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How top VCs view the new future of micromobility
Earlier this month, TechCrunch held its annual Mobility Sessions event, where leading mobility-focused auto companies, startups, executives and thought leaders joined us to discuss all things autonomous vehicle technology, micromobility and electric vehicles.
Extra Crunch is offering members access to full transcripts key panels and conversations from the event, including our panel on micromobility where TechCrunch VC reporter Kate Clark was joined by investors Sarah Smith of Bain Capital Ventures, Michael Granoff of Maniv Mobility, and Ted Serbinski of TechStars Detroit.
The panelists walk through their mobility investment theses and how they’ve changed over the last few years. The group also compares the business models of scooters, e-bikes, e-motorcycles, rideshare and more, while discussing Uber and Lyft’s role in tomorrow’s mobility ecosystem.
Sarah Smith: It was very clear last summer, that there was essentially a near-vertical demand curve developing with consumer adoption of scooters. E-bikes had been around, but scooters, for Lime just to give you perspective, had only hit the road in February. So by the time we were really looking at things, they only had really six months of data. But we could look at the traction and the adoption, and really just what this was doing for consumers.
At the time, consumers had learned through Uber and Lyft and others that you can just grab your cell phone and press a button, and that equates to transportation. And then we see through the sharing economy like Airbnb, people don’t necessarily expect to own every single asset that they use throughout the day. So there’s this confluence of a lot of different consumer trends that suggested that this wasn’t just a fad. This wasn’t something that was going to go away.
For access to the full transcription below and for the opportunity to read through additional event transcripts and recaps, become a member of Extra Crunch. Learn more and try it for free.
Kate Clark: One of the first panels of the day, I think we should take a moment to define mobility. As VCs in this space, how do you define this always-evolving sector?
Michael Granoff: Well, the way I like to put it is that there have been four eras in mobility. The first was walking and we did that for thousands of years. Then we harnessed animal power for thousands of years.
And then there was a date — and I saw Ken Washington from Ford here — September 1st, 1908, which was when the Model T came out. And through the next 100 years, mobility is really defined as the personally owned and operated individual operated internal combustion engine car.
And what’s interesting is to go exactly 100 years later, September 2008, the financial crisis that affects the auto industry tremendously, but also a time where we had the first third-party apps, and you had Waze and you had Uber, and then you had Lime and Bird, and so forth. And really, I think what we’re in now is the age of digital mobility and I think that’s what defines what this day is about.
Ted Serbinski: Yeah, I think just to add to that, I think mobility is the movement of people and goods. But that last part of digital mobility, I really look at the intersection of the physical and digital worlds. And it’s really that intersection, which is enabling all these new ways to move around.
Image via Getty Images / Jackie Niam
Clark: So Ted you run TechStars Detroit, but it was once known as TechStars Mobility. So why did you decide to drop the mobility?
Serbinski: So I’m at a mobility conference, and we no longer call ourselves mobility. So five years ago, when we launched the mobility program at TechStars, we were working very closely with Ford’s group and at the time, five years ago, 2014, where it started with the connected car, auto and [people saying] “you should use the word mobility.”
And I was like “What does that mean?” And so when we launched TechStars Mobility, we got all this stuff but we were like “this isn’t what we’re looking for. What does this word mean?” And then Cruise gets acquired for a billion dollars. And everyone’s like “Mobility! This is the next big gold rush! Mobility, mobility, mobility!”
And because I invest early-stage companies anywhere in the world, what started to happen last year is we’d be going after a company and they’d say, “well, we’re not interested in your program. We’re not mobility.” And I’d be scratching my head like, “No, you are mobility. This is where the future is going. You’re this digital way of moving around. And no, we’re artificial intelligence, we’re robotics.”
And as we started talking to more and more entrepreneurs, and hundreds of startups around the world, it became pretty clear that the word mobility is actually becoming too limiting, depending on your vantage where you are in the world.
And so this year, we actually dropped the word mobility and we just call it TechStars Detroit, and it’s really just intersection of those physical and digital worlds. And so now we don’t have a word, but I think we found more mobility companies by dropping the word mobility.
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Huawei reportedly helped North Korea build out 3G network in secret
A new report could ultimately prove another bombshell in Huawei’s ongoing conflicts with the U.S. government. New documents obtained by The Washington Post tie the Chinese hardware giant to North Korea’s commercial 3G wireless network.
If proven, the ties would be yet more fodder for the U.S., which has already dinged the company over charges of violating Iran sanctions. The government has also investigated potential ties between Huawei and North Korea for years, though concrete links have apparently remained elusive.
