Monthly Archives: October 2020

News: Human Capital: Prop 22 puts the ‘future of labor’ at stake

• October 16, 2020
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Welcome back to Human Capital, where we look at the latest in tech labor and diversity and inclusion. Because election day is quickly approaching and given that California’s Prop 22 puts the “future of labor” at stake, as Instacart worker and co-organizer at Gig Workers Collective Vanessa Bain told TechCrunch this week, we’re paying close

Welcome back to Human Capital, where we look at the latest in tech labor and diversity and inclusion.

Because election day is quickly approaching and given that California’s Prop 22 puts the “future of labor” at stake, as Instacart worker and co-organizer at Gig Workers Collective Vanessa Bain told TechCrunch this week, we’re paying close attention to this ballot measure. Gig companies like Uber, Lyft, DoorDash and Instacart have put more than $180 million into Prop 22, which seeks to keep their drivers and delivery workers classified as independent contractors.

Before we jump in, friendly reminder that Human Capital will soon be a newsletter…starting next week! Sign up here so you don’t miss it.

Gig Work

Instacart began asking workers to pass out Yes on Prop 22 propaganda to customers

Vanessa Bain, Instacart shopper and co-founder of Gig Workers Collective, tweeted about how she was instructed to pass out Yes on 22 stickers to customers. Many people, including Bain, questioned whether it was legal or not. 

Instacart, however, told CNN the initiative was allowed under campaign finance rules. Additionally, I reached out to the Fair Political Practices Commission, but was told by Communications Director Jay Wierenga that “only an investigation by FPPC Enforcement (or a DA or the AG’s Office) determines whether someone or group violated the Political Reform Act.” 

What is clear, however, is that it goes against what many workers want. We actually caught up with Bain ahead of the relaunch of TechCrunch Mixtape, where she discussed why she’s anti Prop 22. The episode goes live next week, but here’s a bit of a teaser from our conversation:

“The future of labor is at stake,” Bain told us earlier this week. “I would argue the future of our democracy, as well. The reality is that, you know, it establishes a dangerous precedent to allow companies to write their own labor laws…This policy was created to unilaterally benefit companies at the detriment of workers.”

Hundreds took to SF’s streets in protest of Prop 22

In San Francisco, there was a massive protest against Prop 22. While Prop 22 would provide more benefits than workers currently have, many drivers and delivery workers say that’s not enough. For example, Prop 22 would institute healthcare subsidies, but it falls short of complete healthcare.

Speaking of SF, 76% of app-based workers in the city are people of color

And 39% are immigrants, according to the latest survey of gig workers conducted by the Local Agency Formation Commission and UC Santa Cruz Professor Chris Benner.

This study surveyed 259 workers who drive or deliver for DoorDash, Instacart or Amazon Fresh. Other findings were:

• 71% of workers get at least 3/4 of monthly income from gig work
• 57% of workers completely rely on gig work for their monthly income
• On average, workers make $450 per week. After expenses, that averages drops to $270 per week.

California appeals court heard arguments in the Uber, Lyft gig worker classification case

California 1st District Court of Appeal judges heard arguments from Uber and Lyft about why they should be able to continue classifying their drivers as independent contractors. The hearing was a result of a district judge granting a preliminary injunction that would force Uber and Lyft to immediately reclassify their workers as employees. Uber and Lyft, however, appealed the ruling and now here we are.

As Uber and Lyft have argued drivers would lose flexibility if forced to be employees, an appeals court judge asked what part of AB 5 would require companies to take away that flexibility. Spoiler alert: there’s nothing in AB 5 that requires such a thing.

But a lawyer for Lyft, which has said it would leave California if forced to reclassify its workers, said he doesn’t “want the court to think that if the injunction is affirmed, that these people will continue to have these earnings opportunities because they won’t.”

Uber’s survey of workers on Prop 22 shows strong support for the ballot measure

But it’s important to note that of the more than 200,000 Uber drivers in California, only 461 workers participated in the study. Uber conducted this survey from September 23 through October 5 to see how drivers felt about Prop 22 and being an independent contractor. In that survey, 54% of respondents said they would definitely vote yes on 22 if the election were today while 13% said they would definitely vote no.

Image Credits: Uber

Those surveyed also weighed in on whether they prefer to be independent contractors; 54% of those surveyed said they strongly prefer being an independent contractor while 9% said they strongly prefer being an employee.

Image Credits: Uber

This week, Uber also encouraged riders to talk to their drivers about Prop 22 to see how they feel about it.

“First and foremost, the conversation about Proposition 22 should be about what gig workers actually want,” an Uber spokesperson said in a statement. “That’s why we are encouraging everyone who uses Uber or Uber Eats to ask their driver or delivery person how they really feel about Prop 22.”

Based on the wording of the in-app message, Uber seems confident most drivers do support Prop 22.

Image Credits: Uber

Stay woke

Facebook and Twitter ban Holocaust-denial posts 

Both Facebook and Twitter took a step in their ongoing battles against hate this week by removing posts that deny the Holocaust, the systematic and state-sponsored mass murder of around 6 million Jewish people. On Monday, Facebook announced it would block posts that deny the Holocaust. Facebook said its decision was driven by the rise in anti-Semitism and “the alarming level of ignorance about the Holocaust, especially among young people.” On Wednesday, Twitter announced a similar stance.

BLCK VC launches Black Venture Institute

In partnership with Operator Collective, Salesforce Ventures and UC Berkeley Haas School of Business, BLCK VC’s Black Venture Institute wants to help more Black entrepreneurs become angel investors. The goal is to train 300 students over the next three years to be in a position of writing checks. 

