensate employees, and last year it sold $2.7 billion in shares and convertible bonds.

Musk’s subsequent options tranches would vest at $50 billion increments of Tesla market capitalization over the agreement’s 10-year period, with the billionaire earning the full package if Tesla’s market capitalization reaches $650 billion and the high tech vehicle maker achieves several revenue and profit targets.

Source: Tesla stock rise appears to qualify CEO Musk for $700 million payday – Reuters

Study reveals single-step strategy for recycling used nuclear fuel

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A typical nuclear reactor uses only a small fraction of its fuel rod to produce power before the energy-generating reaction naturally terminates. What is left behind is an assortment of radioactive elements, including unused fuel, that are disposed of as nuclear waste in the United States. Although certain elements recycled from waste can be used for powering newer generations of nuclear reactors, extracting leftover fuel in a way that prevents possible misuse is an ongoing challenge.

Now, Texas A&M University engineering researchers have devised a simple, proliferation-resistant approach for separating out different components of . The one-step chemical reaction, described in the February issue of the journal Industrial & Engineering Chemistry Research, results in the formation of crystals containing all of the leftover nuclear elements distributed uniformly.

The researchers also noted that the simplicity of their recycling approach makes the translation from lab bench to industry feasible.

“Our recycling strategy can be easily integrated into a chemical flow sheet for industrial-scale implementation,” said Johnathan Burns, research scientist in the Texas A&M Engineering Experiment Station’s Nuclear Engineering and Science Center. “In other words, the reaction can be repeated multiple times to maximize fuel recovery yield and further reduce radioactive nuclear waste.”

[…]

For their experiments, they prepared a surrogate solution of uranium, plutonium, neptunium and americium in highly concentrated nitric acid at 60-90 degrees Celsius to mimic dissolving of a real fuel rod in the strong acid. They found when the solution reached , as predicted, that uranium, neptunium, plutonium and americium separated from the solution together, uniformly distributing themselves within the crystals.

Burns noted that this simplified, single-step process is also proliferation-resistant since plutonium is not isolated but incorporated within the uranium crystals.

“The idea is that the reprocessed fuel generated from our prescribed chemical reaction can be used in future generations of reactors, which would not only burn uranium like most present-day reactors but also other heavy elements such as , and americium,” Burns said. “In addition to addressing the fuel recycling problem and reducing proliferation risk, our strategy will drastically reduce nuclear to just the fission products whose radioactivity is hundreds rather than hundreds of thousands of years.”

Source: Study reveals single-step strategy for recycling used nuclear fuel

Sweet TCAS! We can make airliners go up-diddly-up whenever we want, say infosec researchers

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Not only can malicious people make airliners climb and dive without pilot input – they can also control where and when they do so, research from Pen Test Partners (PTP) has found.

TCAS spoofing, the practice of fooling collision detection systems aboard airliners, can be controlled to precisely determine whether an airliner fitted with TCAS climbs or descends – and even to produce climb rates of up to 3,000ft/min.

Building on earlier research into the bare-bones concept [PDF], PTP said it had figured out how to shape and control airliners’ automatic TCAS responses so they moved up or down at precisely known points.

In a blog post the firm said: “We rationalised this to the point where we only needed three fake aircraft to provide [a Resolution Advisory] that caused a climb of over 3,000 ft/min.”

[…]

The prospect of a rollercoaster ride is less scary (or realistic) than it might seem; a recent Oxford University study showed that when airliner pilots are presented with too many spoof warnings, they simply disable the system responsible – and look out of the window so they keep flying safely.

Source: Sweet TCAS! We can make airliners go up-diddly-up whenever we want, say infosec researchers • The Register

OK, so you’ve air-gapped that PC. Cut the speakers. Covered the LEDs. Disconnected the monitor. Now, about the data-leaking power supply unit…

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Israeli cyber-security side-channel expert Mordechai Guri has devised a way to pilfer data from devices that have been air-gapped and silenced.

Organizations with extreme security needs may keep certain computer hardware disconnected from any network, a practice known as air-gapping, to preclude the possibility of miscreants hacking in from compromised systems on the network, or from across internet. Attacks on such systems generally require some manner of physical access to introduce malware: an unauthorized person has to get their hands on the machine, typically briefly and unnoticed, to install malicious software, thus getting around the air-gap.

Perhaps the most widely reported air gap attack of this sort is said to have involved the covert introduction of the Stuxnet centrifuge-knackering malware around 2007, after three years of planning, to the nuclear fuel enrichment lab in Natanz, Iran, apparently from a USB stick.

Guri, head of research and development at Ben-Gurion University of the Negev, Israel’s Cyber-Security Research Center, told The Register in an email that air-gapped networks are not just for sensitive military facilities. They are used, he said, by many regulated industries to protect sensitive private data, intellectual property, and critical infrastructure.

In previous work, Guri and colleagues have explored various ways to attack air-gapped systems. Two years ago, for example, he and several other researchers developed a technique dubbed MOSQUITO to exfiltrate data from air-gapped systems using ultrasonic transmissions between speakers.

An obvious defense against acoustic data transmission is to disable any speakers on the protected device, a practice known as audio-gapping.

But Guri’s latest research shows that’s not enough. He and his team have found a way to turn the power supply in an isolated, muted machine into a speaker of sorts, one capable of transmitting data at a rate of 50 bits/sec.

He calls the attack POWER-SUPPLaY. The technique has the potential to be used against PC workstations and servers, as well as embedded systems and IoT devices that have no addressable audio hardware.

“We show that malware running on a PC can exploit its power supply unit (PSU) and use it as an out-of-band speaker with limited capabilities,” a paper [PDF] detailing the technique explained. “The malicious code intentionally manipulates the internal switching frequency of the power supply and hence controls the waveform generated from its capacitors and transformers.”

Source: OK, so you’ve air-gapped that PC. Cut the speakers. Covered the LEDs. Disconnected the monitor. Now, about the data-leaking power supply unit… • The Register

Apple’s T2 Security Chip ensure used laptops become unrecyclable junk, a Nightmare for MacBook Refurbishers

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As predicted, the proprietary locking system Apple rolled out with its 2018 MacBook Pros is hurting independent repair stores, refurbishers, and electronics recyclers. A combination of secure software locks, diagnostic requirements, and Apple’s new T2 security chip are making it hard to breathe new life into old MacBook Pros that have been recycled but could be easily repaired and used for years were it not for these locks.

It’s a problem that highlights Apple’s combative attitude towards the secondhand market and the need for national right to repair legislation.

“The irony is that I’d like to do the responsible thing and wipe user data from these machines, but Apple won’t let me,” John Bumstead, a MacBook refurbisher and owner of the RDKL INC repair store, said in a tweet with an attached picture of two “bricked” MacBook Pros. “Literally the only option is to destroy these beautiful $3,000 MacBooks and recover the $12/ea they are worth as scrap.”

Source: Apple’s T2 Security Chip Has Created a Nightmare for MacBook Refurbishers – VICE

Way to highlight capitalist consumer planet unfriendly culture, Apple