This latest report arrives by way of a former Huawei employee, with confirmation and supporting documents from other sources who have also requested to remain anonymous for fear of retribution. For its part, Huawei has stated that it has “no business presence” in the embattled country.
“Huawei is fully committed to comply with all applicable laws and regulations in the countries and regions where we operate, including all export control and sanction laws and regulations,” it said in a statement offered to the press. Notably, the statements appear to apply primarily to its current business offerings, while declining to comment on the past.
The specifics of the dealings are a touch complicated. According to the documents, Huawei partnered with Panda International Information Technology, a state-owned Chinese communications company. Huawei reportedly used the firm to send networking equipment to the country in order to launch wireless carrier Koryolink over a decade ago.
The company has been under additional scrutiny recently as carriers have begun to roll out 5G networks across the globe. We’ve reached out to Huawei for additional comment.
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How Carl Pope helped drive a $500 million pledge to push the U.S. “Beyond Carbon” (Part 2)
Billionaire businessman and philanthropist Michael Bloomberg recently pledged to rapidly spend $500 million in a bid to push the U.S. “Beyond Carbon,” aiming to end this country’s use of coal and natural gas power in a generation or less.
In another recent piece, I featured an in-depth interview with Carl Pope, the veteran environmental leader who has essentially been the inspirational force behind Bloomberg’s evolution. The former New York City Mayor had never given a major gift to environmental causes as of a decade or so ago, until Pope “convinced” him to get involved.
My previous piece was an attempt to understand the ethical vision influencing Bloomberg’s work, by looking at Pope’s personal story and the history of the environmental movement he has helped to shape. Below, Pope joins me again to look at the details of Bloomberg’s “Beyond Carbon” plan, including how he was able to persuade Bloomberg to take it on, and some areas of controversy that could arise as the $500 million is distributed.
Greg Epstein: You and Michael Bloomberg met around a decade ago or so, right?
Carl Pope: About 12 years ago, actually. 2007.
Epstein: Bloomberg had never given a major gift to an environmental group before he met you, and, as he writes in the book, you “convinced him” to get massively involved, to the tune now of many hundreds of millions of dollars. What do you think it is about you, the way that you approach things, or the work you do that made the two of you, in this relatively unlikely partnership, work so well?
Pope: We both like big ideas, and we both like to pursue them very pragmatically. We set very high expectations for what we want to get, and we’re willing to take necessarily small steps to get there. That’s one thing.
The second thing is, my original environmental frame was air pollution, [which] I worked on the first seven or eight years I was an environmentalist. Mike is a big public health advocate. So the fact that I was talking about saving people’s lives made a lot of sense to him.
Epstein: He talked about how you ‘showed him the numbers,’ back in 2011, on just how deadly coal actually is.
Pope: Yeah, that was the deal sealer.
Epstein: Interpersonally, what the interactions between you and him like?
Pope: We’re both public figures who are actually somewhat introspective, and so it works.
Epstein: I’ve read the “Beyond Carbon” plans as they’re presented by the Bloomberg organization. They do seem quite promising as far as broad, sweeping PR statements go.
But whether or not they will work is all in the details, right? You’re a detail-oriented person, as you just mentioned, so, what are some of the practical steps the plan calls for that you think deserve the most attention, beyond the headlines?
Pope: In A Climate of Hope, Mike and I articulated an approach to climate in which we gave our reasons for thinking that most climate leadership is going to come not from national governments but from businesses, cities, provinces, civic organizations, from the bottom up.
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The climate is our biggest threat. Carl Pope is fighting to change our fate
Michael Bloomberg is an unrepentant capitalist who, as he says in his 2017 book A Climate of Hope, is “not exactly your stereotypical environmentalist.” Yet over the past decade, Bloomberg has become arguably the biggest environmental philanthropist in the world — especially given the $500 million investment Bloomberg announced last month that he would soon make in rapidly moving the U.S. “Beyond Carbon,” off both coal and natural gas and to a “100% clean energy economy.” How did this happen?
It turns out one of the biggest factors in Bloomberg’s green transformation has been his friendship with Carl Pope, the longtime former head of the Sierra Club, whom Bloomberg first met about a decade ago, as Mayor of New York.
Pope is not exactly a household name, but nonetheless at this point can probably be called one of the most influential environmental activists in history. He wears a leather jacket and a weathered-looking sweater on the cover of Climate of Hope alongside Bloomberg’s suit, tie, and flag pin.