“It is these closed networks that have helped contribute to the lack of access for the Black community over the years,” BLCK VC co-founder Frederik Groce told TC’s Ron Miller. “Black Venture Institute is a structural attempt to create access for Black operators — from engineers to product marketing managers.”

GV finally has a Black female partner, Terri Burns

Terri Burns recently made partner at GV, formerly known as Google Ventures. Burns is now the only Black female partner at GV, which is wild. But, you know, progress, not perfection. 

Throwback to when Burns spoke a bit about racial justice in tech and venture capital. 

“Venture capital certainly plays a role,” Burns, then a principal at GV, told TechCrunch about the overall lack of diversity in tech. “VC is a tool that can enable businesses to scale greatly and quickly, and historically, this tool hasn’t been equally distributed. For example, VC has traditionally focused on founders from a small number of institutions and pedigrees that are not particularly diverse (in 2016 we learned from Richard Kerby, general partner at Equal Ventures, that 40% of VCs went to either Harvard or Stanford). With more equal distribution of funds across backgrounds, underrepresented people will have a greater chance at success.”

The Wing co-founder admits her mistakes 

Audrey Gelman, the former CEO of The Wing who resigned in June, posted a letter she sent to former employees of The Wing last week. In it, Gelman apologized for not taking action to combat mistreatment of women of color at The Wing. She also acknowledged that her drive for success and scaling quickly “came at the expense of a healthy and sustainable culture that matched our projected values, and workplace practices that made our team feel valued and respected.”

That meant, Gelman said, The Wing “had not subverted the historical oppression and racist roots of the hospitality industry; we had dressed it up as a kindler [sic], gentler version.”

Here are some other highlights from her letter:

• “Members’ needs came first, and those members were often white, and affluent enough to afford The Wing’s membership dues.”
• “White privilege and power trips were rewarded with acquiescence, as opposed to us doubling down on our projected values.”
• “When the realization set in that The Wing wasn’t institutionally different in the ways it had proclaimed, it hurt more because the space we claimed was different reinforced the age-old patterns of women of color and especially Black women being disappointed by white women and our limited feminist values.”

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News: PearPop lets TikTok celebrities monetize by sharing shoutouts and screentime with fans

• October 16, 2020
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PearPop a new Los Angeles-based company, is on its way to racking up nearly 25,000 users in less than a month, and has already landed seed funding from the firm Rocket One Capital. The company’s premise is simple. Allow fans to bid for shared screen time with their favorite TikTok celebrities, and it’s one that’s

PearPop a new Los Angeles-based company, is on its way to racking up nearly 25,000 users in less than a month, and has already landed seed funding from the firm Rocket One Capital.

The company’s premise is simple. Allow fans to bid for shared screen time with their favorite TikTok celebrities, and it’s one that’s attracted the attention of a few of the platform’s stars with several million followers.

The company was able to hook 3,000 users with one post from Anna Shumate, a TikTok star with 6.5 million followers who goes by the handle of “annabananaxdddd,” according to the company’s founder, Cole Mason.

PearPop’s platform works by letting TikTok celebrities set a price for sharing screen time. They can accept bids and preview the content to approve to make sure it’s aligned with their persona on the platform. The payment is made through Stripe and the software verifies payment. Once paid, the celebrity posts the shared screen video.

“We built it for the influencer,” said Mason. “If you’re a fan trying to access your favorite TikTok star, then they can access them through PearPop instead of trying to contact a manager and pay for legal fees. You can simplify that and do that super easily.”

Promotional message from Anna Shumate for PearPop. Image Credit: PearPop

Mason thinks the company can rack up 100,000 users over the next three months and will head out to raise a seed round once he reaches that milestone. An Android and iOS version of the service is expected to launch in November, according to Mason

The journey to founding PearPop began on the floor of an apartment in New York City. Mason was an aspiring model and serial entrepreneur who sold homemade wooden crosses door-to-door as a child and graduated to selling gloves for gamers in high school, Mason had moved to New York when he was signed to Ford Models.

After sleeping on the floor of a friend’s apartment on St. Marks Place in Manhattan’s East Village, Mason tried to land modeling gigs but found more success as a promoter and manager of model apartments (places where young, pretty people can stay for free in exchange for making appearances at a few clubs around New York).

“I hated it,” Mason said. “I always wanted to get into stuff in tech.” 

Mason took the cash from his promotion work and turned his attention to the tech industry soon after. As a struggling model who was building a network of friends in social media, he realized that the problem with the platform was breaking through.

His initial solution was to build a platform called GramEnvy, which tried to find a way to growth hack Instagram.

“The only way to grow your own Instagram was to have people post with you or about you and leverage their huge following.” Mason said. It was something easier said than done, and it was made harder by algorithmic changes that ultimately forced GramEnvy to close.

But Mason was bitten by the entrepreneurial bug, and was inspired by the growing success of Cameo to come up with another way that would enable popular minor celebrities on social media platforms (who were working a tier below the A-listers with tens of millions of followers) to monetize their performance on various platforms.

And while Cameo is a way for celebrities to monetize their following, it doesn’t create the exposure that would-be social media stars are looking for. That’s the problem that Mason thinks he’s solved with PearPop. 

Other entrepreneurs, like Spencer Markel, the chairman of the Los Angeles-based children’s clothing and entertainment brand, CubCoats, think so too.

