‘Conscience laws’ endanger patients and contradict health tech’s core values

Recent laws allowing healthcare providers to refuse care because of conscientious beliefs and denying care to transgender individuals might not seem like an issue for the tech industry at first blush, but these types of legislation directly contradict the core values of health tech.

Arkansas Governor Asa Hutchinson last month signed into law S.B. 289, known as the “Medical Ethics and Diversity Act,” which allows anyone who provides healthcare services — not just doctors — to refuse to give non-emergency care if they believe the care goes against their conscience.

Arkansas is one of several states in the U.S. that have been pushing laws like this over the past several years. These “conscience laws” are harmful to all patients — particularly LGBTQ individuals, women and rural citizens — especially because over 40% of available hospital beds are controlled by Catholic institutions in some states.

While disguised as a safeguard that prevents doctors from having to participate in medical services that are at odds with their religious beliefs, these laws go far beyond that and should be repealed.

While disguised as a safeguard that prevents doctors from having to participate in medical services that are at odds with their religious beliefs, these laws go far beyond that and should be repealed.

“Non-emergency” service is open to interpretation

The Arkansas legislation is one giant slippery slope. Even beyond the direct effects that the law would have on reproductive rights and the LGBTQ community, it leaves open questions about the many different services that medical professionals could decline simply by saying it goes against their conscience.

Broadly letting healthcare providers decide which services they will perform based on religion, ethics or conscience essentially eliminates protections patients have under federal anti-discrimination regulations.

What constitutes an “emergency” to one doctor or EMT may be deemed a “non-emergency” by another. By allowing medical professionals to avoid performing some services, the bill can be interpreted as allowing anyone involved in the provision of healthcare services to avoid performing any kind of service, as long as they say they believed it wasn’t an emergency at the time.

The law also allows individuals to refuse to refer patients to someone who would provide the desired service for them. This places an undue burden on patients with physical or mental health issues and causes delays in treatment as the patient searches for an alternate provider. In cases of health and life-threatening issues, for example, women have been refused treatment at Catholic medical institutions and forced to ride to the closest emergency care center.

The health tech community is working to improve the health of all

The Arkansas law runs counter to the values of the businesses that are working hard to develop and improve medical technologies. Health tech startups at their core are fighting to provide more and better services to more patients — whether it’s by building platforms to make healthcare accessible to all, developing specific medical devices to improve the quality of service or researching new treatments and vaccines.

Imagine developing a vaccine for a global pandemic and then allowing doctors the right to refuse to administer it because it’s open to interpretation whether the virus represents an emergency to specific people. Or imagine a hospital pharmacist who deliberately tries to spoil hundreds of vaccine doses because of the conspiracy theories he believes. Laws like the one in Arkansas open up the healthcare system to abuse by conspiracy theorists, and it is already the case that many wellness providers are basing their advice and services on QAnon falsehoods.

The health tech community is not just developing medications and devices for patients whose beliefs are similar to their own. Equally, medical professionals should not be making it harder for people to get needed medical care based on personal feelings. On the contrary, the ultimate goal of health tech businesses and healthcare providers alike should be a singular focus on improving the quality of care for all.

“Medical ethics” and anti-LGBTQ laws are unethical

As the health tech community continues to work tirelessly to bring new solutions to the marketplace to improve the health of everyone, it must also stand against laws like this, which threaten to eradicate the important gains that have been made in enhancing the lives and health of patients.

The Arkansas law — and others like it — place the burden of finding appropriate care on the patient instead of on the medical community, where it belongs. These laws must be repealed.

#arkansas, #column, #diversity, #health, #healthcare, #healthcare-industry, #healthtech, #lgbtq, #medicine, #opinion, #tc, #united-states

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Flawed data is putting people with disabilities at risk

Data isn’t abstract — it has a direct impact on people’s lives.

In 2019, an AI-powered delivery robot momentarily blocked a wheelchair user from safely accessing the curb when crossing a busy road. Speaking about the incident, the person noted how “it’s important that the development of technologies [doesn’t put] disabled people on the line as collateral”.

Alongside other minority groups, people with disabilities have long been harmed by flawed data and data tools. Disabilities are diverse, nuanced, and dynamic; they don’t fit within the formulaic structure of AI, which is programmed to find patterns and form groups. Because AI treats any outlier data as ‘noise’ and disregards it, too often people with disabilities are excluded from its conclusions.

Take for example the case of Elaine Herzberg, who was struck and killed by a self-driving Uber SUV in 2018. At the time of the collision, Herzberg was pushing a bicycle, which meant Uber’s system struggled to categorize her and flitted between labeling her as a ‘vehicle,’ ‘bicycle,’ and ‘other.’ The tragedy raised many questions for people with disabilities: would a person in a wheelchair or a scooter be at risk of the same fatal misclassification?

We need a new way of collecting and processing data. ‘Data’ ranges from personal information, user feedback, resumes, multimedia, user metrics, and much more, and it’s constantly being used to optimize our software. However, it’s not done so with the understanding of the spectrum of nefarious ways that it can and is used in the wrong hands, or when principles are not applied to each touchpoint of building.

Our products are long overdue for a new, fairer data framework to ensure that data is managed with people with disabilities in mind. If it isn’t, people with disabilities will face more friction, and dangers, in a day-to-day life that is increasingly dependent on digital tools.

Misinformed data hampers the building of good tools

Products that lack accessibility might not stop people with disabilities from leaving their homes, but they can stop them from accessing pivot points of life like quality healthcare, education, and on-demand deliveries.

Our tools are a product of their environment. They reflect their creators’ world view and subjective lens. For too long, the same groups of people have been overseeing faulty data systems. It’s a closed loop, where underlying biases are perpetuated and groups that were already invisible remain unseen. But as data progresses, that loop becomes a snowball. We’re dealing with machine-learning models — if they’re taught long enough that ‘not being X’ (read: white, able-bodied, cisgendered) means not being ‘normal’, they will evolve by building on that foundation.

Data is interlinked in ways that are invisible to us. It’s not enough to say that your algorithm won’t exclude people with registered disabilities. Biases are present in other sets of data. For example, in the United States it’s illegal to refuse someone a mortgage loan because they’re Black. But by basing the process heavily on credit scores — which have inherent biases detrimental to people of color — banks indirectly exclude that segment of society.

For people with disabilities, indirectly biased data could potentially be: frequency of physical activity or number of hours commuted per week. Here’s a concrete example of how indirect bias translates to software: If a hiring algorithm studies candidates’ facial movements during a video interview, a person with a cognitive disability or mobility impairment will experience different barriers than a fully able-bodied applicant.

The problem also stems from people with disabilities not being viewed as part of businesses’ target market. When companies are in the early stage of brainstorming their ideal users, people’s disabilities often don’t figure, especially when they’re less noticeable — like mental health illness. That means the initial user data used to iterate products or services doesn’t come from these individuals. In fact, 56% of organizations still don’t routinely test their digital products among people with disabilities.

If tech companies proactively included individuals with disabilities on their teams, it’s far more likely that their target market would be more representative. In addition, all tech workers need to be aware of and factor in the visible and invisible exclusions in their data. It’s no simple task, and we need to collaborate on this. Ideally, we’ll have more frequent conversations, forums and knowledge-sharing on how to eliminate indirect bias from the data we use daily.

We need an ethical stress test for data

We test our products all the time — on usability, engagement, and even logo preferences. We know which colors perform better to convert paying customers, and the words that resonate most with people, so why aren’t we setting a bar for data ethics?

Ultimately, the responsibility of creating ethical tech does not just lie at the top. Those laying the brickwork for a product day after day are also liable. It was the Volkswagen engineer (not the company CEO) who was sent to jail for developing a device that enabled cars to evade US pollution rules.

Engineers, designers, product managers: we all have to acknowledge the data in front of us and think about why we collect it and how we collect it. That means dissecting the data we’re requesting and analyzing what our motivations are. Does it always make sense to ask about someone’s disabilities, sex or race? How does having this information benefit the end user?

At Stark, we’ve developed a five-point framework to run when designing and building any kind of software, service or tech. We have to address:

  1. What data we’re collecting
  2. Why we’re collecting it
  3. How it will be used (and how it can be misused)
  4. Simulate IFTTT: ‘if this, then that.’ Explain possible scenarios in which the data can be used nefariously, and alternate solutions. For instance, how users can be impacted by an at-scale data breach? What happens if this private information becomes public to their family and friends?
  5. Ship or trash the idea

If we can only explain our data using vague terminology and unclear expectations, or by stretching the truth, we shouldn’t be allowed to have that data. The framework forces us to break down data in the most simple manner; and if we can’t, it’s because we’re not yet equipped to handle it responsibly.

Innovation has to include people with disabilities

Complex data technology is entering new sectors all the time, from vaccine development to robotaxis. Any bias against individuals with disabilities in these sectors stops them from accessing the most cutting-edge products and services. As we become more dependent on tech in every niche of our lives, there’s greater room for exclusion in how we carry out everyday activities.

This is all about forward thinking and baking inclusion into your product at the start. Money and/or experience aren’t limiting factors here — changing your thought process and development journey is free, it’s just a conscious pivot in a better direction. And while the upfront cost may be a heavy lift, the profits you’d lose from not tapping into these markets, or because you end up retrofitting your product down the line, far outweigh that initial expense. This is especially true for enterprise-level companies that won’t be able to access academia or governmental contracts without being compliant.

So early-stage companies, integrate accessibility principles into your product development and gather user data to constantly reinforce those principles. Sharing data across your onboarding, sales, and design teams will give you a more complete picture of where your users are experiencing difficulties. Later-stage companies should carry out a self-assessment to determine where those principles are lacking in their product, and harness historical data and new user feedback to generate a fix.

An overhaul of AI and data isn’t just about adapting businesses’ framework. We still need the people at the helm to be more diverse. The fields remain overwhelmingly male and white, and in tech, there are numerous first-hand accounts of exclusion and bias towards people with disabilities. Until the teams curating data tools are themselves more diverse, nations’ growth will continue to be stifled, and people with disabilities will be some of the hardest-hit casualties.

#accessibility, #artificial-intelligence, #cat-noone, #column, #data, #diversity, #ethics, #opinion, #tc

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Reform the US low-income broadband program by rebuilding Lifeline

“If you build it, they will come” is a mantra that’s been repeated for more than three decades to embolden action. The line from “Field of Dreams” is a powerful saying, but I might add one word: “If you build it well, they will come.”

America’s Lifeline program, a monthly subsidy designed to help low-income families afford critical communications services, was created with the best intentions. The original goal was to achieve universal telephone service, but it has fallen far short of achieving its potential as the Federal Communications Commission has attempted to convert it to a broadband-centric program.

The FCC’s Universal Service Administrative Company estimates that only 26% of the families that are eligible for Lifeline currently participate in the program. That means that nearly three out of four low-income consumers are missing out on a benefit for which they qualify. But that doesn’t mean the program should be abandoned, as the Biden administration’s newly released infrastructure plan suggests.

Now is the right opportunity to complete the transformation of Lifeline to broadband and expand its utilization by increasing the benefit to a level commensurate with the broadband marketplace and making the benefit directly available to end users.

Rather, now is the right opportunity to complete the transformation of Lifeline to broadband and expand its utilization by increasing the benefit to a level commensurate with the broadband marketplace and making the benefit directly available to end users. Instead, the White House fact sheet on the plan recommends price controls for internet access services with a phaseout of subsidies for low-income subscribers. That is a flawed policy prescription.

If maintaining America’s global competitiveness, building broadband infrastructure in high-cost rural areas, and maintaining the nation’s rapid deployment of 5G wireless services are national goals, the government should not set prices for internet access.

Forcing artificially low prices in the quest for broadband affordability would leave internet service providers with insufficient revenues to continue to meet the nation’s communications infrastructure needs with robust innovation and investment.

Instead, targeted changes to the Lifeline program could dramatically increase its participation rate, helping to realize the goal of connecting Americans most in need with the phone and broadband services that in today’s world have become essential to employment, education, healthcare and access to government resources.

To start, Lifeline program participation should be made much easier. Today, individuals seeking the benefit must go through a process of self-enrollment. Implementing “coordinated enrollment” — through which individuals would automatically be enrolled in Lifeline when they qualify for certain other government assistance benefits, including SNAP (the Supplemental Nutrition Assistance Program, formerly known as food stamps) and Medicaid — would help to address the severe program underutilization.

Because multiple government programs serve the same constituency, a single qualification process for enrollment in all applicable programs would generate government efficiencies and reach Americans who are missing out.

Speaking before the American Enterprise Institute back in 2014, former FCC Commissioner Mignon Clyburn said, “In most states, to enroll in federal benefit programs administered by state agencies, consumers already must gather their income-related documentation, and for some programs, go through a face-to-face interview. Allowing customers to enroll in Lifeline at the same time as they apply for other government benefits would provide a better experience for consumers and streamline our efforts.”

Second, the use of the Lifeline benefit can be made far simpler for consumers if the subsidy is provided directly to them via an electronic Lifeline benefit card account — like the SNAP program’s electronic benefit transfer (EBT) card. Not only would a Lifeline benefit card make participation in the program more convenient, but low-income

Americans would then be able to shop among the various providers and select the carrier and the precise service(s) that best suits their needs. The flexibility of greater consumer choice would be an encouragement for more program sign-ups.

And, the current Lifeline subsidy amount — $9.25 per month — isn’t enough to pay for a broadband subscription. For the subsidy to be truly meaningful, an increase in the monthly benefit is needed. Last December, Congress passed the temporary Emergency Broadband Benefit to provide low-income Americans up to a $50 per month discount ($75 per month on tribal lands) to offset the cost of broadband connectivity during the pandemic. After the emergency benefit runs out, a monthly benefit adequate to defray the cost of a broadband subscription will be needed.