The two co-authored the book — and not just in the sense that Pope ghost-wrote Bloomberg’s opinions, as happens regularly when busy political and cultural celebrities take on a lesser-known co-author for some glamour project they may barely even read. A Climate of Hope is an extended dialogue between Bloomberg and Pope, with the two alternating chapters throughout and at times even disagreeing on potentially important issues.
What there’s no disagreement on, however, is that Pope “convinced” his co-author to dive into massive environmental spending (a feat accomplished in part by showing the health-conscious Bloomberg the numbers on how lethal coal can be).
Pope is no stranger to controversy — perhaps unsurprising for a nonprofit leader who has raised money well into the nine figures. He’s a “pragmatist,” as he says many times in the interview below, which depending on who you ask either means compromise to the point of being compromised, or simply that he has a knack for actually getting things done where others merely talk.
His legacy has previously been associated with taking money from natural gas executives in a fundraising bid some saw as necessary and others called ethically tainted; with overlooking people’s polluting individual choices to buy large cars and even bigger homes; and with “looking forward to an active partnership” with Republican leaders when it was obvious they weren’t completely on board with key tenets of the environmental movement.
But Pope has also been equally or better known for pushing the Clinton/Gore administration to be better on emissions; preventing neoliberal environmentalists from adopting a nativist stance on immigration; championing a more diverse and inclusive environmental movement; and now, of course, with potentially ending the use of carbon fuel in America.
Despite 30+ years in the public eye, Carl Pope is a relatively private person who doesn’t seem to like to talk much about himself. So for starters below, I wanted to see if I could figure out what makes him tick.
Because if we could get into the heads of people who persuade billionaires to act against their short-term economic interests, with the bigger human picture in mind, maybe we could do it more often.
Then our conversation moved on to NASA, Ro Khanna, Tesla, AOC and the Green New Deal, and more. And in a soon to come follow up piece, I’ll talk with Pope about the details of the Beyond Carbon plan, including how he was able to persuade Bloomberg to take it on, and some areas of controversy that could arise as the $500 million is distributed.
All of this, after all, is part of what it means to think about the ethics of technology — Pope and Bloomberg’s work, love it or not, is certainly an attempt to reform or transform some of the most influential technologies human hands have ever touched.
How do we motivate people of all backgrounds and means to help make changes for the greener? How do we know what the right changes are to make? How do we grapple with the ethical dilemmas involved and the compromises that can seem to be required?
(Oh and by the way: in the weeks since I spoke with Pope, I have mostly been skipping big evening meals and eating more healthily in the afternoon. So at least there’s that!)
Greg Epstein: I have enjoyed discovering you as — I would even say as a historical figure, though important parts of your story are yet to be told.
I’d like to hear a bit about the key developments in your life that gave you the ethical perspective that you have.
Carl Pope: I can tell you some things about my childhood and my formation. Which particular ingredients formed my ethical perspective, I’m not sure I’ll be able to tell you, but I’ll tell you some things [that might] help.
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Facebook’s regulation dodge: Let us, or China will
Facebook is leaning on fears of China exporting its authoritarian social values to counter arguments that it should be broken up or slowed down. Its top executives have each claimed that if the U.S. limits its size, blocks its acquisitions or bans its cryptocurrency, Chinese company’s absent these restrictions will win abroad, bringing more power and data to their government. CEO Mark Zuckerberg, COO Sheryl Sandberg and VP of communications Nick Clegg have all expressed this position.
The latest incarnation of this talking point came in today’s and yesterday’s congressional hearings over Libra, the Facebook-spearheaded digital currency it hopes to launch in the first half of 2020. Facebook’s head of its blockchain subsidiary Calibra, David Marcus, wrote in his prepared remarks to the House Financial Services Committee today that (emphasis added):
I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.
WASHINGTON, DC – JULY 16: Head of Facebook’s Calibra David Marcus testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee July 16, 2019 on Capitol Hill in Washington, DC. The committee held the hearing on “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations.” (Photo by Alex Wong/Getty Images)
Marcus also told the Senate Banking Subcommittee yesterday that “I believe if we stay put we’re going to be in a situation in 10, 15 years where half the world is on a blockchain technology that is out of reach of our national-security apparatus.”.
This argument is designed to counter House-drafted “Keep Big Tech Out of Finance” legislation that Reuters reports would declare that companies like Facebook that earn over $25 billion in annual revenue “may not establish, maintain, or operate a digital asset . . . that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function.”