Markel was introduced to Mason by a mutual friend from New York and has come on as an adviser to the company since Mason began working on it roughly 10 months ago. For Markel, the potential to actually share screens via TikTok’s platform makes PearPop a potentially more lucrative option for celebrities.

“There’s a lot of different ways that this is going to address a gap in the market,” said Markel. He believes that the service should be a strong monetization opportunity for the TikTok stars who find themselves one level down from their higher-wattage peers with tens of millions of fans. 

News: Private equity firms can offer enterprise startups a viable exit option

• October 16, 2020
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Four years ago, Ping Identity was at a crossroads. A venerable player in the single sign-on market, its product was not a market leader, and after 14 years and $128 million in venture capital, it needed to find a new path. While the company had once discussed an IPO, by 2016 it began putting out

Four years ago, Ping Identity was at a crossroads. A venerable player in the single sign-on market, its product was not a market leader, and after 14 years and $128 million in venture capital, it needed to find a new path.

While the company had once discussed an IPO, by 2016 it began putting out feelers for buyers. Vista Equity Partners made a $600 million offer and promised to keep building the company, something that corporate buyers wouldn’t guarantee. Ping CEO and co-founder Andre Durand accepted Vista’s offer, seeing it as a way to pay off his investors and employees and exit the right way. Even better, his company wasn’t subsumed into a large entity as likely would have happened with a typical M&A transaction.

As it turned out, the IPO-or-acquisition question wasn’t an either/or proposition. Vista continued to invest in the company, using small acquisitions like UnboundID and Elastic Beam to fill in its roadmap, and Ping went public last year. The company’s experience shows that private equity offers a reasonable way for mature enterprise startups with decent but not exceptional growth — like the 100% or more venture firms tend to favor — to exit, pay off investors, reward employees and still keep building the company.

But not everyone that goes this route has a tidy outcome like Ping’s. Some companies get brought into the P/E universe where they replace the executive team, endure big layoffs or sell off profitable pieces and stop investing in the product. But the three private equity firms we spoke to — Vista Equity, Thoma Bravo and Scaleworks — all wanted to see their acquisitions succeed, even if they each go about it differently.

Viable companies with good numbers

News: Analogue takes on the TurboGrafx-16 with its Duo retro console

• October 16, 2020
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Analogue’s beautiful, functional retro gaming consoles provide a sort of “archival quality” alternative to the cheap mini-consoles proliferating these days. The latest system to be resurrected by the company is the ill-fated, but still well-thought-of TurboGrafx-16 or PC Engine. The Duo, as Analogue’s device is called, is named after a later version of the TurboGrafx-16

Analogue’s beautiful, functional retro gaming consoles provide a sort of “archival quality” alternative to the cheap mini-consoles proliferating these days. The latest system to be resurrected by the company is the ill-fated, but still well-thought-of TurboGrafx-16 or PC Engine.

The Duo, as Analogue’s device is called, is named after a later version of the TurboGrafx-16 that included its expensive CD-ROM add-on — and indeed the new Duo supports both game cards and CDs, provided they have survived all this time without getting scratched.

Like the rest of Analogue’s consoles, and unlike the popular SNES and NES Classic Editions from Nintendo (and indeed the new TurboGrafx-16 Mini), the Duo does not use emulation in any way. Instead, it’s a painstaking recreation of the original hardware, with tweaks to introduce modern conveniences like high-definition video, wireless controllers, and improvements to reliability and so on.

Image Credits: Analogue

As a bonus, it’s all done in FPGA, which implies that this hardware is truly one of a kind in service of remaking the console accurately. Games should play exactly as they would have on the original hardware down to the annoying glitches and slowdowns of that era of consoles.

And what games! Well, actually, few of them ever reached the status of their competitors on Nintendo and Sega consoles here in the U.S., where the TurboGrafx-16 sold poorly. But titles like Bonk’s Adventure, Bomberman ’93, Ninja Spirit, Splatterhouse, and Devil’s Crush should be played more widely. Shmup fans like myself were spoiled with originals and arcade ports like R-Type and Blazing Lazers. The Ys series ( also got its start on the PC Engine (if you could afford the CD attachment). Here’s a good retrospective.

I wouldn’t mind having an HDMI port on the back of my SNES. Oh, Analogue makes one…

Analogue’s consoles are made for collectors who would prefer not to have to baby their original hardware, or want to upscale the signal and play wirelessly without too much fuss. I still have my original SNES, but 240p just doesn’t look as crisp as it did on a 15-inch CRT in the ’90s.

At $199, it’s more expensive than finding one at a garage sale, but good luck with that. The original and its CD add-on cost a fortune, so if you think about it from that perspective, this is a real bargain. Analogue says limited quantities are available, and will be shipping in 2021.

News: We need universal digital ad transparency now

• October 16, 2020
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We propose a new standard for universal ad disclosure that should be met by every platform that publishes digital ads.

Dear Mr. Zuckerberg, Mr. Dorsey, Mr. Pichai and Mr. Spiegel: We need universal digital ad transparency now!

The negative social impacts of discriminatory ad targeting and delivery are well-known, as are the social costs of disinformation and exploitative ad content. The prevalence of these harms has been demonstrated repeatedly by our research. At the same time, the vast majority of digital advertisers are responsible actors who are only seeking to connect with their customers and grow their businesses.

Many advertising platforms acknowledge the seriousness of the problems with digital ads, but they have taken different approaches to confronting those problems. While we believe that platforms need to continue to strengthen their vetting procedures for advertisers and ads, it is clear that this is not a problem advertising platforms can solve by themselves, as they themselves acknowledge. The vetting being done by the platforms alone is not working; public transparency of all ads, including ad spend and targeting information, is needed so that advertisers can be held accountable when they mislead or manipulate users.