In order to support more than a $9.25 monthly benefit, the funding source for the Lifeline program must also be reimagined. Currently, the program relies on the FCC’s Universal Service Fund, which is financed through a “tax” on traditional long-distance and international telephone services.

As greater use is made of the web for voice communications, coupled with less use of traditional telephones, the tax rate has increased to compensate for the shrinking revenues associated with landline phone services. A decade ago, the tax, known as the “contribution factor,” was 15.5%, but it’s now more than double that at an unsustainable 33.4%. Without changes, the problem will only worsen.

It’s easy to see that the financing of a broadband benefit should no longer be tied to a dying technology. Instead, funding for the Lifeline program could come from a “tax” shared across the entire internet ecosystem, including the edge providers that depend on broadband to reach their customers, or from direct congressional appropriations for the Lifeline program.

These reforms are realistic and straightforward. Rather than burn the program down, it’s time to rebuild Lifeline to ensure that it fulfills its original intention and reaches America’s neediest.

#biden-administration, #broadband, #column, #digital-divide, #federal-communications-commission, #government, #internet-access, #internet-service-providers, #opinion, #policy

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Tech talent can thrive in the public sector but government must invest in it

Building, scaling and launching new tools and products is the lifeblood of the technology sector. When we consider these concepts today, many think of Big Tech and flashy startups, known for their industry dominance or new technologies that impact our everyday lives. But long before garages and dorm rooms became decentralized hubs for these innovations, local and state governments, along with many agencies within the federal government, pioneered tech products with the goal of improving the lives of millions.

Long before garages and dorm rooms became decentralized hubs for innovation, local and state governments, along with many agencies within the federal government, pioneered tech products with the goal of improving the lives of millions.

As an industry, we’ve developed a notion that working in government, the place where the groundwork was laid for the digital assistants we use every day, is now far less appealing than working in the private sector. The immense salary differential is often cited as the overwhelming reason workers prefer to work in the private sphere.

But the hard truth is the private sector brings far more value than just higher compensation to employees. Look no further than the boom in the tech sector during the pandemic to understand why it’s so attractive. A company like Zoom, already established and successful in its own right for years, found itself in a situation where it had to serve an exponentially growing and diverse user base in a short period of time. It quickly confronted a slew of infrastructure and user experience pivots on its way to becoming a staple of work-from-home culture — and succeeded.

That innate ability to work fast to deliver for consumers and innovate at what feels like a moment’s notice is what really draws talent. Compare that to the government’s tech environment, where decreased funding and partisan oversight slow the pace of work, or, worse, can get in the way of exploring or implementing new ideas entirely.

One look (literally, see our graph below) at the trends around R&D spending in the private and government sectors also paints a clear picture of where future innovations will come from if we don’t change the equation.

Chart of Facebook R&D spending vs. DARPA annual budget

Image Credits: Josh Mendelsohn/Hangar

Look no further than the U.S. government’s own (now defunct) Office of Technology Assessment. The agency aimed to provide a thorough analysis of burgeoning issues in science and technology, exposing many public services to a new age of innovation and implementation. Amid a period of downsizing by a newly Republican-led Congress, the OTA was defunded in 1995 with a peak annual budget of just $35.1 million (adjusted for 2019 dollars). The authoritative body on the importance of technology to the government was deemed duplicative and unnecessary. Despite numerous calls for its reinstatement, it has since remained shuttered.

Despite dwindling public sector investment and lackluster political action, the problems that technology is poised to help solve haven’t gone away or even eased up.

From the COVID pandemic to worsening natural disasters and growing societal inequities, public leaders have a responsibility to solve the pressing issues we face today. That responsibility should breed a desire to continuously iterate for the sake of constituents and quality of life, much in the same way private tech caters to the product, user and bottom line.

My own experiences in government have shaped my career and approach to building new technologies more than my time in Silicon Valley. There are plenty of tangible parallels to the private sector that can attract driven and passionate tech workers, but the responsibility of giving government work realistic consideration doesn’t just fall at the feet of talent. The governments that we depend on must invest more capital and pay closer attention to the tech community.

Tech workers want an environment where they can thrive and get to see their work in action, whoever the end user may be. They don’t want to feel hamstrung by the threat of decreased funding or the red tape that comes as a result of government partisanship. Replicating the unimpeded focus of Silicon Valley’s brightest examples is a must if we’re serious about drawing talented individuals into government or public-sector-focused work.

A great example of these ideas in action is one of the most beloved government agencies, NASA. Its continued funding has produced technologies developed for space exploration that are now commonplace in our lives, such as scratch-resistant lenses, memory foam and water filters. These use cases came much later on, only after millions of dollars were invested without knowing what would result.

NASA has continued to bolster its ability to stay nimble and evolve at a rapid pace by partnering with private companies. For talent in the tech sphere, the ability to leverage outside resources in this way, without compromising the product or work, is a boon for ideation and iteration.

One can also point to the agency when considering the importance of keeping technology research and innovation as apolitical as possible. It’s one of the few widely known public entities to prosper on the back of bipartisan support. Unfortunately, politicians typically do all of us a disservice, particularly tech workers in government, when they too closely connect themselves or their parties to a particular program or platform. It hinders innovation — and the ensuing mudslinging can detract from talented individuals jumping into government service.

There is no shortage of extremely capable tech workers who want to help solve the biggest issues facing society. Will we give them the legitimate space and opportunity to conquer those problems? There’s been some indication that we can. These ambitious and forward-looking efforts matter today more than ever and show all of us in the tech ecosystem that there’s a place in government for tech talent to grow and flourish.

#column, #congress, #covid-19, #federal-government, #innovation, #opinion, #silicon-valley, #tc, #united-states

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Clarence Thomas plays a poor devil’s advocate in floating First Amendment limits for tech companies

Supreme Court Justice Clarence Thomas flaunted a dangerous ignorance regarding matters digital in an opinion published today. In attempting to explain the legal difficulties of social media platforms, particularly those arising from Twitter’s ban of Trump, he makes an ill-informed, bordering on bizarre, argument as to why such companies may need their First Amendment rights curtailed.

There are several points on which Thomas seems to willfully misconstrue or misunderstand the issues.

The first is in his characterization of Trump’s use of Twitter. You may remember that several people sued after being blocked by Trump, alleging that his use of the platform amounted to creating a “public forum” in a legal sense, meaning it was unlawful to exclude anyone from it for political reasons. (The case, as it happens, was rendered moot after its appeal and dismissed by the court except as a Thomas’s temporary soapbox.)

“But Mr. Trump, it turned out, had only limited control of the account; Twitter has permanently removed the account from the platform,” writes Thomas. “[I]t seems rather odd to say something is a government forum when a private company has unrestricted authority to do away with it.”

Does it? Does it seem odd? Because a few paragraphs later, he uses the example of a government agency using a conference room in a hotel to hold a public hearing. They can’t kick people out for voicing their political opinions, certainly, because the room is a de facto public forum. But if someone is loud and disruptive, they can ask hotel security to remove that person, because the room is de jure a privately owned space.

Yet the obvious third example, and the one clearly most relevant to the situation at hand, is skipped. What if it is the government representatives who are being loud and disruptive, to the point where the hotel must make the choice whether to remove them?

It says something that this scenario, so remarkably close a metaphor for what actually happened, is not considered. Perhaps it casts the ostensibly “odd” situation and actors in too clear a light, for Thomas’s other arguments suggest he is not for clarity here but for muddying the waters ahead of a partisan knife fight over free speech.

In his best “I’m not saying, I’m just saying” tone, Thomas presents his reasoning why, if the problem is that these platforms have too much power over free speech, then historically there just happen to be some legal options to limit that power.

Thomas argues first, and worst, that platforms like Facebook and Google may amount to “common carriers,” a term that goes back centuries to actual carriers of cargo, but which is now a common legal concept that refers to services that act as simple distribution – “bound to serve all customers alike, without discrimination.” A telephone company is the most common example, in that it cannot and does not choose what connections it makes, nor what conversations happen over those connections – it moves electric signals from one phone to another.

But as he notes at the outset of his commentary, “applying old doctrines to new digital platforms is rarely straightforward.” And Thomas’s method of doing so is spurious.

“Though digital instead of physical, they are at bottom communications networks, and they ‘carry’ information from one user to another,” he says, and equates telephone companies laying cable with companies like Google laying “information infrastructure that can be controlled in much the same way.”

Now, this is certainly wrong. So wrong in so many ways that it’s hard to know where to start and when to stop.

The idea that companies like Facebook and Google are equivalent to telephone lines is such a reach that it seems almost like a joke. These are companies that have built entire business empires by adding enormous amounts of storage, processing, analysis, and other services on top of the element of pure communication. One might as easily suggest that because computers are just a simple piece of hardware that moves data around, that Apple is a common carrier as well. It’s really not so far a logical leap!

There’s no real need to get into the technical and legal reasons why this opinion is wrong, however, because these grounds have been covered so extensively over the years, particularly by the FCC — which the Supreme Court has deferred to as an expert agency on this matter. If Facebook were a common carrier (or telecommunications service), it would fall under the FCC’s jurisdiction — but it doesn’t, because it isn’t, and really, no one thinks it is. This has been supported over and over, by multiple FCCs and administrations, and the deferral is itself a Supreme Court precedent that has become doctrine.

In fact, and this is really the cherry on top, freshman Justice Kavanaugh in a truly stupefying legal opinion a few years ago argued so far in the other direction that it became wrong in a totally different way! It was Kavanaugh’s considered opinion that the bar for qualifying as a common carrier was actually so high that even broadband providers don’t qualify for it (This was all in service of taking down net neutrality, a saga we are in danger of resuming soon). As his erudite colleague Judge Srinivasan explained to him at the time, this approach too is embarrassingly wrong.

Looking at these two opinions, of two sitting conservative Supreme Court Justices, you may find the arguments strangely at odds, yet they are wrong after a common fashion.

Kavanaugh claims that broadband providers, the plainest form of digital common carrier conceivable, are in fact providing all kinds sophisticated services over and above their functionality as a pipe (they aren’t). Thomas claims that companies actually providing all kinds of sophisticated services are nothing more than pipes.

Simply stated, these men have no regard for the facts but have chosen the definition that best suits their political purposes: for Kavanaugh, thwarting a Democrat-led push for strong net neutrality rules; for Thomas, asserting control over social media companies perceived as having an anti-conservative bias.

The case Thomas uses for his sounding board on these topics was rightly rendered moot — Trump is no longer president and the account no longer exists — but he makes it clear that he regrets this extremely.

“As Twitter made clear, the right to cut off speech lies most powerfully in the hands of private digital platforms,” he concludes. “The extent to which that power matters for purposes of the First Amendment and the extent to which that power could lawfully be modified raise interesting and important questions. This petition, unfortunately, affords us no opportunity to confront them.”

Between the common carrier argument and questioning the form of Section 230 (of which in this article), Thomas’s hypotheticals break the seals on several legal avenues to restrict First Amendment rights of digital platforms, as well as legitimizing those (largely on one side of the political spectrum) who claim a grievance along these lines. (Slate legal commentator Mark Joseph Stern, who spotted the opinion early, goes further, calling Thomas’s argument a “paranoid Marxist delusion” and providing some other interesting context.)

This is not to say that social media and tech do not deserve scrutiny on any number of fronts — they exist in an alarming global vacuum of regulatory powers, and hardly anyone would suggest they have been entirely responsible with this freedom. But the arguments of Thomas and Kavanaugh stink of cynical partisan sophistry. This endorsement by Thomas amounts accomplishes nothing legally, but will provide valuable fuel for the bitter fires of contention — though they hardly needed it.

#clarence-thomas, #donald-trump, #facebook, #first-amendment, #google, #government, #lawsuit, #opinion, #section-230, #social-media, #supreme-court, #tc, #trump

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Breaking up big tech would be a mistake

It seems safe to say that our honeymoon with big tech is officially over.

After years of questionable data-handling procedures, arbitrary content management policies and outright anti-competitive practices, it is only fair that we take a moment to rethink our relationship with the industry.

Sadly, most of the ideas that have gathered mainstream attention — such as the calls to break up big tech — have been knee-jerk responses that smack more of retributionist fantasies than sound economic thinking.

Instead of chasing sensationalist non-starters and zero-sum solutions, we should be focused on ensuring that big tech grows better as it grows bigger by establishing a level playing field for startups’ and competitors’ proprietary digital markets.

We can find inspiration on how to do just that by taking a look at how 20th-century lawmakers reined in the railroad monopolies, which similarly turned from darlings of industry to destructive forces of stagnation.

We’ve been here before

More than a century ago, a familiar story of a nation coming to terms with the unanticipated effects of technological disruption was unfolding across a rapidly industrializing United States.

While the first full-scale steam locomotive debuted in 1804, it took until 1868 for more powerful and cargo-friendly American-style locomotives to be introduced.

The more efficient and cargo-friendly locomotives caught on like wildfire, and soon steel and iron pierced through mountains and leaped over gushing rivers to connect Americans from coast to coast.

Soon, railroad mileage tripled and a whopping 77% of all intercity traffic and 98% of passenger business would be running on rails, ushering in an era of cost-efficient transcontinental travel that would recast the economic fortunes of the entire country.

As is often the case with disruptive technologies, early success would come with a heavy human cost.

From the very beginning, abuse and exploitation ran rampant in the railroad industry, with up to 3% of the labor force suffering injuries or dying during the course of an average year.