The message Facebook is trying to deliver is that cryptocurrencies are inevitable. Blocking Libra would just open the door to even less scrupulous actors controlling the technology. Facebook’s position here isn’t limited to cryptocurrencies, though.
The concept crystallized exactly a year ago when Zuckerberg said in an interview with Recode’s Kara Swisher, “I think you have this question from a policy perspective, which is, do we want American companies to be exporting across the world?” (emphasis added):
We grew up here, I think we share a lot of values that I think people hold very dear here, and I think it’s generally very good that we’re doing this, both for security reasons and from a values perspective. Because I think that the alternative, frankly, is going to be the Chinese companies. If we adopt a stance which is that, ‘Okay, we’re gonna, as a country, decide that we wanna clip the wings of these companies and make it so that it’s harder for them to operate in different places, where they have to be smaller,’ then there are plenty of other companies out that are willing and able to take the place of the work that we’re doing.
When asked if he specifically meant Chinese companies, Zuckerberg doubled down, saying (emphasis added):
Yeah. And they do not share the values that we have. I think you can bet that if the government hears word that it’s election interference or terrorism, I don’t think Chinese companies are going to wanna cooperate as much and try to aid the national interest there.
WASHINGTON, DC – APRIL 10: Facebook co-founder, Chairman and CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC. Zuckerberg, 33, was called to testify after it was reported that 87 million Facebook users had their personal information harvested by Cambridge Analytica, a British political consulting firm linked to the Trump campaign. (Photo by Chip Somodevilla/Getty Images)
This April, Zuckerberg went deeper when he described how Facebook would refuse to comply with data localization laws in countries with poor track records on human rights. The CEO explained the risk of data being stored in other countries, which is precisely what might happen if regulators hamper Facebook and innovation happens elsewhere. Zuckerberg told philosopher Yuval Harari that (emphasis added):
When I look towards the future, one of the things that I just get very worried about is the values that I just laid out [for the internet and data] are not values that all countries share. And when you get into some of the more authoritarian countries and their data policies, they’re very different from the kind of regulatory frameworks that across Europe and across a lot of other places, people are talking about or put into place . . . And the most likely alternative to each country adopting something that encodes the freedoms and rights of something like GDPR, in my mind, is the authoritarian model, which is currently being spread, which says every company needs to store everyone’s data locally in data centers and then, if I’m a government, I can send my military there and get access to whatever data I want and take that for surveillance or military.
I just think that that’s a really bad future. And that’s not the direction, as someone who’s building one of these internet services, or just as a citizen of the world, I want to see the world going. If a government can get access to your data, then it can identify who you are and go lock you up and hurt you and your family and cause real physical harm in ways that are just really deep.
Facebook’s newly hired head of communications, Nick Clegg, told reporters back in January that (emphasis added):
These are of course legitimate questions, but we don’t hear so much about China, which combines astonishing ingenuity with the ability to process data on a vast scale without the legal and regulatory constraints on privacy and data protection that we require on both sides of the Atlantic . . . [and this data could be] put to more sinister surveillance ends, as we’ve seen with the Chinese government’s controversial social credit system.
In response to Facebook co-founder Chris Hughes’ call that Facebook should be broken up, Clegg wrote in May that “Facebook shouldn’t be broken up — but it does need to be held to account. Anyone worried about the challenges we face in an online world should look at getting the rules of the internet right, not dismantling successful American companies.”
He hammered home the alternative the next month during a speech in Berlin (emphasis added):
If we in Europe and America don’t turn off the white noise and begin to work together, we will sleepwalk into a new era where the internet is no longer a universal space but a series of silos where different countries set their own rules and authoritarian regimes soak up their citizens’ data while restricting their freedom . . . If the West doesn’t engage with this question quickly and emphatically, it may be that it isn’t ours to answer. The common rules created in our hemisphere can become the example the rest of the world follows.
COO Sheryl Sandberg made the point most directly in an interview with CNBC in May (emphasis added):
You could break us up, you could break other tech companies up, but you actually don’t address the underlying issues people are concerned about . . . While people are concerned with the size and power of tech companies, there’s also a concern in the United States about the size and power of Chinese tech companies and the … realization that those companies are not going to be broken up.
WASHINGTON, DC – SEPTEMBER 5: Facebook chief operating officer Sheryl Sandberg testifies during a Senate Intelligence Committee hearing concerning foreign influence operations’ use of social media platforms, on Capitol Hill, September 5, 2018 in Washington, DC. Twitter CEO Jack Dorsey and Facebook chief operating officer Sheryl Sandberg faced questions about how foreign operatives use their platforms in attempts to influence and manipulate public opinion. (Photo by Drew Angerer/Getty Images)
Scared tactics
Indeed, China does not share the United States’ values on individual freedoms and privacy. And yes, breaking up Facebook could weaken its products like WhatsApp, providing more opportunities for apps like Chinese tech giant Tencent’s WeChat to proliferate.