Our research has shown:

• Advertising platform system design allows advertisers to discriminate against users based on their gender, race and other sensitive attributes.
• Platform ad delivery optimization can be discriminatory, regardless of whether advertisers attempt to set inclusive ad audience preferences.
• Ad delivery algorithms may be causing polarization and make it difficult for political campaigns to reach voters with diverse political views.
• Sponsors spent more than $1.3 billion dollars on digital political ads, yet disclosure is vastly inadequate. Current voluntary archives do not prevent intentional or accidental deception of users.

While it doesn’t take the place of strong policies and rigorous enforcement, we believe transparency of ad content, targeting and delivery can effectively mitigate many of the potential harms of digital ads. Many of the largest advertising platforms agree; Facebook, Google, Twitter and Snapchat all have some form of an ad archive. The problem is that many of these archives are incomplete, poorly implemented, hard to access by researchers and have very different formats and modes of access. We propose a new standard for universal ad disclosure that should be met by every platform that publishes digital ads. If all platforms commit to the universal ad transparency standard we propose, it will mean a level playing field for platforms and advertisers, data for researchers and a safer internet for everyone.

The public deserves full transparency of all digital advertising. We want to acknowledge that what we propose will be a major undertaking for platforms and advertisers. However, we believe that the social harms currently being borne by users everywhere vastly outweigh the burden universal ad transparency would place on ad platforms and advertisers. Users deserve real transparency about all ads they are bombarded with every day. We have created a detailed description of what data should be made transparent that you can find here.

We researchers stand ready to do our part. The time for universal ad transparency is now.

Signed by:

Jason Chuang, Mozilla
Kate Dommett, University of Sheffield
Laura Edelson, New York University
Erika Franklin Fowler, Wesleyan University
Michael Franz, Bowdoin College
Archon Fung, Harvard University
Sheila Krumholz, Center for Responsive Politics
Ben Lyons, University of Utah
Gregory Martin, Stanford University
Brendan Nyhan, Dartmouth College
Nate Persily, Stanford University
Travis Ridout, Washington State University
Kathleen Searles, Louisiana State University
Rebekah Tromble, George Washington University
Abby Wood, University of Southern California

News: Elon Musk’s Las Vegas Loop might only carry a fraction of the passengers it promised

• October 16, 2020
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If the company struggles to deliver capacity — and revenue — from its small-scale Convention Center system, the future of those ambitions could be in doubt. 

In pandemic-free years, America’s biggest trade show, CES, attracts more than 170,000 attendees, bringing traffic that jams surrounding roads day and night. To help absorb at least some of the congestion, the Las Vegas Convention Center (LVCC) last year planned a people-mover to serve an expanded campus. The LVCC wanted transit that could move up to 4,400 attendees every hour between exhibition halls and parking lots.

It considered traditional light rail that could shuttle hundreds of attendees per train, but settled on an underground system from Elon Musk’s The Boring Company (TBC) instead — largely because Musk’s bid was tens of millions of dollars cheaper. The LVCC Loop would transport attendees through two 0.8-mile underground tunnels in Tesla vehicles, four or five at a time. 

But planning files reviewed by TechCrunch seem to show that the Loop system will not be able to move anywhere near the number of people LVCC wants, and that TBC agreed to.

Fire regulations peg the occupant capacity in the load and unload zones of one of the Loop’s three stations at just 800 passengers an hour. If the other stations have similar limitations, the system might only be able to transport 1,200 people an hour — around a quarter of its promised capacity. 

If TBC misses its performance target by such a margin, Musk’s company will not receive more than $13 million of its construction budget — and will face millions more in penalty charges once the system becomes operational. 

Neither TBC nor LVCVA responded to multiple requests for comment. 

Fire regulations limit the load/unload zone near the cars to 800 people per hour. Credit: TBC/Clark County

The LVCC always realized that it was taking a gamble on the Loop. Although Musk built a short demonstration tunnel near Los Angeles, this would be the first public system with real customers and service requirements. An analysis by Las Vegas Mayor Carolyn Goodman in May 2019 concluded that TBC’s unproven system presented a high risk for the LVCC’s parent body, the Las Vegas Convention and Visitor’s Authority (LVCVA).

So when the LCVCA wrote its contract with The Boring Company, it did its best to incentivize Musk to deliver on his promises. The contract would be for a fixed price, and TBC would have to hit specific milestones to receive all of its payments. When the bare tunnels are completed, which could happen any day now, TBC will have earned just over 30% of the total. The next big milestone is the completion of the entire working system, which would result in a pay-out of over $10 million. 

That was scheduled to have happened by October 1, so that the system would be ready for the next CES show in January. Although CES 2021 has now gone virtual and there is less time pressure on Musk to deliver, he presumably still wants to get paid. 

In a tweet this week, Elon Musk wrote that the system would be open in “maybe a month or so. Some finishing touches need to be done on the stations.”

After another milestone for the completion of a test period and safety report, the system’s final three milestones relate to how many passengers it can carry. If the Loop can demonstrate moving 2,200 passengers an hour, TBC will get $4.4 million, then the same payment again for hitting 3,300, and the same again for 4,400 passengers an hour. Together, these capacity payments represent 30% of the fixed price contract. 