Railroad trust owners soon became key constituents of the widely maligned group of businessmen colloquially known as robber barons, whose corporations devoured everything in their path and made life difficult for competitors and new entrants in particular.

The railroad proprietors achieved this by maintaining carefully constructed walled gardens, allowing them to run competitors into the ground by means of extortion, exclusion and everything in between.

While these methods proved wildly successful for railroad owners, the rest of society languished under stifled competition and an utter lack of concern for consumers’ interests.

Everything old is new again

Learning from past experiences certainly doesn’t seem to be humankind’s strong suit.

In fact, most of our concerns with the tech industry are mirror images of the objections 20th-century Americans had against the railroad trusts.

Similar to the robber barons, Alphabet, Amazon, Apple, Facebook, Twitter, et al., have come to dominate the major thoroughfares of trade in a fashion that leaves little space for competitors and startups.

By instating double-digit platform fees, establishing strict limitations on payment processing protocols, and jealously hoarding proprietary data and APIs, big tech has erected artificial barriers to entry that make replicating their success all but impossible.

Over the past years, tech giants have also taken to cannibalizing third-party solutions by providing private-label versions — à la AmazonBasics — to the point where big tech’s clients are finding themselves undercut and outplayed by the platform-holders themselves.

Given the above, it is not surprising that the pace at which tech startups are created in the US has been declining for years.

In fact, VC veterans such as Albert Wenger have called attention to the “kill zone” around big tech for years, and if we are to reinvigorate the competitive fringe around our large tech conglomerates, something has to be done fast.

Why we need to stop talking about breaking up big tech

The 20th-century playbook for taming monopolistic railroad trusts offers several helpful lessons for dealing with big tech.

For first steps, Congress created the Interstate Commerce Commission (ICC) in 1887 and tasked it with administering reasonable and just rates for access to proprietary railroad networks.

Due to partisan politicking, the ICC proved relatively toothless, however. It wasn’t until Congress passed the 1906 Hepburn Act, which separated the function of transportation from the ownership of the goods being shipped, that we started seeing true progress.

By disallowing self-dealing and double-dipping in proprietary platforms, Congress succeeded in opening up access on equal terms both to existing competitors and startups alike, making a once-unnavigable thicket of exploitative practices into the metallic backbone of American prosperity that we know today.

This could never have been achieved by simply breaking the railroad trusts into smaller pieces.

In fact, when it comes to platforms and networks, bigger often is better for everyone involved thanks to network effects and several other factors that conspire against smaller platforms.

Most importantly, when access and interoperability rules are done right, bigger platforms can sustain wider and wider constellations of startups and third parties, helping us grow our economic pie instead of shrinking it.

Making digital markets work for startups

In our post-pandemic economy, our attention should be in helping tech platforms grow better as they grow bigger instead of cutting them down to size.

Ensuring that startups and competitors can access these platforms on equitable terms and at fair prices is a necessary first step.

There are numerous other tangible actions policymakers can take today. For example, rewriting the rules on data portability, pushing for wider standardization and interoperability across platforms, and reintroducing net neutrality would go a long way in addressing what ails the industry today.

With President Joe Biden’s recent nod toward “Amazon’s Antitrust Antagonist” Lina Khan as the next commissioner of the Federal Trade Commission, these changes suddenly seem more likely than ever.

In the end, all of us would stand to benefit from a robust fringe of startups and competitors that thrive on the shoulders of giants and the platforms they have made.

#antitrust, #column, #congress, #federal-trade-commission, #opinion, #policy, #private-equity, #startup-company, #technology

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NFTs are part of a larger economic development in finance capital

Non-fungible tokens (NFTs) are trending hotter than pogs right now, and the number of articles published on the subject in the last few weeks has ballooned into the thousands. So a pardon must be begged at the outset here, but the overlooked potential of token economies is simply too important to let slip away.

NFTs are but one small part of a much larger development in the world of finance capital. What leaves some scratching their heads and chuckling could, within a decade, completely transform the model of investment that has been in place since the rise of Silicon Valley.

Non-fungible what?

NFTs have had a strange first step into the spotlight, bringing wealth to a very small group of people and making most people simply perplexed. Before NFTs are written off as a flash in the pan, it might be worth considering that NFTs were never designed to be very useful in traditional investment frameworks.

It can be hard to imagine how this might all play out, but we are already seeing the outlines of this new economy begin to poke through the dried-out skin of the old model.

An auction house selling a $69 million JPEG is akin to a horse-and-buggy driver strapping a small nuclear reactor to the top of the cab and declaring, “This is an atomic buggy!” as the horse continues to chug along, doing all the work. You’ll get the attention of bystanders, but nothing has fundamentally changed here.

Each of the headline-grabbing NFT sales seen recently are instances of exactly this kind of backward thinking. And the bystanders criticizing the buggy driver and saying, “nuclear reactors are hype,” are not really seeing the long-term implications, or they just don’t like horses.

Whales, dogs and unicorns

From early conceptions of investment as a way to fund transoceanic ship voyages, to the rise of venture capital as we know it today, the entire cosmos of finance capital has remained an elite sport. This is because the current model is based on big investors getting big wins.

Almost the entire world of finance capital is structured on big whales and unicorns, mythical creatures that mere mortals consider themselves lucky to have glimpsed. The word “structured” is chosen here carefully, as the “big-dog” theory of capital is literally built on powerful intermediaries that facilitate the will of these top investors.

The invention of bitcoin is an epochal event in the development of finance. Bitcoin itself has crystallized into merely another playground of power, but the technological tremors it left in its wake are starting to emerge as the real game-changers. Primarily, distributed ledger technologies (DLTs) — of which blockchain is but one instance — are a breakthrough on par with being able to send a message instantaneously to a person on the other side of the world.

DLTs mean that finance capital no longer has a need for powerful intermediaries — or intermediaries of any kind. Middlemen are currently very necessary in order for parties to establish trust in transactions, trades contracts or investments. Paying for the services of these middlemen can be written off as the cost of doing business for large companies and wealthy individuals, but these expenses remain prohibitive barriers for many.

DLTs break down these barriers because trust is established by and built into the very architecture of the network itself. With DLTs, anybody with an internet connection can do big-dog-style business deals at whatever level they can afford, and the way that these deals are transacted is through tokens.

Token economies will be transformative

DLT economies are going to be adopted by all of the major investment players in the next few years as the advantages of decentralizing investment are too numerous to ignore — lower friction for transactions due to automation, much quicker (real-time) results and analysis of market conditions, greater security through transparency, and a higher level of customization for financial products and services. The adoption of decentralized finance by major players will have a net-positive impact for everyone else.

Tokens are the lifeblood of this new system, and non-fungible tokens are just one type of token. In this emerging model, there are payment tokens that behave like money, security tokens that are comparable to stocks, utility tokens that provide functions like space or bandwidth and hybrid tokens that mix these tokens into new forms. If it sounds a bit confusing and exciting, that’s because it is.

The main takeaway to understand here is that tokens are going to replace not just stocks and other investment products but also the entire idea of having middlemen between you and your purchases, whether that middleman is an investment broker, a credit card company, a platform provider or a bank. The decentralized economy is going to be a much more open and direct kind of market.

The rubber hits the road like this

It can be hard to imagine how this might all play out, but we are already seeing the outlines of this new economy begin to poke through the dried-out skin of the old model. These protrusions are most apparent where economic reality doesn’t really make sense.

Think of the emerging gig economy, where nobody really seems to have a steady job anymore, where each of us is some kind of professional mercenary, moving from gig to gig. Think of the huge number of subscriptions that most of us carry like millstones around our necks. Think of the paradoxically frustrating relationship of musicians to streaming platforms, or artists to galleries. Think about the amount of crushing poverty that still remains on our planet.

These are all instances of models of living and working not really fitting into old containers. We can all sense that these aspects of our lives aren’t really functioning optimally, but we can’t quite say why and we certainly don’t know what the solution might look like. Decentralized, tokenized economies have the potential to erase all of these pain points, paradoxes and kludges and replace them with something much more intuitive and elegant.

This new reality is easy to imagine in some of its attributes: Instead of nine different subscriptions, you can just pay directly for the content that you want, when you want it. Instead of artists giving up half of their earnings to galleries or musicians giving, well, all of their earnings to streaming platforms, they now just take direct payment for their work through fluid networks built by and for this type of content. Instead of paying brokers to facilitate your investments, you can now just invest directly in the enterprises that interest you, including formerly out-of-reach sectors like real estate investment. Instead of crushing poverty and fiercely protected borders between classes, we break down barriers and give everyone access to value.

Many of the other developments in a token economy have yet to be imagined, and this is probably the most exciting aspect of all. When we distribute the economy globally, in a way that allows anyone with an internet connection the ability to interact and contribute in a meaningful way, we are unlocking the value of untapped assets that are worth literally trillions of dollars. So what is holding us back, and how do we get there as soon as possible?

The work ahead is very clear

The hardest part of unlocking this new economy has already been achieved — we have the technological understanding of how to distribute and decentralize a system of consensus that combines with a system of digitizing assets for trade and investment.

The remaining work that will actually bring this system online is fairly obvious — first and foremost, we need to take a look at the ecological impacts that this new system has had in its infancy. We should absolutely outlaw mining farms or set the strictest limits for how much of their energy comes from nonrenewables. If the backbone of this new economy is destroying the planet, we need to shut it down before it grows, full stop. The system needs to be ecologically sustainable.

The second most immediate concern is that there are currently no standards, no common network, that the multitude of different cryptocurrencies and tokens agree on. It’s astounding and absolutely frustrating that the various cryptos are hardly even talking about this.

It’s as if we have a bunch of different companies not only inventing the light bulb but also inventing their own light sockets and wiring protocols, and each one is insisting that they are the best and they will win out in the end. Light bulbs are great, but can we please agree on one socket? This beautiful new economy will never get off the ground unless we build a neutral, interoperable network, and this network needs to be feeless and scalable.

The last cause of immediate concern is regulation and legal frameworks. There are too many people still in crypto that have some kind of anarchist’s deathwish to just be completely left outside, and this is not serving the long-term goals of our communities.

I’m all for knocking intermediaries out of the value chain, but this doesn’t automatically entail the establishment of a never-never land that no regulatory agencies are invited to. Legal frameworks for decentralized economies go hand in hand with our ethos of open-source, community-building, transparent operations. We all need to be advocates for thorough and precise regulation of our nascent technology.

With ecology, interoperability and regulation as our watchwords, we can begin work on building the actual apps and other infrastructure that will allow users to leverage the power of a new economy. The uses are limitless, from selling excess electricity to your regional smart power grid, to investing in your favorite artists’ network, to accepting direct payment for your own labor, to — yes — buying NFTs, which will make a lot more sense in the new economy.

#bitcoin, #blockchain, #blockchains, #column, #cryptocurrencies, #cryptocurrency, #digital-currencies, #media, #nfts, #opinion

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Computer vision software has the potential to reinvent the way cities move

In October 2019, The New York Times reported that 1.5 million packages were delivered in New York City every single day. Though convenient for customers and profitable for the Amazons of the world, getting so many boxes from warehouse to customer generates considerable negative externalities for cities.

As the Times put it, “The push for convenience is having a stark impact on gridlock, roadway safety, and pollution in New York City and urban areas around the world.”

Since that article was published, the global pandemic has taken e-commerce to new heights, and experts don’t expect this upward trend to slow down anytime soon. Without strategic intervention, we will find our cities facing increasingly severe traffic problems, safety issues and polluting emissions.

Without strategic intervention, we will find our cities facing increasingly severe traffic problems, safety issues and polluting emissions.

The same frustrations have plagued urban roadways for decades. However, technology is finally catching up, providing new means of addressing the challenges of crowding, pollution and parking enforcement on dense city streets.

As is almost always the case, an effective solution begins by first understanding the detailed circumstances giving rise to the problem. In this case, a simple means of assessing the problem is to observe curbside parking and street traffic using streetlight cameras.

Deploying cameras to monitor public spaces may immediately incite the ire of die-hard privacy advocates (I consider myself among them), which is why companies like mine have taken a privacy-by-design approach to product development. Our technology processes video in real time and addresses further concerns about potential misuse for surveillance purposes by blurring faces and license plates beyond recognition prior to making any kind of image data available either internally or to public officials.

The point of these cameras is not to surveil but rather to leverage concrete data from real-world city streets to generate crucial insights and power automations at the curb. Automotus’ computer vision software is already using this model to help cities manage the aforementioned flood of commercial vehicles on their streets.

This technology can also be used to optimize and incentivize parking turnover. According to one study, drivers in New York City spend an average of 107 hours per year searching for parking spots, at a cost of $2,243 per driver in wasted time, fuel and emissions, which represents $4.3 billion in total costs to the city. Similar wasteful dynamics are unfolding across America and the world. By collecting comprehensive data around the demand for curbside space, cities can design parking policies that ensure proper alignment between the supply of curb space and the way vehicles are actually using it.

In one pilot we ran on the campus of Loyola Marymount University, traffic caused by drivers searching for parking dropped by more than 20% after our data was used to adjust parking policy. Using data to optimize parking results in more efficient turnover, less time spent circling for a spot and reduced traffic delays. Real-time parking availability data can also be used to direct drivers to open parking spots via an application or API.

By arming city planners with accurate, up-to-date information on all forms of curbside activity, we empower them to fully understand the temporal and spatial patterns that rule their curbs. This gives planners the information they need to make informed decisions about curbside policy tailored to their city’s peculiarities.