But letting Facebook off the hook won’t solve the problems China’s influence poses to an open and just internet. Framing the issue as “strong regulation lets China win” creates a false dichotomy. There are more constructive approaches if Zuckerberg seriously wants to work with the government on exporting freedom via the web. And the distrust Facebook has accrued through the mistakes it’s made in the absence of proper regulation arguably do plenty to hurt the perception of how American ideals are spread through its tech companies.
Breaking up Facebook may not be the answer, especially if it’s done in retaliation for its wrong-doings instead of as a coherent way to prevent more in the future. To that end, a better approach might be stopping future acquisitions of large or rapidly growing social networks, forcing it to offer true data portability so existing users have the freedom to switch to competitors, applying proper oversight of its privacy policies and requiring a slow rollout of Libra with testing in each phase to ensure it doesn’t screw consumers, enable terrorists or jeopardize the world economy.
Resorting to scare tactics shows that it’s Facebook that’s scared. Years of growth over safety strategy might finally catch up with it. The $5 billion FTC fine is a slap on the wrist for a company that profits more than that per quarter, but a break-up would do real damage. Instead of fear-mongering, Facebook would be better served by working with regulators in good faith while focusing more on preempting abuse. Perhaps it’s politically savvy to invoke the threat of China to stoke the worries of government officials, and it might even be effective. That doesn’t make it right.
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CES will allow sex tech on a one-year trial basis, and finally bans booth babes
The Consumer Technology Association, the organization behind the annual Consumer Electronics Show, is slowly getting up to speed with the modern day. Today, CTA announced it will allow sex tech startups to participate and compete for awards as part of the health and wellness category on a one-year trial basis.
This comes after the CTA royally messed up with sex tech company Lora DiCarlo last year. The CTA revoked an innovation award from the company, which is developing a hands-free device that uses biomimicry and robotics to help women achieve a blended orgasm by simultaneously stimulating the G-spot and the clitoris. In May, CTA re-awarded the company and apologized.
“CTA is committed to evolving and continuing to create an experience at CES that is inclusive and welcoming for everyone,” CES EVP Karen Chupka said in a statement. “We worked with a number of external advisors and partners to update and improve our existing CES policies.”
Additionally, CTA has banned booth babes, or, booth people, as it’s applicable to everyone, regardless of gender.
“Booth personnel may not wear clothing that is sexually revealing or that could be interpreted as undergarments,” the new policy states. “Clothing that reveals an excess of bare skin, or body-conforming clothing that hugs genitalia must not be worn.”
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Highlights from Facebook’s Libra Senate hearing
Facebook will only build its own Calibra cryptocurrency wallet into Messenger and WhatsApp, and will refuse to embed competing wallets, the head of Calibra David Marcus told the Senate Banking Committee today. While some, like Senator Brown, blustered that “Facebook is dangerous!,” others surfaced poignant questions about Libra’s risks.
Calibra will be interoperable, so users can send money back and forth with other wallets, and Marcus committed to data portability so users can switch entirely to a competitor. But solely embedding Facebook’s own wallet into its leading messaging apps could give the company a sizable advantage over banks, PayPal, Coinbase or any other potential wallet developer.
Other highlights from the “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations” hearing included Marcus saying:
- The U.S. should “absolutely” lead the world in rule-making for cryptocurrencies
- The Libra Association chose to be headquartered in Switzerland “not to evade any responsibilities of oversight” but since it’s where international financial groups like the Bank for International Settlements, though Calibra will be regulated by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network
- “Yes,” Libra will comply with all U.S. regulations and not launch until the U.S. lawmakers’ concerns have been answered
- “You will not have to trust Facebook” because it’s only one of 28 current and potentially 100 or more Libra Association members and it won’t have special privileges
- “Yes I would” accept compensation from Facebook in the form of Libra as a show of trust in the currency
- It is “not the intention at all” for Calibra to sell or directly monetize user data directly, though if it offered additional financial services in partnership with other financial organizations it would ask consent to use their data specifically for those purposes
- Facebook’s core revenue model around Libra is that more online commerce will lead businesses to spend more on Facebook ads
- When repeatedly asked why Facebook is pushing Libra to happen, Marcus noted that blockchain technology is inevitable and if the U.S. doesn’t lead in building and regulating it, the tech will come from places “out of reach of our national security apparatus,” raising the spectre of China
But Marcus also didn’t clearly answer some critical questions about Libra and Calibra, and may be asked again when he testifies before the House Financial Services Committee tomorrow.