Even if TBC achieved those numbers during testing, the LVCVA was worried that it might not be able to maintain them once the system was operational, so it inserted yet another requirement: “[TBC] acknowledges liquidated damages are applicable for [TBC’s] failure to provide System Capacity for Full Facility Trade Show Events.” 

For each large trade show that TBC fails to transport an average capacity of 3,960 passengers per hour for 13 hours, it will have to pay LVCVA $300,000 in damages. If TBC keeps falling short, it keeps paying, up to a maximum of $4.5 million. 

So what is stopping TBC from transporting as many people as both it and the LVCC wants? There are national fire safety rules for underground transit systems that specify alarms, sprinklers, emergency exits and a maximum occupant load, to avoid overcrowding in the event of a fire.

Building plans submitted by The Boring Company include a fire code analysis for one of the Loop’s above-ground stations: 

Image source: The Boring Company/Clark County NV

The above screenshot from the plans notes that the area where passengers get into and out of the Tesla cars has a peak occupancy load of 100 people every 7.5 minutes, equivalent to 800 passengers an hour. Even if the other stations had higher limits, this would limit the system’s hourly capacity to about 1,200 people. 

“That sounds correct,” says Glenn Corbett, a professor of security, fire and emergency management at the John Jay College of Criminal Justice in New York. “But if that’s the bottleneck, the question from a safety standpoint is, what controls that [800 per hour]? Is it just pure honesty and people following the rules, or is there a mechanical thing that keeps them out?” 

The plans do not show any turnstiles or barriers to limit entry.

Even without the safety restrictions, the Loop may struggle to hit its capacity goals. Each of the 10 bays at the Loop’s stations must handle hundreds of passengers an hour, corresponding to perhaps 100 or more arrivals and departures, depending on how many people each car is carrying. That leaves little time to load and unload people and luggage, let alone make the 0.8-mile journey and occasionally recharge. 

Although TBC’s Loop website says that the system will use autonomous vehicles, a TBC executive told a planning committee last year that the cars would have human drivers “for additional safety.” TBC had proposed developing a larger capacity autonomous shuttle for the Loop, capable of carrying up to 16 people. The latest plans all show traditional sedans, however, and another Musk tweet this week admitted: “We simplified this a lot. It’s basically just Teslas in tunnels at this point.”

The most recent documents filed by TBC also show changes to the Loop’s original design.

Gone are striking curved roofs, with both aboveground stations now having flat photovoltaic canopies to help charge the Tesla vehicles. These terminal stations each have a single Supercharger station, and a “showpiece sculpture” consisting of a concrete segment similar to those used in the tunnels below.

The central, subterranean station has a large, open platform, and also houses the electrical, fire safety and IT equipment. Each station will have bays for 10 Tesla vehicles to load and unload passengers. 

Even before the first Loop is operating, TBC is planning two more Loop tunnels nearby, connecting the LVCC to the Wynn Encore and Resorts World casinos.

The tunnel to the Encore is long enough that safety regulations require an emergency exit about halfway along. Plans indicate an emergency egress shaft and a small hatch, but it is unclear whether passengers escaping a fire or breakdown would be expected to climb stairs or even a ladder.

Loop extension egress. Image source: The Boring Company/Clark County NV

TBC last year suggested an emergency ladder for its proposed Loop between Baltimore and Washington, D.C., a system that Corbett called “the definition of insanity,” as it did not account for passengers with limited mobility. That project is now on pause. 

TBC’s stated aim is to expand the LVCC Loop from a local people mover to a Vegas-wide transit system serving the Strip, the airport and eventually extending all the way to Los Angeles. If the company struggles to deliver capacity — and revenue — from its small-scale Convention Center system, the future of those ambitions could be in doubt. 

News: EU’s Google-Fitbit antitrust decision deadline pushed into 2021

• October 16, 2020
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The deadline for Europe to make a call on the Google -Fitbit merger has been pushed out again — with EU regulators now having until January 8, 2021, to take a decision. The latest change to the provisional deadline, spotted earlier by Reuters, could be the result of one of the parties asking for more

The deadline for Europe to make a call on the Google -Fitbit merger has been pushed out again — with EU regulators now having until January 8, 2021, to take a decision.

The latest change to the provisional deadline, spotted earlier by Reuters, could be the result of one of the parties asking for more time.

Last month the deadline for a decision was extended until December 23 — potentially pushing the decision out beyond a year after Google announced its intention to buy Fitbit, back in November 2019. So if the tech giant was hoping for a simple and swift regulatory rubberstamping its hopes have been diminishing since August when the Commission announced it was going to dig into the detail. Once bitten and all that.

The proposed Fitbit acquisition also comes as Alphabet, Google’s parent, is under intense antitrust scrutiny on multiple fronts on home turf.

Google featured prominently in a report by the House Judiciary Committee on big tech antitrust concerns earlier this month, with US lawmakers recommending a range of remedies — including breaking up platform giants.

European lawmakers are also in the process of drawing up new rules to regulate so-called ‘gatekeeper’ platforms — which would almost certainly apply to Google. A legislative proposal on that is expected before the end of this year, which means it may appear before EU regulators have taken a decision on the Google-Fitbit deal. (And one imagines Google isn’t exactly stoked about that possibility.)

Both competition and privacy concerns have been raised against allowing Google get its hands on Fitbit users’ data.

The tech giant has responded by offering a number of pledges to try to convince regulators — saying it would not use Fitbit health and wellness data for ads and offering to have data separation requirements monitored. It has also said it would commit to maintain third parties’/rivals’ access to its Android ecosystem and Fitbit’s APIs.