Suddenly, questions such as “How many ride-hailing drop-offs occur here?” and “Whose delivery trucks are double parking on Tuesday morning?” become trivial to answer. Gone are the days of using vague heuristics to guide policy; this new wealth of information makes possible precise and impactful decisions on the locations of passenger parking, dedicated delivery zones and ride-hailing areas, as well as optimal rates to charge for parking, appropriate penalties for violations and much more.

This tech is also a win for delivery companies. When delivery fleets have data about real-time and predicted parking availability, this can improve route efficiency, saving them money. Instead of paying for curb usage via fines, delivery companies can instead receive an invoice for their time spent at the curb (a tax-deductible expense, I might add).

A study done in Columbus, Ohio, found that designated loading zones decreased double parking violations by 50% and reduced commercial vehicle time at the curb by 28%. Radically increasing the efficiency of delivery translates into savings for companies like FedEx and Amazon, which can then afford to pay fair rates for their curb access and pass on those savings to consumers.

Several interrelated trends make the current moment an especially opportune time to apply new technology to our streets and curbs. Pre-pandemic, many cities already faced declining revenue from parking as citizens shifted toward using ride-shares. Now, thousands of American municipalities are expecting major budget shortfalls in the wake of COVID-19. At the same time, a report from the World Economic Forum predicts that the number of commercial delivery vehicles will increase by 36% in inner cities by the year 2030. Our research suggests that more than 50% of parking violations are unenforced and committed by commercial vehicles.

It’s no coincidence that Columbus was the winner of the 2016 federal Smart City Challenge. When former President Barack Obama pledged over $160 million as part of his “Smart Cities” initiative in 2015, reducing congestion and pollution were among the program’s major goals. Better management of parking and curb space are crucial tools for achieving these aims. Though former President Donald Trump campaigned on a massive infrastructure plan, his delivery on promises in this area were mixed at best. Despite the lack of federal support, there are currently promising initiatives underway in cities such as Santa Monica, which is piloting a zero-emissions delivery zone in the heart of its downtown.

President Joe Biden has outlined a plan to build the infrastructure America needs both to combat climate change and modernize urban transportation. This plan includes a provision for 500,000 public charging stations for electric vehicles; changes to our cities that allow drivers, pedestrians, cyclists and others to safely share the road; and investment in critical clean energy solutions.

Curb management technology is one of a suite of options on the market that federal and local governments can leverage to reduce pollution and improve quality of life in cities. If the incoming administration is willing to champion this novel approach toward solving the problems of urban mobility, America’s infrastructure will not just be modernized but made ready for the future.

I, for one, hope this renewal is realized; our nation’s health, safety and shared prosperity depend on it.

#api, #artificial-intelligence, #column, #e-commerce, #electric-vehicle, #opinion, #parking, #smart-city, #transportation

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Investors and business leaders: It’s time to take coaching mainstream

The business world has a love-hate relationship with coaching. Founders are visionaries: They start with an idea, a talent, a dream, but not necessarily the business know-how. Because being an entrepreneur doesn’t require a license or training — Jeff Bezos is an engineer and computer scientist; Elon Musk is an economist and physicist, and so on.

In any other industry, when someone with raw talent — an athlete, a singer, an actor — furthers their career, the first thing they receive is a coach. And it doesn’t stop once they get their first Olympic gold or Grammy.

Coaches don’t leave their side until they hang up their gloves. Tiger Woods is famous for having worked with many coaches to switch up his tactics and keep exceeding in his performance.

In any other industry, when someone with raw talent — an athlete, a singer, an actor — furthers their career, the first thing they receive is a coach.

Despite a culture that pushes founders to the edge of their physical, mental and personal limits as they build their company, we insist that they fly solo. They’re led to believe that reaching out for support is a sign of weakness.

That stigma is a huge part of the problem. We look up to business magnates, believing that they sailed from a college dorm to the C-suite without breaking a sweat. But we don’t see the vigorous kicking that goes on beneath the surface. As a client of mine once mused, even the best leaders are self-sabotaging themselves at least 30% of the time. I know for a fact that top Silicon Valley billionaires have nutrition, parenting, meditation and life coaches, but they — like half of my own clients — are reluctant to embrace this out in the open.

VCs know that they don’t invest in the business; they invest in the person. Record amounts of money are being funneled into mental wellness startups right now, but investors also need to direct that awareness toward their founders’ well-being. By offering access to a coach to all your portfolio founders, you’ll be tackling the real problems stopping them from pouring their energy into their business, and you’ll without a doubt improve your returns.

1. Business is not always a founder’s main problem

I coach founders and CEOs of startups, and more than half their main life challenges are not work related. They’re getting pulled in multiple directions — some have cancer, others are having an affair, a few are going through IVF, others still are dealing with past grief and traumas.

And when a problem is work related, it’s often a communication or psychological issue: How do I face my fear of failure? How do I lead a team of 50 for the first time? Should I trust my gut?

All this is happening in the midst of Series A raises, hiring and firing employees, acquisitions, and deciding whether to bridge or shut down the business. Imagine how much emotional energy and hours it takes for founders — or anyone, really — to face those intimate issues in isolation while putting on a brave face with investors or at board meetings.

One of the most recurring concerns founders share with me is that they feel alone.

VCs, when you choose to fund someone, you’re also marrying into their past, their family, their personal issues. The full package. Ask yourself — do you currently know the major distractions in the lives of all your portfolio founders? If you don’t, start with the assumption that something is going on in their life other than work and make coaching available to them at any time.

If you commit to helping founders manage their fears, limiting beliefs and blind spots, you’re committing to their potential as a company and industry leader. A healthy leadership is a healthy company.

2. Return on coaching (ROC)

As with elite soccer coaches, the benefits of business coaching are highly visible, without the million-dollar expense. Founders start to make better decisions the first time around. They hire the right talent, rather than hiring, onboarding and firing someone within a month.

They have more honest conversations with stakeholders, avoiding conflict and allowing more people to contribute meaningfully to the business’ growth. They have the proper mindset to fundraise, and their attitude matches the money they’re asking for.

That’s before getting to the physical improvements. My founders have lost weight, stopped smoking and drinking, and have more energy to build a business. If a founder works with chronic fatigue, which many are, it won’t be long before their body cracks. I get calls from clients caught in panic attacks before big meetings, struggling to steady their frayed nerves.

You can fund your founders’ well-being in a variety of ways. In the same way your firm might offer marketing or PR services to portfolio companies, coaching should be part of the package. Firms can make executive coaches available on retainer. You may choose to have a full-time resident coach, available whenever someone needs them.

At the very least, firms should make available a list of recommended coaches. Some coaches specialize in leadership coaching, female founders or health specifically, while others cover various personal and professional skills.

Investors will sometimes offer a handful of free sessions to their founders, but if they want to continue, they are then forced to decide between their personal health and the health of the business — which other people (including your firm) have staked millions of dollars on. It should never be a case of one or the other.

My hope is that in the future, VCs will set aside a percentage of their funds exclusively for mental wellness for founders and executives.

A few VCs have already taken a 1% pledge, but it’s the Europeans who are leading the charge here, with funds from Estonia to Ireland generously covering all founder coaching fees and other support programs. Those I know talk about how 10x growth is possible without burnout.

3. Cut through the stigma to enable founders to make the most of coaching

Founders are resistant to hiring a coach themselves because they’re worried about what their investors and board will think of them. They tell themselves: “If I were normal, and good enough, I wouldn’t need one.”

It’s not just their inner voice talking. When a client of mine joined a Silicon Valley startup, he asked his superiors if coaching could be part of his comp package. They wondered why he needed a coach.

In other industries, connecting someone with a coach is proof of their worth. That’s the conversation investors should be having: You’re good enough for us to give you money, so we’re going to give you someone to accompany you on your journey, so you don’t pretend you can figure it out at every step.

There’s also a negative connotation around the term “mental health” that we should be reframing. Those two words tend to make people think about depression, suicidal thoughts or addiction. Which is mental unhealth. Let’s talk more about mental wellness and founder well-being, which focuses us on the goal we’re working toward.

Eliminating the stigma can start with open conversations about well-being between investors and executives, as well as inviting a coach to talk to your founders about what these sessions entail, and why everyone has something to gain. By shattering the taboo, you’ll enable founders to make the absolute most of that experience, rather than hold back to keep up appearances.

If we start making coaching mainstream today, we might eventually see it as obligatory for all founders.

4. Lead by example

Finally, business leaders and investors need to set an example for the startup community, and especially people at the start of their journeys, that it’s OK to ask for assistance in bettering yourself.

Many VCs, like top CEOs, have coaches. If more simply owned it, they’d have so much power to normalize coaching, and even make #IHaveACoach fashionable. After all, we’re talking about the same industry that made meditation rooms trendy and kombucha an office feature.

Why not make coaching a central topic in future investor conferences, or, as a VC firm, publish a study on how portfolio founders who followed a coaching program saw greater business success?

For example: For years, Union Square Ventures has invested in providing value to their founders and has built a team whose responsibilities include developing leadership training, fostering mentorship circles and connecting founders to coaches. If you let founders see your commitment to human issues, it won’t occur to them that being human is being weak.

These approaches are also important self-promotion for VCs positioning themselves as the next generation of ethical investors. With so many alternative funding options becoming available, founders are seeking VCs who give them more than just capital and who see wellness and diversity and inclusion as inextricable from success.

Founder health and startup health can’t be separated from each other. On some level, all investors know this. So let’s give the people shaping tomorrow’s world the tools to be more comfortable in their own skin and more masterful in leading teams to achieve greatness and incredible returns.

#coach, #coaching, #column, #entrepreneurship, #labor, #mental-health, #opinion, #startups, #venture-capital

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To rebuild manufacturing, the US needs to beef up the Small Business Innovation Research program

I grew up in poverty in upstate New York, but I was lucky enough to study engineering at Rensselaer Polytechnic Institute. I founded a company that went public when I was 28, and I used that wealth to invest in startups.

It’s been exhilarating to watch many founders flourish, but when I return to upstate New York, the desolate remains of long-closed factories remind me of the sectors that the tech revolution never reached.

The numbers behind those empty facades could not be more dire. In late 2019, even before COVID struck, U.S. manufacturing fell to 11% of GDP, the lowest level in 72 years. We ceded much of that ground to low-cost competitors in China, which became the world’s top manufacturer back in 2011. We now have only a small window of time to restore manufacturing as a foundation of American prosperity, and a remarkable but underappreciated federal program has a big role to play.

My firm, SOSV, specializes in running programs that help founders take technically difficult ideas from research to product. Many of these companies represent the future of American industry, especially when it comes to such national priorities as industrial automation and decarbonization.

You might think those startups would be ripe for venture investment, but in reality, only a fraction of venture capital flows to them. They are simply too risky compared with categories like SaaS and consumer.

SBIR’s brilliant design has helped thousands of technology-minded entrepreneurs cross the chasm from research to real products, new markets and venture backing.

That is exactly why in 1982 the U.S. Congress established the Small Business Innovation Research (SBIR) program, which, in the words of its founder, Roland Tibbetts, aimed to “provide funding for some of the best early-stage innovation ideas — ideas that, however promising, are still too high risk for private investors, including venture capital firms.”

For a little more than $3 billion per year in contracts and grants disbursed by federal agencies, the SBIR has produced 70,000 patents, $41 billion in follow-on venture capital investments and 700 public companies.

SBIR’s brilliant design has helped thousands of technology-minded entrepreneurs cross the chasm from research to real products, new markets and venture backing. We’ll need thousands more brilliant scientists, technologists and entrepreneurs to step up in the decade ahead. They can do this from their garage, but they can’t do it out of thin air. Congress should act quickly to create an “SBIR 2.0” with three critical improvements over how SBIR works today.

First, we need at least 10 times more SBIR funding. Even at $30 billion, SBIR’s funding would be a rounding error compared to many budgets in Washington, like $693 billion for defense in 2020, and just a fraction of total U.S. venture investing, which in 2020 reached $156 billion. Yet, arguably, nothing in the federal budget could do more to help American industry.

Second, we need to focus new SBIR funding on critical strategic areas, especially decarbonization and advanced manufacturing. The first will save humanity’s future on this planet. The second will help us leap over our missed generation of manufacturing investment to establish leads in critical areas, including robotics, battery technology, artificially intelligent devices and additive manufacturing. Who could ask for better markets?

Finally, the review and reward process needs to be fast. One great example is the innovative U.S. Air Force “pitch day” programs in 2019 and 2020, which granted funds to the best founder pitches (carefully pre-qualified) in a matter of minutes. In our almost frictionless market for talent, long waits to deliberate and disburse funds is not a winning approach.

The Biden administration’s late-February issuance of an executive order on America’s supply chains suggests that the White House is already working hard on policy measures. No doubt the administration’s effort will draw on many approaches, but the key must be a relentless focus on America’s primary unspent fuel: the ingenuity and drive of our people.

We will only pull the depressed regions of this country out of poverty by giving them the tools to, with their own hands, rebuild American manufacturing through entrepreneurship.

Editor’s note: Former TechCrunch COO Ned Desmond is now senior operating partner at SOSV.

#column, #manufacturing, #opinion, #sbir, #small-business-innovation-research, #startup-company, #venture-capital, #washington

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The next era of moderation will be verified

Since the dawn of the internet, knowing (or, perhaps more accurately, not knowing) who is on the other side of the screen has been one of the biggest mysteries and thrills. In the early days of social media and online forums, anonymous usernames were the norm and meant you could pretend to be whoever you wanted to be.

As exciting and liberating as this freedom was, the problems quickly became apparent — predators of all kinds have used this cloak of anonymity to prey upon unsuspecting victims, harass anyone they dislike or disagree with, and spread misinformation without consequence.