Unanswered Questions
Chairman Crapo asked if Facebook would collect data about transactions made with Calibra that are made on Facebook, such as when users buy products from businesses they discover through Facebook. Marcus instead merely noted that Facebook would still let users pay with credit cards and other mediums as well as Calibra. That means that even though Facebook might not know how much money is in someone’s Calibra wallet or their other transactions, it might know how much they paid and for what if that transaction happens over their social networks.
Senator Tillis asked how much Facebook has invested in the formation of Libra. TechCrunch has also asked specifically how much Facebook has invested in the Libra Investment Token that will earn it a share of interest earned from the fiat currencies in the Libra Reserve. Marcus said Facebook and Calibra hadn’t determined exactly how much it would invest in the project. Marcus also didn’t clearly answer Senator Toomey’s question of why the Libra Association is considered a not-for-profit organization if it will pay out interest to members.
Senator Menendez asked if the Libra Association would freeze the assets if terrorist organizations were identified. Marcus said that Calibra and other custodial wallets that actually hold users’ Libra could do that, and that regulated off-ramps could block them from converting Libra into fiat. But this answer underscores that there may be no way for the Libra Association to stop transfers between terrorists’ non-custodial wallets, especially if local governments where those terrorists operate don’t step in.
Perhaps the most worrying moment of the hearing was when Senator Sinema brought up TechCrunch’s article citing that “The real risk of Libra is crooked developers.” There I wrote that Facebook’s VP of product Kevin Weil told me that “There are no plans for the Libra Association to take a role in actively vetting [developers],” which I believe leaves the door open to a crypto Cambridge Analytica situation where shady developers steal users money, not just their data.
Senator Sinema asked if an Arizonan was scammed out of their Libra by a Pakistani developer via a Thai exchange and a Spanish wallet, would that U.S. citizen be entitled to protection to recuperate their lost funds. Marcus responded that U.S. citizens would likely use American Libra wallets that are subject to protections and that the Libra Association will work to educate users on how to avoid scams. But Sinema stressed that if Libra is designed to assist the poor who are often less educated, they could be especially vulnerable to scammers.
Here @SenatorSinema cites my article warning that we need protection from Facebook Libra’s unvetted developers https://t.co/gYeYIQVFLj pic.twitter.com/QSqVDztpCU
— Josh Constine (@JoshConstine) July 16, 2019
Crypto openness versus a dangerous Wild West
Overall, the hearing was surprisingly coherent. Many Senators showed strong base knowledge of how Libra worked and asked the right questions. Marcus was generally forthcoming, beyond the topics of how much Facebook has invested in the Libra project and what data it will glean from transactions atop its social network.
Some of the top concerns, such as terrorist money laundering, encompass the entire cryptocurrency ecosystem and can’t be solved even by strong rules around Libra. Little regard was given to how Libra could improve remittance or cut transaction fees that see corporations profit off families and small businesses.
Still, if Libra actually becomes popular and evolves as an open ecosystem full of unvetted developers, the currency could be used to facilitate scams. Precisely because of the lack of trust in Facebook that many Senators harped on, consumers could go seeking Libra wallet alternatives to the company that might push them into the hands of evildoers. The Libra Association may need to shift the balance further toward safety and away from cryptocurrency’s prevailing philosophies from openness. Otherwise, the frontiers of this Wild West could prove dangerous, even if its civilized regions are well-regulated.
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Why commerce companies are the advertising players to watch in a privacy-centric world
Justin Choi is the founder and CEO of Nativo, which empowers brands and publishers through its advanced platform for content.
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The unchecked digital land grab for consumers’ personal data that has been going on for more than a decade is coming to an end, and the dominoes have begun to fall when it comes to the regulation of consumer privacy and data security.
We’re witnessing the beginning of a sweeping upheaval in how companies are allowed to obtain, process, manage, use and sell consumer data, and the implications for the digital ad competitive landscape are massive.
On the backdrop of evolving privacy expectations and requirements, we’re seeing the rise of a new class of digital advertising player: consumer-facing apps and commerce platforms. These commerce companies are emerging as the most likely beneficiaries of this new regulatory privacy landscape — and we’re not just talking about e-commerce giants like Amazon.