However rival wearable makers have continued to criticize the proposed merger. And, earlier this week, consumer protection and human rights groups issued a joint letter — urging regulators to only approve the takeover if “merger remedies can effectively prevent [competition and privacy] harms in the short and long term”.

One thing is clear: With antitrust concerns now writ large against ‘big tech’ the era of ‘friction-free’ acquisitions looks to be behind Google et al.

News: Datto sets initial IPO price range, indicating a valuation of around $4B

• October 16, 2020
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It was just a few weeks ago that Datto, what TechCrunch called a “backup and disaster recovery firm,” filed to go public. This week the firm set an initial range for its debut. The Vista Equity Partners -backed company was picked up by the private equity firm back in 2017. Vista is back in the

It was just a few weeks ago that Datto, what TechCrunch called a “backup and disaster recovery firm,” filed to go public. This week the firm set an initial range for its debut.

The Vista Equity Partners -backed company was picked up by the private equity firm back in 2017. Vista is back in the news lately for several reasons, some stemming from executive shenanigans — read: tax evasion and huge penalties — but at least what’s coming from Datto’s camp is good tidings.

How so? Vista bought Datto for around $1.5 billion, and is set to make billions on its exit, based on the company’s expected IPO pricing.

Per the data firm’s latest S-1 filing, Datto is targeting a $24 to $27 per share price range. Here’s the math:

• Total shares outstanding after IPO, sans underwriters’ allotment: 157,548,740 shares
• Total shares outstanding after IPO, with underwriters’ allotment: 160,848,740
• Max valuation at current prices, sans underwriters’ allotment: $4.25 billion
• Max valuation at current prices, with underwriters’ allotment: $4.34 billion

Those two final numbers are dramatically bigger than the $1.5 billion that Vista is said to have paid for Datto.

How has Datto managed to generate so much value in the last few years? In financial terms, the company grew to a run rate of around $500 million, based on its Q1 and Q2 2020 revenue results. That gives the company a revenue multiple of less than 10x at its current IPO price maximum.

And that price makes sense. Datto is not growing very quickly, just 16% from H1 2019 to H1 2020, for example. The company did recently become profitable, however, which helps its valuation case. But more importantly, between 2017 and 2020 we have seen revenue multiples for software companies expand. That, plus Datto’s growth since 2017, have repriced it far above its sale price.

For Vista, it’s good news. Provided that they don’t get into tax issues over this particular set of returns. More on Datto as it prices and debuts.

News: Crypto-driven marketplace Zora raises $2M to build a sustainable creator economy

• October 16, 2020
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Dee Goens and Jacob Horne have both the exact and precisely opposite background that you’d expect to see from two people building a way for creators to build a sustainable economy for their followers to participate in. Coinbase, crypto hack projects at university, KPMG, Merill Lynch. But where’s the art? “Believe it or not, I

Dee Goens and Jacob Horne have both the exact and precisely opposite background that you’d expect to see from two people building a way for creators to build a sustainable economy for their followers to participate in. Coinbase, crypto hack projects at university, KPMG, Merill Lynch. But where’s the art?

“Believe it or not, I used to have dreams of being a rapper,” laughs Goens. “There’s a Soundcloud out there somewhere. With that passion you explore the inner workings of the music industry. I would excitedly ask industry friends about the advance and 360 deal models only to realize they were completely broken.”

And, while many may be well intentioned, these deal structures of exploit artistry. In many cases taking the majority of an artist’s ownership. I grew curious why artists were unable to resource themselves from their community in an impactful way — but instead, were forced to seek out potentially predatory relationships. To me, this was bullshit.”

Horne says that he’d always wanted to create a fashion brand. 

“I always thought a fashion brand would be something I’d do after crypto,” he tells me. “I love crypto but it felt overly focused on just finance and felt like it was missing something. When I started to play with the idea of combining these two passions and starting Saint Fame.”

While at Coinbase, Horne hacked on Saint Fame, a side project that leveraged some of the ideas on display in Zora. It was a marketplace that allowed people to sell and trade items with cryptocurrency, buying intermediate variable-value tokens redeemable for future goods. 

“I realized that culture itself was shaped and built upon an old financial system that is systemically skewed against artists and communities,” says Horne. “The operating system of ownership was built in the 1600s with the Dutch East India Trading Company and early Nation States. Like what the fuck is up with that?” 

We have the internet now, we can literally create and share information to billions of people all at once, and the ownership system is the same as when people had to get on a boat for 6 months to send a letter. It’s time for an upgrade. Any community on the internet should be able to come together, with capital, and work towards any shared vision. That starts with empowering creators and artists to create and own the culture they’re creating. In the long term this moves to internet communities taking on societal endeavours.”

The answer that they’re working on is called Zora. It’s a marketplace with two main components but one philosophy: sustainable economics for creators. 

All too often creators are involved in reaping the rewards for their work only once, but the secondary economy continues to generate value out of their reach. Think of an artist, as an example, that creates a piece and sells it for market value. That’s great, but thereafter, every ounce of work that the artist puts into future work, into building a name and a brand and a community for themselves puts additional value into that piece. The artist never sees a dime from that, relying instead on the value of future releases to pay dividends on the work. 

That’s basically the way it has always worked. I have a little background in this as I used to exhibit and was involved in running a gallery and my father is a fine artist. If he sells a painting today for $300, gets a lot better, more popular and more valued over time, the owner of that painting may re-sell it for hundreds or thousands more. He will never see a dime of that. And god forbid that an artist like him gets too locked into the gallery system which slices off enormous chunks of the value of a piece for a square of wall space and the marketing cachet of a curator or storefront. 