For years, the conversation around moderation has been focused on two key pillars. First, what rules to write: What content is deemed acceptable or forbidden, how do we define these terms, and who makes the final call on the gray areas? And second, how to enforce them: How can we leverage both humans and AI to find and flag inappropriate or even illegal content?

While these continue to be important elements to any moderation strategy, this approach only flags bad actors after an offense. There is another equally critical tool in our arsenal that isn’t getting the attention it deserves: verification.

Most people think of verification as the “blue checkmark” — a badge of honor bestowed upon the elite and celebrities among us. However, verification is becoming an increasingly important tool in moderation efforts to combat nefarious issues like harassment and hate speech.

That blue checkmark is more than just a signal showing who’s important — it also confirms that a person is who they say they are, which is an incredibly powerful means to hold people accountable for their actions.

One of the biggest challenges that social media platforms face today is the explosion of fake accounts, with the Brad Pitt impersonator on Clubhouse being one of the more recent examples. Bots and sock puppets spread lies and misinformation like wildfire, and they propagate more quickly than moderators can ban them.

This is why Instagram began implementing new verification measures last year to combat this exact issue. By verifying users’ real identities, Instagram said it “will be able to better understand when accounts are attempting to mislead their followers, hold them accountable, and keep our community safe.”

It’s important to remember that verification is not a single tactic, but rather a collection of solutions that must be used dynamically in concert to be effective.

The urgency to implement verification is also bigger than just stopping the spread of questionable content. It can also help companies ensure they’re staying on the right side of the law.

Following an exposé revealing illegal content was being uploaded to Pornhub’s site, the company banned posts from nonverified users and deleted all content uploaded from unverified sources (more than 80% of the videos hosted on its platform). It has since implemented new measures to verify its users to prevent this kind of issue from infiltrating its systems again in the future.

Companies of all kinds should be looking at this case as a cautionary tale — if there had been verification from the beginning, the systems would have been in a much better place to identify bad actors and keep them out.

However, it’s important to remember that verification is not a single tactic, but rather a collection of solutions that must be used dynamically in concert to be effective. Bad actors are savvy and continually updating their methods to circumvent systems. Using a single-point solution to verify users — such as through a photo ID — might sound sufficient on its face, but it’s relatively easy for a motivated fraudster to overcome.

At Persona, we’ve detected increasingly sophisticated fraud attempts ranging from using celebrity photos and data to create accounts to intricate photoshopping of IDs and even using deepfakes to mimic a live selfie.

That’s why it’s critical for verification systems to take multiple signals into account when verifying users, including actively collected customer information (like a photo ID), passive signals (their IP address or browser fingerprint), and third-party data sources (like phone and email risk lists). By combining multiple data points, a valid but stolen ID won’t pass through the gates because signals like location or behavioral patterns will raise a red flag that this user’s identity is likely fraudulent or at the very least warrants further investigation.

This kind of holistic verification system will enable social and user-generated-content platforms to not only deter and flag bad actors but also prevent them from repeatedly entering your platform under new usernames and emails, a common tactic of trolls and account abusers who have previously been banned.

Beyond individual account abusers, a multisignal approach can help manage an arguably bigger problem for social media platforms: coordinated disinformation campaigns. Any issue involving groups of bad actors is like battling the multiheaded Hydra — you cut off one head only to have two more grow back in its place.

Yet killing the beast is possible when you have a comprehensive verification system that can help surface groups of bad actors based on shared properties (e.g., location). While these groups will continue to look for new ways in, multifaceted verification that is tailored for the end user can help keep them from running rampant.

Historically, identity verification systems like Jumio or Trulioo were designed for specific industries, like financial services. But we’re starting to see the rise in demand for industry-agnostic solutions like Persona to keep up with these new and emerging use cases for verification. Nearly every industry that operates online can benefit from verification, even ones like social media, where there isn’t necessarily a financial transaction to protect.

It’s not a question of if verification will become a part of the solution for challenges like moderation, but rather a question of when. The technology and tools exist today, and it’s up to social media platforms to decide that it’s time to make this a priority.

#column, #misinformation, #opinion, #privacy, #security, #social, #social-media, #social-media-platforms, #verification

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Tech companies should oppose the new wave of anti-LGBTQ legislation

American tech companies are engaged in a worldwide competition for top talent that can pick and choose where they want to live or where they want to launch the next great startup. With the expansion of remote work and tech talent spread across the country, there are larger amounts of venture capital investment and opportunity available to companies. States should enact policies that embrace businesses and are welcoming for entrepreneurs and employees. However, far too many states are doing the opposite and trying to enact anti-equality legislation that will hurt business.

There are a number of states that are currently considering anti-LGBTQ legislation, including Montana, Texas, New Hampshire, Tennessee, Missouri, Georgia, Iowa, Kentucky, North Dakota, Mississippi and Alabama. These bills would cause irrevocable harm to tech employees and their families who may already be marginalized and susceptible to harassment.

The tech industry should therefore be more vigilant than ever in opposing discriminatory state-level legislation that would target workers and their families, become an economic liability, and negatively impact businesses’ ability to recruit and retain the best and brightest employees.

Anti-LGBTQ bills are not just harmful on the human level, they’re bad economics, as well.

Tech employees want to know that they will be treated fairly as they move through their daily lives and that they, their colleagues and their families are protected from discrimination. And tech companies want to do business in states where they can recruit top talent to promote innovation. Laws that discriminate are a major barrier to that effort.

And states that care about the growth of their innovation economies should not erect institutional barriers to opportunity and make it harder to convince people to call their state home.

Anti-LGBTQ bills are not just harmful on the human level, they’re bad economics, as well.  As states struggle to rebuild their economies post-pandemic, anti-LGBTQ legislation would negatively affect travel, tourism and business investments.

There is precedence. When North Carolina passed a law banning transgender people from using public restrooms in 2016, it cost the state approximately $630 million in less than a year, and 2,000 new jobs were lost due to halted corporate investments. In Indiana, citing a dangerous anti-LGBTQ law, Indianapolis-based Angie’s List froze a $40 million, 1,000-job expansion. Visit Indy found that the state lost at least 12 conventions and $60 million in revenue after the passage of the legislation.

In Arizona, an economic development study estimated potential economic damage of more than $140 million in lost meetings and conventions over three years after passage of a bill that was hostile to LGBTQ people and subsequently vetoed by their governor.

That’s why TechNet, on behalf of our member companies, recently spoke out against proposed anti-LGBTQ legislation in Montana, New Hampshire and elsewhere, making the case that welcoming, inclusive states are now 21st century economic imperatives. We plan to do so in any state that proposes similar discriminatory legislation.

We recognize the work these states have done to help the technology sector grow and be competitive in a national and global economy, but we caution legislators from doing anything that would make it more challenging to compete for the talented and highly educated workers many companies are looking to hire.

Businesses — and states — thrive when they are open to everyone. LGBTQ people are our family members, friends, co-workers, neighbors and community leaders. They deserve the same rights and opportunities.

Lawmakers in Montana, Tennessee and elsewhere are preparing to send unconscionable anti-LGBTQ bills to their governors shortly for signing. We strongly encourage state lawmakers to reject these extreme proposals to ban the LGBTQ community from fully participating in all aspects of society.

The technology industry will continue to take a strong public stance in opposing these bills, as they would be immensely harmful to our families, our employees, and the communities in which we thrive.

#civil-rights, #column, #discrimination, #diversity, #labor, #lgbtq, #opinion, #policy

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Three energy-innovation takeaways from Texas’ deep freeze

Individual solutions to the collective crisis of climate change abound: backup diesel generators, Tesla powerwalls, “prepper” shelters. However, the infrastructure that our modern civilization relies on is interconnected and interdependent — energy, transportation, food, water and waste systems are all vulnerable in climate-driven emergencies. No one solution alone and in isolation will be the salvation to our energy infrastructure crisis.

After Hurricane Katrina in 2005, Superstorm Sandy in 2012, the California wildfires last year, and the recent deep freeze in Texas, the majority of the American public has not only realized how vulnerable infrastructure is, but also how critical it is to properly regulate it and invest in its resilience.

What is needed now is a mindset shift in how we think about infrastructure. Specifically, how we price risk, how we value maintenance, and how we make policy that is aligned with our climate reality. The extreme cold weather in Texas wreaked havoc on electric and gas infrastructure that was not prepared for unusually cold weather events. If we continue to operate without an urgent (bipartisan?) investment in infrastructure, especially as extreme weather becomes the norm, this tragic trend will only continue (with frontline communities bearing a disproportionately high burden).

A month after Texas’ record-breaking storm, attention is rightly focused on helping the millions of residents putting their lives back together. But as we look toward the near-term future and get a better picture of the electric mobility tipping point on the horizon, past-due action to reform our nation’s energy infrastructure and utilities must take precedence.

Emphasize energy storage

Seventy-five percent of Texas’ electricity is generated from fossil fuels and uranium, and about 80% of the power outages in Texas were caused by these systems. The state and the U.S. are overly dependent on outdated energy generation, transmission and distribution technologies. As the price of energy storage is expected to drop to $75/kWh by 2030, more emphasis needs to be placed on “demand-side management” and distributed energy resources that support the grid, rather than trying to supplant it. By pooling and aggregating small-scale clean energy generation sources and customer-sited storage, 2021 can be the year that “virtual power plants” realize their full potential.

Policymakers would do well to mandate new incentives and rebates to support new and emerging distributed energy resources installed on the customers’ side of the utility meter, such as California’s Self-Generation Incentive Program.

Invest in workforce development

For the energy transition to succeed, workforce development will need to be a central component. As we shift from coal, oil and gas to clean energy sources, businesses and governments — from the federal to the city level — should invest in retraining workers into well-paying jobs across emerging verticals, like solar, electric vehicles and battery storage. In energy efficiency (the lowest-hanging fruit of the energy transition), cities should seize the opportunity to tie equity-based workforce development programs to real estate energy benchmarking requirements.

These policies will not only boost the efficiency of our energy systems and the viability of our aging building stock, creating a more productive economy but will also lead to job growth and expertise in a growth industry of the 21st century. According to analysis from Rewiring America, an aggressive national commitment to decarbonization could yield 25 million good-paying jobs over the next 15 years.

Build microgrids for reliability

Microgrids can connect and disconnect from the grid. By operating on normal “blue-sky” operating days as well as during emergencies, microgrids provide uninterrupted power when the grid goes down — and reduce grid constraints and energy costs when grid-connected. Previously the sole domain of military bases and universities, microgrids are growing 15% annually, reaching an $18 billion market in the U.S. by 2022.

For grid resiliency and reliable power supply, there is no better solution than community-scale microgrids that connect critical infrastructure facilities with nearby residential and commercial loads. Funding feasibility studies and audit-grade designs — so that communities have zero-cost but high-quality pathways to constructable projects, as New York State did with the NY Prize initiative — is a proven way to involve communities in their energy planning and engage the private sector in building low-carbon resilient energy systems.

Unpredictability and complexity are quickening, and technology has its place, but not simply as an individual safeguard or false security blanket. Instead, technology should be used to better calculate risk, increase system resilience, improve infrastructure durability, and strengthen the bonds between people in a community both during and in between emergencies.

#column, #electrical-grid, #electricity, #energy, #energy-efficiency, #energy-storage, #greentech, #opinion, #tc, #texas

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4 signs your product is not as accessible as you think

For too many companies, accessibility wasn’t baked into their products from the start, meaning they now find themselves trying to figure out how to inject it retrospectively. But bringing decades-long legacy code and design into the future isn’t easy (or cheap).

Businesses have to overcome the fear and uncertainty about how to do such retrofitting, address the lack of education to launch such projects, and balance the scope of these iterations while still maintaining other production work.

Among the U.S. adult population, 26% live with some form of disability, and businesses that are ignorant or slow to respond to accessibility needs are producing digital products for a smaller group of users. Someone who is a neophyte might not be able to use a product with overwhelming cognitive overhead. Someone using a product that isn’t localized may not be able to refill their prescription in a new country.

We recently saw this play out in the “cat lawyer” episode, which the kitten-faced attorney took in good humor. But it also reminded us that many people struggle with today’s basic tools, and for those who don’t, it’s hard to understand just how much this disrupts people’s personal and professional lives.

If you’re a founder with a software product out there, you probably won’t receive as loud an alarm bell as a viral cat filter video to tell you that something’s wrong. At least not immediately. Unfortunately, that time will come because social media has become the megaphone for support issues. You want to avoid that final, uncontrollable warning sign. Here are four other warning signs that make clear your product is not as accessible as you might think — and how you can address that.

1. You didn’t define a11y principles at the start of your journey

Accessibility is a key ingredient in your product cake — and it’ll always taste best when it’s added to the mix at the beginning. It’s also more time- and cost-effective, as fixing a usability issue after the product has been released can cost up to 100 times more than earlier on in the development process.

Your roadmap should work toward the four principles of accessibility, described using the acronym POUR.

  • Perceivable: Your users need to be able to perceive all of the information displayed on your user interface.
  • Operable: Your users must be able to operate and navigate your interface components.
  • Understandable: Your content and the functioning of your user interface must be clearly understandable to users.
  • Robust: Your content has to be robust enough that a wide variety of users can continue to access it as technologies advance, including assistive technologies.

Without following each of these principles consistently, you cannot guarantee that your product is accessible to everybody.

The roadmap should integrate accessibility efforts into the design, development and quality assurance process, all the way through to product release and updates, where the cycle starts all over.

This means it’s vital to have everyone on your team informed and committed to accessibility. You could even go further and nominate one person from each team to lead the accessibility process and be responsible for each team’s compliance. It’s worth starting any new project with an accessibility audit so you understand exactly where your gaps are. And by syncing with sales and support teams, you can identify where users are experiencing friction.