Traditional commerce companies like eBay, Target and Walmart have publicly spoken about advertising as a major focus area for growth, but even companies like Starbucks and Uber have an edge in consumer data consent and, thus, an edge over incumbent media players in the fight for ad revenues.
Tectonic regulatory shifts
Image via Getty Images / alashi
By now, most executives, investors and entrepreneurs are aware of the growing acronym soup of privacy regulation, the two most prominent ingredients being the GDPR (General Data Protection Regulation) and the CCPA (California Consumer Privacy Act).
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As FTC cracks down, data ethics is now a strategic business weapon
Daniel Wu
Contributor
Contributor
Five billion dollars. That’s the apparent size of Facebook’s latest fine for violating data privacy.
While many believe the sum is simply a slap on the wrist for a behemoth like Facebook, it’s still the largest amount the Federal Trade Commission has ever levied on a technology company.
Facebook is clearly still reeling from Cambridge Analytica, after which trust in the company dropped 51%, searches for “delete Facebook” reached 5-year highs, and Facebook’s stock dropped 20%.
While incumbents like Facebook are struggling with their data, startups in highly-regulated, “Third Wave” industries can take advantage by using a data strategy one would least expect: ethics. Beyond complying with regulations, startups that embrace ethics look out for their customers’ best interests, cultivate long-term trust — and avoid billion dollar fines.
To weave ethics into the very fabric of their business strategies and tech systems, startups should adopt “agile” data governance systems. Often combining law and technology, these systems will become a key weapon of data-centric Third Wave startups to beat incumbents in their field.
Established, highly-regulated incumbents often use slow and unsystematic data compliance workflows, operated manually by armies of lawyers and technology personnel. Agile data governance systems, in contrast, simplify both these workflows and the use of cutting-edge privacy tools, allowing resource-poor startups both to protect their customers better and to improve their services.
In fact, 47% of customers are willing to switch to startups that protect their sensitive data better. Yet 80% of customers highly value more convenience and better service.
By using agile data governance, startups can balance protection and improvement. Ultimately, they gain a strategic advantage by obtaining more data, cultivating more loyalty, and being more resilient to inevitable data mishaps.
Agile data governance helps startups obtain more data — and create more value
With agile data governance, startups can address their critical weakness: data scarcity. Customers share more data with startups that make data collection a feature, not a burdensome part of the user experience. Agile data governance systems simplify compliance with this data practice.
Take Ally Bank, which the Ponemon Institute rated as one of the most privacy-protecting banks. In 2017, Ally’s deposits base grew 16%, while those of incumbents declined 4%.
One key principle to its ethical data strategy: minimizing data collection and use. Ally’s customers obtain services through a personalized website, rarely filling out long surveys. When data is requested, it’s done in small doses on the site — and always results in immediate value, such as viewing transactions.
This is on purpose. Ally’s Chief Marketing Officer publicly calls the industry-mantra of “more data” dangerous to brands and consumers alike.
A critical tool to minimize data use is to use advanced data privacy tools like differential privacy. A favorite of organizations like Apple, differential privacy limits your data analysts’ access to summaries of data, such as averages. And by injecting noise into those summaries, differential privacy creates provable guarantees of privacy and prevents scenarios where malicious parties can reverse-engineer sensitive data. But because differential privacy uses summaries, instead of completely masking the data, companies can still draw meaning from it and improve their services.
With tools like differential privacy, organizations move beyond governance patterns where data analysts either gain unrestricted access to sensitive data (think: Uber’s controversial “god view”) or face multiple barriers to data access. Instead, startups can use differential privacy to share and pool data safely, helping them overcome data scarcity. The most agile data governance systems allow startups to use differential privacy without code and the large engineering teams that only incumbents can afford.
Ultimately, better data means better predictions — and happier customers.
Agile data governance cultivates customer loyalty
According to Deloitte, 80% of consumers are more loyal to companies they believe protect their data. Yet far fewer leaders at established, incumbent companies — the respondents of the same survey — believed this to be true. Customers care more about their data than the leaders at incumbent companies think.
This knowledge gap is an opportunity for startups.
Furthermore, big enterprise companies — themselves customers of many startups — say data compliance risks prevent them from working with startups. And rightly so. Over 80% of data incidents are actually caused by errors from insiders, like third party vendors who mishandle sensitive data by sharing it with inappropriate parties. Yet over 68% of companies do not have good systems to prevent these types of errors. In fact, Facebook’s Cambridge Analytica firestorm — and resulting $5 billion fine — was sparked by third party inappropriately sharing personal data with a political consulting firm without user consent.