The same story can be told across the recording industry, fashion, sports and even social media. Lots of middle-people and lots of vigs to pay. And, unsurprisingly, the same creators of color that drive so much of The Culture are the biggest losers hands down. 

The primary Zora product is a market that allows creators or artists to launch products and then continue to participate in their second market value. 

Here’s how the Zora team explains it:

On Zora, creators have the ability to set two prices: start price and max price. As community members buy and sell a token, it moves the price up or down. This makes the price dynamic as it opens price discovery on the items by the market. When people buy the token it moves the price closer to its maximum. When they sell, it moves closer to its minimum. 

For an excited community like Jeff [Staple’s], this new dynamic price can cause a quick increase in the value of his sneakers. As a creator, they capture the value from selling on a price curve as well as getting a take on trading fees from the market which they now own. What used to trade on StockX is now about to trade on a creator owned market.

There have been some early successes. Designer and marketer Jeff Staple launched a run of 30 Coca-Cola x Staple SB Dunk customs by Reverseland and their value is trending up around 234% since release. A Benji Taylor x Kevin Doan vinyl figure is up 210%. 

I have seen some other stabs at this. When he was still at StockX, founder Josh Luber launched their Intial Product Offerings, a Blind Dutch Auction system that allowed the market to set a price for an item, with some of the cut of pricing above market going back to the manufacturer or brand making the offering. The focus there was brands vs. individual creators (though they did launch with a Ben Baller slide). Allowing brands to tap into second market value for limited goods is a lot less of a revolution play, but the thesis is similar. I thought that was a good idea then, and I like it even better when it’s being used to democratize rather than maximize returns. 

Side note: I love that this team is messing around with interesting ideas like dogfooding their own marketplace with the value of being in their own TestFlight group. I’m sort of like, is that allowed, but at the same time it’s dope and I’ve never seen anything like it. 

Zora was founded in May of 2020 (right in the middle of this current panny-palooza). The team is Goens (Creators and Community), Horne (Product), Slava Kim (Design), Dai Hovey (Engineering), Ethan Daya (Engineering) and Tyson Batistella (Engineering). 

Zora has raised a $2M seed round led by Kindred Ventures with participation from Trevor McFedries of Brud, Alice Lloyd George, Jeff Staple, Coinbase Ventures and others.

Tokenized community

But this idea that physical goods or even digitally packaged works have to exist as finite containers of value is not a given either. Goens and Horne are pushing to challenge that too with the first big new product for Zora: community tokens. Built on Ethereum, the $RAC token is the first of its kind from Zora. André Allen Anjos, stage name RAC, is a Portuguese- American musician and producer who makes remixes that stream on the web, original music and has had commercial work featured in major brand ads. 

Though he is popular and has a following in the tens of thousands, RAC is not a social media superpower. The token distribution and subsequent activity in trades and sales is purely driven by the buy-in that his fans feel. This is a key learning for a lot of players in this new economy: raw numbers are the social media equivalent of a billboard that people drive by. It may get you eyeballs, but it doesn’t guarantee action. The modern creator is living in a house with their fans, offering them access and interacting via Discord and Snap and comments. 

But those houses are all other people’s houses, which leads into the reason that Zora is launching a token.

The token drop serves multiple purposes. 

• It unites fans across multiple silos. Whether they’re on Intsa, Tiktok, Spotify or Snapchat, they can all earn tokens. That token serves as a unifying community unit of value that they all understand and pivot around. It’s a way to own a finite binary “atom” of an artist’s digital being.
• It creates a pool of value that an artist can own and distribute themselves. Currently you cannot buy $RAC directly. You can only earn it. Some of that is retroactive for loyal supporters. If, for instance, you followed RAC on Bandcamp dating back to 2009, you’ll get some of a pool of 25,000 RAC. Bought a bit of RAC merch? You get some credit in tokens too. Future RAC distributions will be given to Patron supporters, merch purchasers etc.
• The value stays in the artists universe, rather than being spun out into currency. It serves as a way for the artist to incentivize, reward and energize their followers. RAC fans who buy his mixtape get tokens, and they can redeem them for purchases of further merch. 
• It allows more flexibility for creators whose work doesn’t fall so neatly into package-able categories. Performance art, activism, bite-sized entertainment. These are not easy to ‘drop’ for money. But if you have a circulating token that grows in value as you grow your audience, there is definitely something there. 

The future of Zora most immediately involves spinning up a self-service version of the marketplace, allowing creators and entrepreneurs to launch their products without a direct partnership and onboarding. There are many, many uncertainties here and the team has a lot of challenges ahead on the traction and messaging front. But as mentioned, some early releases have shown promise, and the philosophy is sound and much needed. As the creator universe/passion economy/what you call it depends on how old you are/fandom merchant wave rises there is definitely an opportunity to rethink how the value of their contributions are assigned and whether there is a way to turn the long-term labor of building a community into long-term value. 

The last traded price of RAC’s tape, BOY, by the way? $3,713, up 18,465%. 

News: The need for true equity in equity compensation

• October 16, 2020
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I believe creating a broader picture of compensation is essential for startups, global conglomerates and every company in between.

I began my career at Oracle in the mid-1980s and have since been around the proverbial block, particularly in Silicon Valley working for and with companies ranging from the Fortune 50 to global consulting companies to leading a number of startups, including the SaaS company I presently lead. Throughout my career, I’ve carved out a niche not only working with technology companies, but focused on designing and implementing global compensation programs.