This baking process helps you avoid legal problems in the future as a result of non-compliance. In 2019, a blind man successfully sued Domino’s after he was unable to order food on the Domino’s website and mobile app, despite using screen-reading software. Beyoncé’s company was sued by a blind woman that same year. Product owners are wide open to lawsuits if they don’t implement the Web Content Accessibility Guidelines.

To help you on your way, IBM’s Carbon Design System is an open-source design system for digital products that offers free guidelines to build an accessible product, including for people with physical or cognitive disabilities. In addition, software tools exist that can help you do accessibility checks ahead of time rather than when the product is finished.

2. You’re treating a11y like a set-it-and-forget-it

Design trends evolve fast in the tech world. Your team is probably staying on top of the latest software or mobile features, but are they paying attention to accessibility?

A11y needs maintenance; the requirements for the web and mobile platforms are changing all the time and it’s important (as well as necessary) to stay on top of those changes. If you’re not carrying out constant tweaks and upgrades, chances are that you’ve racked up a few accessibility issues over time.

Plan regular meetings where you review and discuss your products’ accessibility and a11y compliance. Look at what other products are doing to be more accessible and attend courses about inclusive design (e.g., TechCrunch Sessions). Platforms like the A11Y Project are also incredibly useful resources for teams to stay up to date, and they also offer books, tutorials, professional support and professional testers.

3. You and your team haven’t tried out a11y tools

The best accessibility tool you have is your team itself. Building a product with a diverse group of people will mean you encounter and rectify any barriers to use faster and can innovate with greater impact — after all, people with disabilities are some of the world’s greatest innovators.

Outside of your team makeup, ask yourself: Have you ever used a screen reader? Or tried to navigate your website using only your keyboard? Seen your designs simulated against various types of vision?

If the answer is no, chances are you’re letting key accessibility features slip through the cracks. By putting yourself in the shoes of someone with impairments, these tools force you toward a better appreciation of their needs.

Try and get your team using these tools as early as possible, especially if you’re struggling to convey to them the importance of a11y. Once you’ve broadened your perspective, it’ll genuinely be harder to not see how people with different abilities are experiencing your product. Which is why you should come back to your product afterward, as a user, and explore it through a new lens.

4. You aren’t talking to your users

Lastly, there’s little chance you’ve built a truly accessible product without actually talking to its users. The general population is the most diverse set of critics to warn you if your product’s falling short for people of different backgrounds and abilities. Every single user experiences a product uniquely, and regardless of all the effort you’ve put in until now, there will likely be issues.

Lend an ear to a wide range of users, throughout the product life cycle. You can do this by doing user testing with each update, asking users to complete surveys on their in-app experience, and holding focus groups that proactively enlist people with a spectrum of needs.

Accessible design is just good design. It’s a misconception that it only improves UX for people with disabilities — it provides a better experience for everyone. And all founders want their product to reach as many people as possible. Once you put in the initial effort and embrace it, it becomes easier, like another tool in your kit. You won’t get it 100% right on the first try. But this is about progress, not perfection.

#accessibility, #column, #design, #developer, #diversity, #opinion, #tc, #usability, #ux, #web-accessibility

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Does Atlantic Canada have a blueprint for rural revival in the post-pandemic era?

When Mike Morrison left his hometown of Fredericton, New Brunswick, for Calgary, Alberta, he assumed he’d never go back except to visit.

Morrison was following a well-trodden path of Atlantic Canadians heading west to find work rom which few returned. During the mid-aughts, Alberta was booming thanks to the high price of oil. To Morrison, migrating west seemed an easy choice. “If I stayed, my options were to be a supply teacher or work in a call center.”

When he arrived in Alberta, Morrison worked three jobs. During his free time, he started a blog to tell his friends back home about his life out west, and also to recommend TV shows. Slowly, Mike’s Bloggity Blog became one of Canada’s premier entertainment sites, and Morrison found himself with a local newspaper column as well as regular television and radio appearances. He then started Social West, a Calgary-based digital marketing conference that, before long, expanded to three cities. His identity and public persona were intertwined with his adopted city.

“For a while, I would tell people that I was being paid to be a professional Calgarian.” Then, in 2021, Morrison left Calgary for Halifax, Nova Scotia, back east.

Morrison and his partner are part of a wave of skilled young people reversing Canada’s natural current of internal migration. In doing so, they’re participating in an economic revival that could change the destiny of the depressed Atlantic region.

When they return, young people like Morrison are finding that Atlantic Canadians have quietly built a robust startup ecosystem that has resulted in a dozen acquisitions to companies like IBM and Salesforce, the sum of which likely surpasses $5 million in cash and stock.

The Atlantic Canada story may provide a blueprint for other rural regions looking to take advantage of the decentralizing impact of COVID-19 to swap resource-based economies for the knowledge economy.

If you’ve never thought of Atlantic Canada before, you’re not alone. Indeed, many Canadians refer to Toronto as “east”’ despite there being 1,900 miles between Drake and The Weeknd’s hometown and St. John’s, Newfoundland and Labrador, the easternmost point of Canada and North America. The four provinces that make up Atlantic Canada (New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador) are easy to overlook for their remoteness. Known within Canada for its sleepy seaside towns, kitchen parties, trouble-making red-headed orphans and lobster galore, Atlantic Canada has had a rough few decades.

After the collapse of the cod fishing industry in the 1990s followed by the migration of shipbuilding to Asia, Atlantic Canada defined itself as the have-not region of America’s rational northern neighbor. Despite booming from the war years onward due to its abundant natural resources, since the ’90s Atlantic Canada has watched its young people migrate west to the oil fields of Alberta for blue-collar work and to Toronto and Montreal for white-collar work.

Soon, the region’s hard-luck narrative stuck. Stephen Harper, the country’s prime minister from 2006 to 2015, famously quipped that the region suffered from “a culture of defeatism.” The narrative of the death of the coastal region became a self-fulfilling prophecy.

Then, during the pandemic, the narrative drastically changed. In September 2020, Halifax-based fitness data management company Kinduct was acquired by mCube. In November 2020, Newfoundland-based Verafin was acquired by Nasdaq for $2.75 billion in cash. In January 2021, Prince Edward Island-based ScreenScape Networks was acquired by Spectrio for an undisclosed fee, then Halifax-based storytelling platform Wattpad was acquired by Naver in a deal worth $600 million. Atlantic Canada had four major tech acquisitions in a five-month period.

Outsiders were surprised by the sudden upsurge in exits, but momentum had been building for some time. Business writer Gordon Pitts pinpoints 2011 as the game-changing year for the Atlantic startup scene. In his book “Unicorn in the Woods: How East Coast Geeks and Dreamers are Changing the Game,” Pitts recounts how in March 2011 Salesforce purchased New Brunswick-based social media monitoring company Radian6 for approximately $300 million. Then, in November of the same year, IBM purchased another New Brunswick-based startup, cybersecurity company Q1 labs, for a reported $600 million. If anyone considered the Radian6 acquisition a one-off chance event, the subsequent success of Q1 labs demonstrated there was a there there.

Under normal circumstances, one might expect the founders of Radian6 and Q1 labs to disappear into the suburbs of Cambridge or Marin Country, but that never happened. Rather than uproot their newly acquired companies, both Salesforce and IBM opened engineering offices in Fredericton. Verafin would appear to be following suit: in the press release announcing the acquisition, Nasdaq committed to keeping the company’s headquarters in Newfoundland, investing in the local university and contributing to the development of the local ecosystem.

Once lone rangers, Q1 Labs and Radian6 are now surrounded by thriving copycats in a self-sustaining ecosystem. According to Peter Moreira, founder of Entrevestor, a publication that has tracked the Atlantic Canadian startup scene since 2011, the ecosystem has attracted over a billion dollars in investment spread among 700 companies, creating more than 6,000 direct jobs. About 100 companies are created every year in fields as diverse as life sciences, cleantech and ocean tech.

VC firms have taken notice: notable investors in Atlantic Canadian startups include Breakthrough Energy Ventures, a fund supported by Bill Gates, Jeff Bezos and Richard Branson. Indeed, what’s remarkable about the string of recent exits is their diversity across industries and their inside-baseball inclinations, spanning everything from fraudulent credit card transactions to fitness data and video technology.

Sandy Bird is one of the protagonists of the Atlantic Canada tech-driven economic revival. Sandy co-founded Q1 Labs and then, after the acquisition, became the CTO of IBM’s security division. In 2017, Bird and the former CEO of Q1 Labs founded a new cybersecurity company, this one focused on public clouds, called Sonrai Security, which has since raised nearly $40 million in venture capital. Bird takes great pride in having lived his entire life within a 30-minute radius and showing the world that his prior exit was not a one-off event.

According to Bird, IBM was happy to keep an engineering division in New Brunswick because the quality of the engineers is high and employee attrition, one of the obstacles for any fast-growing company operating in the competitive labor market of the San Francisco Bay Area, is low. Atlantic Canada is a place where the idea of the “company man/woman” is still alive and thriving.

Bird noted that “thanks to our high retention, we’re able to build a company culture that makes up for any of the disadvantages of a smaller labor market.” Bird also pointed out that the Atlantic time zones are ideal, enabling effective communications with Europe as well as the rest of North America.

Bird is also honest about the region’s shortcomings. For example, airline connections to Atlantic Canada can be tricky. Getting to places like Denver can take a day and multiple connections. Sonrai Security, for example, has its core engineering team in Fredericton while sales and marketing are in New York, with regional salespeople spread out around North America.

In terms of starting a company, the local ecosystem can provide those first checks to get a company up and running, but growth from Series B onward requires tapping into U.S. venture capital. Another challenge is hiring fast enough to meet the demands of a thriving tech company. Though companies like his can recruit recent graduates and exiled Atlantic Canadians eager to return, Bird mentioned that Q1 Labs opened a parallel engineering office in Belfast, Ireland, to scale-up hiring.

So what is the playbook for other rural regions hoping to copy the Atlantic Canada model of generating tech jobs? Speaking to insiders, all cite the low cost of living and high quality of life as enabling startups to both attract and retain talent. Second, a welcoming attitude toward immigration helps. Even prior to COVID-19, Canada cheekily took advantage of anxiety around U.S. immigration policies to launch a startup visa program to attract entrepreneurs and H1-B visa holders away from the United States, and many cite that program as acting as a strategic advantage for the coastal provinces.

Atlantic Canada’s recent success is owed in part to proactive government. After years of failed top-down economic development initiatives, both the provincial and the federal governments have found formulas to kickstart new companies through grants as well as repayable and non-repayable non-dilutive funding.

Entrepreneurs cite IRAP, the National Research Council of Canada’s Industrial Research Assistance Program, as key to obtaining funds that subsidize wages for staff and contractors. Another federal government agency, the Atlantic Canada Opportunities Agency (ACOA), awards funding between CA$500,000 and CA$3 million (roughly $400,000 USD to $2.4 million USD) through its Atlantic Innovation Fund (AIF). Each of the four provincial governments has its own incentive programs, which include grants and wage subsidies as well as incentives for private investors.

Despite these government programs, local entrepreneurs stress that the region’s modest success is primarily driven by the private sector. Each province tends to have a godfather/cheerleader who has championed local startups through investment, advice and connections. Notable also is the accessibility of the success stories of the region’s protagonists. In a place where ostentatious displays of wealth are avoided, successful founders are easy to get a hold of and happy to provide advice, contacts and in some cases capital. Also notable is the region’s mix of 16 public-private universities that produce graduates with varied skill sets across STEM and humanities programs.

Even with these advances, obstacles abound, and it remains to be seen whether politicians and policy-makers can match entrepreneurs with bold initiatives. While countries like Ireland and Estonia have rewritten their corporate tax codes to encourage tech companies to set up in their previously disadvantaged jurisdictions, Atlantic Canada continues to have tax rates above neighboring provinces and U.S. states. Past innovation hubs have relied on physical proximity in order to build networks of human and social capital. Atlantic Canada as a region spans 500,000 square kilometers (193,256 square miles), much of which is hard to get to and poorly connected to the rest of the world.

Having done the hard work of providing the region with a new narrative, and a newfound sense of self-belief, many entrepreneurs hope to finally transition away from a declining resource-based economic model. They want to create a world where ambitious Atlantic Canadians don’t need to choose between staying close to home and pursuing exciting careers.

There are reasons to be hopeful: With every exit, future entrepreneurs are provided the success stories that, like supernovas, explode and act as the base material for new ventures. With every VC investment, the region’s network of startups builds the social capital that can enable the next round of funding. With every innovation, the region’s breadth of knowledge deepens through newfound expertise.

And with Atlantic Canada’s traditional migratory patterns seeming to reverse themselves as workers return to seek a lower cost of living and higher quality of life in small towns with coastal views, the pool of talent has only increased.

In the post-COVID world, talent can go anywhere, proving that constant proximity is not a prerequisite to building high-performing companies. To replicate the Atlantic Canada model, however, rural areas will need to offer more than a lower cost of living, as housing prices quickly catch up to demand.

Atlantic Canada’s modest success can be summarized as the result of fomenting a highly collaborative ecosystem that includes companies, universities, investors and government to ensure that the human capital, social capital and financial capital are available to propel new companies forward. Only by building an ecosystem can we create economic models where instead of talent chasing opportunity, opportunity chases talent.

#canada, #column, #founder, #north-america, #opinion, #startups, #venture-capital

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Big Tech companies cannot be trusted to self-regulate: We need Congress to act

It’s been two months since Donald Trump was kicked off of social media following the violent insurrection on Capitol Hill in January. While the constant barrage of hate-fueled commentary and disinformation from the former president has come to a halt, we must stay vigilant.