As a result, many companies — both startups and incumbents — are holding a ticking time bomb of customer attrition.
Agile data governance defuses these risks by simplifying the ethical data practices of understanding, controlling, and monitoring data at all times. With such practices, startups can prevent and correct the mishandling of sensitive data quickly.
Cognoa is a good example of a Third Wave healthcare startup adopting these three practices at a rapid pace. First, it understands where all of its sensitive health data lies by connecting all of its databases. Second, Cognoa can control all connected data sources at once from one point by using a single access-and-control layer, as opposed to relying on data silos. When this happens, employees and third parties can only access and share the sensitive data sources they’re supposed to. Finally, data queries are always monitored, allowing Cognoa to produce audit reports frequently and catch problems before they escalate out of control.
With tools that simplify these three practices, even low-resourced startups can make sure sensitive data is tightly controlled at all times to prevent data incidents. Because key workflows are simplified, these same startups can maintain the speed of their data analytics by sharing data safely with the right parties. With better and safer data sharing across functions, startups can develop the insight necessary to cultivate a loyal fan base for the long-term.
Agile data governance can help startups survive inevitable data incidents
In 2018, Panera mistakenly shared 37 million customer records on its website and took 8 months to respond. Panera’s data incident is a taste of what’s to come: Gartner predicts that 50% of business ethics violations will stem from data incidents like these. In the era of “Big Data,” billion dollar incumbents without agile data governance will likely continue to violate data ethics.
Given the inevitability of such incidents, startups that adopt agile data governance will likely be the most resilient companies of the future.
Case in point: Harvard Business Review reports that the stock prices of companies without strong data governance practices drop 150% more than companies that do adopt strong practices. Despite this difference, only 10% of Fortune 500 companies actually employ the data transparency principle identified in the report. Practices include clearly disclosing data practices and giving users control over their privacy settings.
Sure, data incidents are becoming more common. But that doesn’t mean startups don’t suffer from them. In fact, up to 60% of startups fold after a cyber attack.
Startups can learn from WebMD, which Deloitte named as one standout in applying data transparency. With a readable privacy policy, customers know how data will be used, helping customers feel comfortable about sharing their data. More informed about the company’s practices, customers are surprised less by incidents. Surprises, BCG found, can reduce consumer spending by one-third. On a self-service platform on WebMD’s site, customers can control their privacy settings and how to share their data, further cultivating trust.
Self-service tools like WebMD’s are part of agile data governance. These tools allow startups to simplify manual processes, like responding to customer requests to control their data. Instead, startups can focus on safely delivering value to their customers.
Get ahead of the curve
For so long, the public seemed to care less about their data.
That’s changing. Senior executives at major companies have been publicly interrogated for not taking data governance seriously. Some, like Facebook and Apple, are even claiming to lead with privacy. Ultimately, data privacy risks significantly rise in Third Wave industries where errors can alter access to key basic needs, such as healthcare, housing, and transportation.
While many incumbents have well-resourced legal and compliance departments, agile data governance goes beyond the “risk mitigation” missions of those functions. Agile governance means that time-consuming and error-prone workflows are streamlined so that companies serve their customers more quickly and safely.
Case in point: even after being advised by an army of lawyers, Zuckerberg’s 30,000-word Senate testimony about Cambridge Analytica included “ethics” only once, and it excluded “data governance” completely.
And even if companies do have legal departments, most don’t make their commitment to governance clear. Less than 15% of consumers say they know which companies protect their data the best. Startups can take advantage of this knowledge gap by adopting agile data governance and educate their customers about how to protect themselves in the risky world of the Third Wave.
Some incumbents may always be safe. But those in highly-regulated Third Wave industries, such as automotive, healthcare, and telecom should be worried; customers trust these incumbents the least. Startups that adopt agile data governance, however, will be trusted the most, and the time to act is now.
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Minimum investment for EB-5 investor green card expected to more than double
While not a startup visa, the EB-5 investor green card offers many entrepreneurs a path to a green card by investing money and creating jobs in the U.S. Under the EB-5 program, an entrepreneur’s family is also eligible for green cards.
Imminent regulatory changes to the EB-5 program are expected to make obtaining an EB-5 green card a whole lot more expensive. The minimum investment is anticipated to more than double to $1.35 million from the current $500,000. And with individuals from India expected to face a backlog for EB-5 green cards shortly, the opportunity to obtain an EB-5 green card at a relatively low cost and in a timely manner is closing.
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