In short, if there’s two things I know like the back of my hand, it’s tech and how people are paid.

The compensation evolution I’ve witnessed over these past 35+ years has been dramatic. Among other things, there has been a fundamentally seismic shift in how women are perceived and paid, principally for the better. Some of it, in truth, has been window dressing. It’s good PR to say you’re a company with a strong culture focused on diversity, as it helps attract top talent. But the rubber meets the road once hires get past the recruiter. When companies don’t do what they say, we see mass exoduses and even lawsuits, as has recently been the case at Pinterest and Carta.

So with the likes of Intel, Salesforce and Apple publicly committed to gender pay equity, there’s nothing left to see here, right? Actually, we’re not even close. Yes, the glass ceiling is cracking. But significant, largely unaddressed gaps remain relative to the broader scope of long-tail compensation for women, especially at startups, where essential measures of economic reward such as stock options in companies are often not even part of the conversation around pay parity.

As a baseline, while progress is evident, gender pay is an unfinished product to say the least. Recently the U.S. Bureau of Labor Statistics found white women earn 83.3% as much as their white male counterparts, while African-American women earn 93.7% compared to men of their same race. Asian women made 77.1% and Hispanic women earned 85.1% as much respectively.

According to Payscale, the ratio of the median earnings of women to men has decreased by just $0.07 since 2015, and in 2020, women make $0.81 for every dollar a man makes. Long term, in calculating presumptive raises given over a 40-year career, women could lose as much as $900,000 over the duration of a career.

But that’s just the tip of the iceberg. Even if we solely left the gender pay gap to just a cash salary disparity, there is something further to see here. However, to quote a famous pitchman, “But wait, there’s more!” And the more — at least in my mind — is far more troubling.

As innovative startups from Silicon Valley to New York’s Silicon Alley and beyond continue to reshape the business landscape, guess how most of them are able to lure bright, entrepreneurial minds? It’s certainly not salary, as when a company has nothing beyond a great idea and maybe a lead to a VC on Sand Hill Road, there’s no fat paycheck or benefits package to offer. Instead, they dangle the proverbial carrot of stock/equity compensation.

“Look, we know you can get $180,000 a year from Apple but we’ll give you $48,000 a year plus 1,000 shares presently valuated at $62 per share. Our board — which is packed with studs from the Bay Area — is expecting that to soar within two years! Wait ‘til we go public!”

This is the pitch, at least if you’re a promising male. But women, historically, have tended to get left out of this lucrative reward package for varying reasons.

How has this happened? Beyond just a furtherance of business culture, while there have been legislative steps taken to address inequities in public company compensation and stock dispersal, there are no regulations as to how private companies distribute or manage the appreciation of stock. And, as we all know, the appreciation can be potentially massive.

It makes sense. Many companies and even naïve job-seekers consider equity as the “third pillar” of compensation beyond titles/compensation (which come hand-in-hand) and benefits. Shares of startups are just not top-of-mind — often ignored or misunderstood — by many who look at gender pay inequities, although that could not be more misguided.

A recent study published in the “Journal of Applied Psychology” found a gender gap for equity-based awards ranging from 15%-30% — even beyond accounting for typical reasons women historically earn less than men, including differences in occupation and length of service at a company. Keep in mind many of these companies will go on to massive valuations, and for some, lucrative IPOs or acquisitions.

It’s a problem I recognized long ago, and it is largely why I agreed to lead our Bay Area startup on behalf of our New York-based parent company AST. I found a commitment to a genuinely equitable culture instilled by a shared moral compass, a belief that companies who care about gender equity perform better and provide better returns, and a conviction that diversity brings unique perspectives, drives talent retention, builds a stronger culture and aids client satisfaction.

In speaking with industry colleagues, I know it’s something CEOs, both men and women, are dedicated to addressing. I believe creating a broader picture of compensation is essential for startups, global conglomerates and every company in between. If you are in a position of leadership and recognize this is a challenge in need of addressing at your company, here are some steps I recommend you implement:

1. Look at the data: Do the analysis. See if this is truly an issue at your company, and if it is, commit to creating a level playing field. There are plenty of experienced consultants who can help you work through remediation strategies.
2. Remove subjectivity: Hire an independent arbiter to analyze your data, as it removes the politics and emotion, as well as bias from the work product.
3. Create compensation bands: Much like the government’s GS system, create a salary grade system that contains bands of compensation for specific roles. Prior to hiring a person, decide which band the job responsibilities should be assigned.
4. Empower a champion: Identify and empower an internal champion to truly own parity — someone whose performance is judged based upon creating equity company-wide. Instead of assigning it to your human resources chief, create a chief diversity officer role to own it. After all, this is bigger than just pay or medical benefits. This is the culture and thus foundation of your company.
5. Get your board on board: Educate your board as to why this matters. If your board doesn’t value this, it ultimately won’t matter. Companies have audit committee chairs or nominations chairs. Identify a “culture chair.”

One of the first reports we created is a Pay Comparison Report so there are tools anyone in management can easily use to review stock grants made to all employees and ensure equity between people of different ethnicities or gender. It’s not that hard if you care to look.

When I was graduating from college and Ronald Reagan was in office, we were talking about the potential for women to break the glass ceiling. Now, many years later, somehow we’ve managed to develop lights you can turn on and off by clapping and most of us are walking around with the power of a supercomputer in our hands. Is it really asking too much that we require gender pay equity, including all three compensation pillars (cash, benefits and stock), to be a priority?