Now is the time to think about how to prevent Trump, his allies and other bad actors from fomenting extremism in the future. It’s time to figure out how we as a society address the misinformation, conspiracy theories and lies that threaten our democracy by destroying our information infrastructure.

As vice president at Color Of Change, my team and I have had countless meetings with leaders of multi-billion-dollar tech companies like Facebook, Twitter and Google, where we had to consistently flag hateful, racist content and disinformation on their platforms. We’ve also raised demands supported by millions of our members to adequately address these systemic issues — calls that are too often met with a lack of urgency and sense of responsibility to keep users and Black communities safe.

The violent insurrection by white nationalists and far-right extremists in our nation’s capital was absolutely fueled and enabled by tech companies who had years to address hate speech and disinformation that proliferated on their social media platforms. Many social media companies relinquished their platforms to far-right extremists, white supremacists and domestic terrorists long ago, and it will take more than an attempted coup to hold them fully accountable for their complicity in the erosion of our democracy — and to ensure it can’t happen again.

To restore our systems of knowledge-sharing and eliminate white nationalist organizing online, Big Tech must move beyond its typical reactive and shallow approach to addressing the harm they cause to our communities and our democracy. But it’s more clear than ever that the federal government must step in to ensure tech giants act.

After six years leading corporate accountability campaigns and engaging with Big Tech leaders, I can definitively say it’s evident that social media companies do have the power, resources and tools to enforce policies that protect our democracy and our communities. However, leaders at these tech giants have demonstrated time and time again that they will choose not to implement and enforce adequate measures to stem the dangerous misinformation, targeted hate and white nationalist organizing on their platforms if it means sacrificing maximum profit and growth.

And they use their massive PR teams to create an illusion that they’re sufficiently addressing these issues. For example, social media companies like Facebook continue to follow a reactive formula of announcing disparate policy changes in response to whatever public relations disaster they’re fending off at the moment. Before the insurrection, the company’s leaders failed to heed the warnings of advocates like Color Of Change about the dangers of white supremacists, far-right conspiracists and racist militias using their platforms to organize, recruit and incite violence. They did not ban Trump, implement stronger content moderation policies or change algorithms to stop the spread of misinformation-superspreader Facebook groups — as we had been recommending for years.

These threats were apparent long before the attack on Capitol Hill. They were obvious as Color Of Change and our allies propelled the #StopHateForProfit campaign last summer, when over 1,000 advertisers pulled millions in ad revenues from the platform. They were obvious when Facebook finally agreed to conduct a civil rights audit in 2018 after pressure from our organization and our members. They were obvious even before the deadly white nationalist demonstration in Charlottesville in 2017.

Only after significant damage had already been done did social media companies take action and concede to some of our most pressing demands, including the call to ban Trump’s accounts, implement disclaimers on voter fraud claims, and move aggressively remove COVID misinformation as well as posts inciting violence at the polls amid the 2020 election. But even now, these companies continue to shirk full responsibility by, for example, using self-created entities like the Facebook Oversight Board — an illegitimate substitute for adequate policy enforcement — as PR cover while the fate of recent decisions, such as the suspension of Trump’s account, hang in the balance.

Facebook, Twitter, YouTube and many other Big Tech companies kick into action when their profits, self-interests and reputation are threatened, but always after the damage has been done because their business models are built solely around maximizing engagement. The more polarized content is, the more engagement it gets; the more comments it elicits or times it’s shared, the more of our attention they command and can sell to advertisers. Big Tech leaders have demonstrated they neither have the willpower nor the ability to proactively and successfully self-regulate, and that’s why Congress must immediately intervene.

Congress should enact and enforce federal regulations to reign in the outsized power of Big Tech behemoths, and our lawmakers must create policies that translate to real-life changes in our everyday lives — policies that protect Black and other marginalized communities both online and offline.

We need stronger antitrust enforcement laws to break up big tech monopolies that evade corporate accountability and impact Black businesses and workers; comprehensive privacy and algorithmic discrimination legislation to ensure that profits from our data aren’t being used to fuel our exploitation; expanded broadband access to close the digital divide for Black and low-income communities; restored net neutrality so that internet services providers can’t charge differently based on content or equipment; and disinformation and content moderation by making it clear that Section 230 does not exempt platforms from complying with civil rights laws.

We’ve already seen some progress following pressure from activists and advocacy groups including Color Of Change. Last year alone, Big Tech companies like Zoom hired chief diversity experts; Google took action to block the Proud Boys website and online store; and major social media platforms like TikTok adopted better, stronger policies on banning hateful content.

But we’re not going to applaud billion-dollar tech companies for doing what they should and could have already done to address the years of misinformation, hate and violence fueled by social media platforms. We’re not going to wait for the next PR stunt or blanket statement to come out or until Facebook decides whether or not to reinstate Trump’s accounts — and we’re not going to stand idly by until more lives are lost.

The federal government and regulatory powers need to hold Big Tech accountable to their commitments by immediately enacting policy change. Our nation’s leaders have a responsibility to protect us from the harms Big Tech is enabling on our democracy and our communities — to regulate social media platforms and change the dangerous incentives in the digital economy. Without federal intervention, tech companies are on pace to repeat history.

#column, #congress, #disinformation, #misinformation, #opinion, #policy, #section-230, #social, #social-media, #social-media-platforms, #tc

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Facebook can save itself by becoming a B Corporation

As Facebook confronts outrage among its employees and the public for mishandling multiple decisions about its role in shaping public discourse, it is becoming clear that it cannot solve its conundrums without a major change in its business model. And a new model is readily available: for-benefit status.

For decades, a misguided ideology has warped companies, economies and societies: that the sole purpose of corporations is to maximize short-term returns to one set of stakeholders — those who have bought shares. Neither law nor history requires this to be true.

But shareholder value-maximization ideology has become cemented in far too much corporate practice at the expense of societal well-being. This is manifested in many ways: a slavish adherence to the judgment of the “market,” even when other social signals are more powerful; executives enriched by stock options; companies fearful of “activist investors” who attack whenever stock prices fail to meet quarterly “expectations” and often-frivolous shareholder lawsuits pushing for stock gains at all costs.

The pandemic, however, has accelerated an already-spreading recognition that shareholder value maximization is often a harmful choice — not by any means a moral imperative or even a fiduciary responsibility.

Major institutions of capitalism are converging on a new vision for it. The 2019 Business Roundtable CEO statement said that corporate strategy should benefit all stakeholders – including shareholders, yes, but equally customers, employees, suppliers, and the communities in which companies operate. BlackRock CEO Larry Fink’s recent annual letters assert new views of how that investment company, the world’s largest, should invest the trillions it oversees.

Fink’s 2019 letter spelled out a new vision for corporate purpose; the subsequent 2020 and 2021 letters focused on business’ responsibility around climate change, particularly in light of the pandemic. The B Corporation and conscious capitalism movements are growing. The World Economic Forum is championing a “Fourth Sector,” combining purpose with profit. Business schools, facing student rebellions against a purely profit-maximizing curriculum, are rapidly changing what they teach.

And with society under siege, many more businesses, including social media, are scrambling to seem like good corporate citizens. They have no choice.

Facebook, for example, has doubled down on philanthropy and new efforts to combat misinformation, even as usage and share price soar. Platforms like WhatsApp (owned by Facebook) have become essential services to connect people whose physical ties have been abruptly severed during the global pandemic. Shelter-in-place has become, in many ways, shelter-in-Facebook-properties.

But Facebook and its brethren remain fragile. Since the 2016 presidential election in the U.S., Facebook has faced governmental hearings and regulation, public uproar (#deleteFacebook), and huge fines for invading privacy and undermining democracy. These calls were amplified in the weeks following the January 6 Capitol riot. Separately, it faces allegations of bias, largely (though not entirely) from the political right. These have led to calls for the revocation or reform of Section 230 of the Communications Decency Act, which grants it immunity from the actions of its users.

A giant company that is simultaneously essential and pilloried is vulnerable. Just ask the ghosts of John D. Rockefeller and his fellow robber barons, whose huge monopolies industrialized America more than 100 years ago. Journalistic muckrakers and public outrage targeted them for their abusive practices until the government finally broke up their companies via antitrust legislation.

Because Mark Zuckerberg maintains complete majority control of Facebook, he could unilaterally quell public opprobrium and fend off heavy-handed regulation singlehandedly by transforming Facebook into a new kind of business: a for-benefit corporation.

Under the Public Benefit Corporation legal model, firms bind themselves to a public benefit mission statement and carry out required ongoing reporting on both the standard financials and on how the company is living up to its mission. That status protects the company against profit-demanding shareholder lawsuits, and also attracts employees and investors who want to combine profit with purpose.

Data.world is one of the thousands of certified B Corporations that have seen good returns on financial metrics. Allbirds, for example, launched in a few sustainable materials using a pro-sustainability process to manufacture comfortable shoes, quickly reaching revenues of $100 million and valuation of $1.7 billion in an industry fraught with sustainability and human rights concerns. Other household names that are B Corps include The Body ShopCourseraDanone, the Jamie Oliver GroupKing Arthur FlourNumi Tea and Patagonia.

Many companies that have not undergone formal B Certification from B Labs have nonetheless done well while transforming their business practices, such as the carpet and flooring company Interface. Some firms incorporate ESG principles into their management systems – the $24 billion (market cap) Dutch life sciences company DSM has for years had meaningful sustainability targets for its senior management that account for fully 50 percent of their annual bonuses. Both Interface and DSM attribute much of their commercial success to their attention to non-financial considerations.

A for-benefit Facebook could similarly relate to the world differently, avoiding many of the reputational shocks and regulatory responses that have led to huge stock dips and enormous fines. Its operations would align with Zuckerberg’s proclaimed purpose to enable the potential abundance that results from connecting everyone in the world.

Imagine a Facebook town hall as a true public square, not just another way to gather and sell people’s data without their explicit consent. Imagine a Facebook that put its users first and its advertisers second; that revealed where ads came from; that earned your attention in a way that you controlled rather than through machine-driven algorithms maximizing your attention for good or ill. Such a for-benefit Facebook could create true buy-in and transparency with its massive community around the world.

Of course, such steps as Facebook’s new Oversight Board, which may provide some meaningful review, don’t require a legal change. But if shareholders and employees continue to be rewarded primarily by the success of the problematic ad revenue model, a continuing conflict between private gain and public benefit makes it impossible to have confidence about what is happening behind the scenes. A shift to for-benefit incorporation and appropriate certification brings with it different performance metrics and accountability systems with public scores.

In changing Facebook into a for-benefit corporation, Zuckerberg could insulate himself against presidential rage while rehabilitating his reputation — and his company’s. It would likely create vast ripples both in Silicon Valley and beyond — and it might help transform capitalism itself.

#column, #ethics, #facebook, #mark-zuckerberg, #opinion, #social, #startups

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Broaden your view of ‘best’ to make smarter, more inclusive investments

What can we learn from the best 40 venture capital investments of all time? Well, we learn to invest exclusively in men, preferably white or Asian.

We reviewed CB Insights’ global list of “40 of the Best VC Bets of all Time.” All of the 40 companies’ 92 founders were male.

  • Of the 43 U.S.-based founders, 35 were white American; four were white immigrant/first generation, from France, Ukraine, Russia and Iran; and four were Indian immigrant/first generation.
  • Of the 19 Western Europe/Israel-based founders, all were white.
  • Of the 30 Asia-based founders, all were natives of the country in which they built their businesses: 23 Chinese, three Japanese, two Korean and two Indian.

Of course, this dataset is incomplete. There are numerous examples of founders from underrepresented backgrounds who have generated extremely impressive returns. For example, Amazon’s Jeff Bezos is Cuban American; Calendly’s Tope Awotona is Nigerian American; Sendgrid’s Isaac Saldana is Latinx; and Bumble’s Whitney Wolfe Herd is the second-youngest woman to take a company public.

That said, the pattern in the dataset is striking. So, why invest in anyone who’s not a white or Asian male? 

The conventional answer is that diversity pays. Research from BCG, Harvard Business Review, First Round Capital, the Kauffman Foundation and Illuminate Ventures shows that investors in diverse teams get better returns:

  • Paul Graham, cofounder of Y Combinator (2015): “Many suspect that venture capital firms are biased against female founders. This would be easy to detect: among their portfolio companies, do startups with female founders outperform those without? A couple months ago, one VC firm (almost certainly unintentionally) published a study showing bias of this type. First Round Capital found that among its portfolio companies, startups with female founders outperformed those without by 63%.”
  • Kauffman Fellows Report (2020): “Diverse Founding Teams generate higher median realized multiples (RMs) on Acquisitions and IPOs. Diverse Founding Teams returned 3.3x, while White Founding Teams returned 2.5x. The results are even more pronounced when looking at the perceived ethnicity of the executive team. Diverse Executive Teams returned 3.3x, while White Executive Teams only returned 2.0x. As mentioned above, we report realized multiples (RMs) only for successful startups that were acquired or went through the IPO process.”
  • BCG (June 2018): “Startups founded and cofounded by women actually performed better over time, generating 10% more in cumulative revenue over a five-year period: $730,000 compared with $662,000.”
  • BCG (January 2018): “Companies that reported above-average diversity on their management teams also reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity — 45% of total revenue versus just 26%.”
  • Peterson Institute for International Economics (2016): “The correlation between women at the C-suite level and firm profitability is demonstrated repeatedly, and the magnitude of the estimated effects is not small. For example, a profitable firm at which 30 percent of leaders are women could expect to add more than 1 percentage point to its net margin compared with an otherwise similar firm with no female leaders. By way of comparison, the typical profitable firm in our sample had a net profit margin of 6.4 percent, so a 1 percentage point increase represents a 15 percent boost to profitability.”

How do we reconcile these two sets of data? Research going back a decade shows that diverse teams, companies and founders pay, so why are all of the VC home runs from white men, or Asian men in Asia, plus a few Asian men in the U.S.?

First Round did not include their investment in Uber in their analysis we reference above on the grounds that it was an outlier. Of course, one could rebut that by saying traditional VC is all about investing in outliers.

  • Seth Levine analyzed data from Correlation Ventures (21,000 financings from 2004-2013) and writes that “a full 65% of financings fail to return 1x capital. And perhaps more interestingly, only 4% produce a return of 10x or more, and only 10% produce a return of 5x or more.” In Levine’s extrapolated model, he found that in a “hypothetical $100M fund with 20 investments, the total number of financings producing a return above 5x was 0.8 – producing almost $100M of proceeds. My theoretical fund actually didn’t find their purple unicorn, they found 4/5ths of that company. If they had missed it, they would have failed to return capital after fees.”
  • Benedict Evans observes that the best investors don’t seem to be better at avoiding startups that fail. “For funds with an overall return of 3-5x, which is what VC funds aim for, the overall return was 4.6x but the return of the deals that did better than 10x was actually 26.7x. For >5x funds, it was 64.3x. The best VC funds don’t just have more failures and more big wins —  they have bigger big wins.”

The first problem with the outlier model of investing in VC is that it results in, on average, poor returns and is a risker proposition compared to alternative models. The Kauffman Foundation analyzed their own investments in venture capital (100 funds) over a 20-year period and found “only 20 of the hundred venture funds generated returns that beat a public-market equivalent by more than 3% annually,” while 62 “failed to exceed returns available from the public markets, after fees and carry were paid.”

The outlier model of investing in VC also typically results in a bias toward investing in homogeneous teams. We suggest that the extremely homogeneous profiles of the big wealth creators above reflect the fact that these are people who took the biggest risks: financial, reputational and career risk. The people who can afford to take the biggest risks are also the people with the most privilege; they’re not as concerned about providing for food, shelter and healthcare as economically stressed people are. According to the Kauffman Foundation, a study of “549 company founders of successful businesses in high-growth industries, including aerospace, defense, computing, electronics and healthcare” showed that “more than 90 percent of the entrepreneurs came from middle-class or upper-lower-class backgrounds and were well-educated: 95.1 percent of those surveyed had earned bachelor’s degrees, and 47 percent had more advanced degrees.” But when you analyze the next tier down of VC success, the companies that don’t make Top 40 lists but land on Top 500 lists, you see a lot more diversity.

In VC, 100x investment opportunities only come along once every few years. If you bet your VC fund on opportunities like that, you’re relying on luck. Hope is not a strategy. There are many 3x-20x return opportunities, and if you’re incredibly lucky (or Chris Sacca), you might get one 100x in your career.

We prefer to invest based on statistics, not luck. That’s why Versatile VC provides companies with the option of an “alternative-VC” model, using a non-traditional term sheet designed to better align incentives between investors and founders. We also proactively seek to invest in diverse teams. Given the choice of running a fund with one 100x investment, or a fund with two 10x investments, we’ll take the latter. The former implies that we came perilously close to missing our one home run, and therefore we’re not doing such a great job investing.

“While we all want to have invested in those exciting home-runs/unicorns, most investors are seeking the data points to construct reliable portfolios,” Shelly Porges, co-founder and managing partner of Beyond the Billion, observed. “That’s not about aiming for the bleachers but leveraging experience to reliably deliver on the singles and doubles it takes to get to home base. A number of the institutional investors we’ve spoken to have gone so far as to say that they can no longer meet their targets without alternatives, including venture investments. “

Lastly, the data above reflects companies that typically took a decade to build. As the culture changes, we anticipate that the 2030 “Top 40” wealth creators list will include many more people with diverse backgrounds. Just in 2018, 15 unicorns were born with at least one woman founder; in 2019, 21 startups founded or co-founded by a woman became unicorns. Why?

  • “All else being equal, a larger pool of female-founded companies to select from for VC investing should increase the odds of a higher number of female-founded VC home runs,” said Michael Chow, research director for the National Venture Capital Association and Venture Forward. According to PitchBook, investments in women-led companies grew approximately 54 percent from 2015 to 2019, from 459 to 709. In the first three quarters of 2020, there have been 468 fundings of women-led companies; this figure beats 2015, 2016 and nearly 2017 total annual fundings. ProjectDiane highlights that from 2018 to 2020, the number of Black women who have raised $1 million in venture funding nearly tripled, and the number of Latinx women doubled. Their average two-year fail rate is also 13 percentage points lower than the overall average.
  • “Millennials value a diverse workforce,” Chow added, according to Gallup and Deloitte Millennial surveys. “In the battle for talent, diverse founders may have the edge in attracting the best and brightest, and talent is what is required for going from zero to one.”
  • The rise in popularity of alternative VC models, which are disproportionately attractive to women and underrepresented founders. We are in the very early days of this wave; according to research by Bootstrapp, 32 U.S. firms have launched an inaugural Revenue-Based Finance fund. Clearbanc notes on their site they have “invested in thousands of companies using data science to identify high-growth funding opportunities. This data-driven approach takes the bias out of decision making. Clearbanc has funded 8x more female founders than traditional VCs and has invested in 43 states in the U.S. in 2019.”
  • More VCs are working proactively to market to underrepresented founders. Implicit biases are robust and pervasive; it takes a proactive and intentional approach to shift the current status quo of funding,” Dreamers & Doers Founder Gesche Haas said. Holly Jacobus, an investment partner at Joyance Partners and Social Starts, noted that “we’re proud to boast a portfolio featuring ~30% female founders in core roles —  well above the industry average —  without specific targeting of any sort. However, there is still work to be done. That’s why we lean heavily on our software and CEOs to find the best tech and teams in the best segments, and we are always actively working on improving the process with new systems that remove bias from the dealflow and diligence process.”

Thanks to Janet Bannister, managing partner, Real Ventures, and Erika Cramer, co-managing member, How Women Invest, for thoughtful comments. David Teten is a past Advisor to Real Ventures.

#column, #diversity, #opinion, #private-equity, #startup-company, #startups, #venture-capital, #venture-capital-investments

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Why I felt fine about not disclosing my pregnancy to investors

I closed two major rounds of funding for my geothermal energy startup, Dandelion Energy, while pregnant. I did not disclose either pregnancy to my investors during the fundraising process either time. I felt fine doing this, and I believe other founders should feel free to keep their pregnancies private as well if they’d prefer to.

No one would think twice about a male founder who declined to share the details of his health or family status with investors during an initial fundraising meeting. On the contrary, it would be an unusual move for him to do so.

For some context, my co-founder and I spun our startup, Dandelion Energy, out of Alphabet’s X in April 2017 and raised our first small round of outside funding that summer. Our goal was to set up a commercial pilot and start selling and installing heat pumps to demonstrate that our product worked and show that there was demand for affordable geothermal before we raised a larger round. We had to prove that our business was viable.

No one would think twice about a male founder who declined to share the details of his health or family status with investors during an initial fundraising meeting.

That same summer, in 2017, I became pregnant.

Round one

As summer turned to fall, I had to figure out how to approach being pregnant while raising Dandelion’s second round of funding. I was lucky to be able to choose whether to tell people I was pregnant because it turned out I didn’t end up looking visibly pregnant until about seven months in, and even then I could dress to make it nonobvious. Without knowing anyone who’d gone through a similar experience, I had to decide how I would handle my status as a pregnant person when speaking with investors.

At first, it worried me that I would be hiding something if I didn’t disclose my pregnancy. But I really didn’t want to. I was a first-time entrepreneur with no real track record. Oh yeah, and I was a woman. And almost all of the investors were men who typically funded men.

Especially early on in a startup’s life, these investors are judging the founder as much as the business. Making an impression is key, and “pregnant” didn’t strike me as accretive in any way to my ability to deliver the type of impression that would lead to investment in my business (I hope this changes over time, but I am being honest about how things seemed to me).

And then there was this: Even if I had decided to tell investors I was expecting, how could I broach the topic in a way that wouldn’t threaten to derail the entire tenor of the meeting? I was meeting most of these people for the first time and had a limited amount of time to spend explaining payback periods and vapor compression refrigeration cycles. It seemed like the best-case scenario was if disclosing pregnancy made the meeting no worse than it would otherwise have been. In no world could I imagine it would be a net positive.

Given all of this, I made the decision to not talk about it. It worked out for me. As soon as I started showing, around seven months in, everyone left their offices for the holidays, and so I was never forced to address what was becoming visibly obvious.

But of course there was a downside to my approach. I would have to tell them eventually, and I’d pushed it off so long that by the time I finally got around to it we basically had to have a conversation like this:

Me: “Some happy news to share: I’m pregnant!”

Investors: “Congratulations! We are so thrilled for you! When’s the due date?”

Me: “Ahhh … Next month.”

Happily, all of them were extremely supportive and gracious when I told them. Their uncomplicated and positive acceptance of the news even made me wonder if all my internal wrangling about whether to tell investors had been unnecessary. I gave birth to my daughter literally one day after the money was wired.

Round two

Time passed and it became clear we were ready to raise our next round of funding. Also, I become pregnant again. This time, most of the fundraising happened in the early stages of my pregnancy. Early enough that I hadn’t even really told my friends, so it was obvious to me I wouldn’t be telling investors I was just meeting. After having gone through it once before, it was an easier decision the second time around.

Looking back

Reflecting on my experience, I do think it helped that I got to know my investors throughout the fundraising process, so by the time I told them I was pregnant, they already knew me and I had already established my credibility as an entrepreneur. Being pregnant was just something going on in my life; it didn’t define who I was to them. That is one advantage of introducing it later: It did not define me because they knew so much else about me by that point.

In many ways, I am a stereotypical founder: I have a CS degree from Stanford, I worked as a PM at Google, I have an engineering background. I have many advantages. Yet, more present in my mind during fundraising were the parts of my identity that seemed atypical, and the primary aspect here was my being a woman.

Because there is so much conversation about how women receive so much less investment, I was worried that being a woman would be a disadvantage, and there’s nothing like being pregnant to highlight in the strongest possible way that you’re a woman.

I now feel lucky to know other founders who have raised money while visibly pregnant, and so I’ve seen firsthand that it’s possible. But it is not something that a pregnant founder should feel obligated to disclose. I hope that it becomes common for women to start businesses and raise capital for those businesses in every stage of their lives, including when they’re pregnant.

Because as soon as the pregnant woman and the guy with the hoodie both seem equally probable as startup founders, it will suddenly matter much less whether to talk about your pregnancy.

#column, #diversity, #labor, #opinion, #pregnancy, #sexism, #startups, #tc, #tc-include, #venture-capital

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Fintech companies must balance the pursuit of profit against ethical data usage

Financial institutions are falling behind the tech curve in delivering on the convenience consumers demand, leaving the door wide open for Big Tech companies like Apple, Amazon and Google to become our bankers. In November, Google redesigned its contactless payments service Google Pay, merging the services of traditional banks with the seamless, convenient experience users expect from the likes of Big Tech.

But there’s a catch.

Despite the elaborate smoke and mirrors that Google has put up, one fact remains: Google is an advertising company with ads representing 71% of its revenue sources in 2019.

What happens when an advertising company now wants to be our bank?

One must ask: What happens when an advertising company — armed with the terabytes of data points it has harvested from our personal emails, location data, song preferences and shopping lists — now wants to be our bank? The answer is potentially unsettling, especially considering the extraordinary neglect Big Tech has shown for user privacy, as seen here. And here. And here.

As the marketplace is poked by yet another technocrat tentacle, this time in the heart of financial services, traditional banks that consumers and businesses once relied on find themselves at a crossroads. To retain market share, these institutions will need to continue investing in fintech so they can level up with convenience and personalization provided by new competitors while preserving trust and transparency.

Traditional banks miss the digital mark

Fintech holds the potential to fundamentally transform the financial services industry, enabling financial institutions (FIs) to operate more efficiently and deliver superb user experiences (UX).

But there’s a digital gap holding FIs back, especially small community banks and credit unions. Many have long struggled to compete with the deep pockets of national banks and the tech savvy of neo and challenger banks, like Varo and Monzo. After investing more than $1 trillion in new technology from 2016 through 2019, the majority of banks globally have yet to see any financial boost from digital transformation programs, according to Accenture.

Never before has this gap been more prevalent than amid the pandemic as customers migrated online en masse. In April 2020 alone, there was a 200% uptick in new mobile banking registrations and total mobile banking traffic jumped 85%, according to Fidelity National Information Services (FIS).

Data is the grand prize for Big Tech, not revenue from financial services

Naturally, Big Tech players have recognized the opportunity to foray into financial services and flex their innovation muscles, giving banks and credit unions a strenuous run for their money. Consumers looking to digitize their finances must heed caution before they break up with traditional banks and run into the arms of Big Tech.

It’s important to bear in mind that the venture into payments and financial services is multipronged for Big Tech players. For example, in-house payments capabilities would not just provide companies focused on retail and commerce an additional revenue stream; it promises them more power and control over the shopping process.

Regulations in the U.S. might restrain this invasion to an extent, or at least limit a company’s ability to directly profit. Because let’s face it: the Big Tech players certainly aren’t asking for the regulatory “baggage” that comes with a bank charter.

But tech companies don’t need to profit directly from offerings like payments and wealth management, so long as they can hoard data. Gleaning insights on users’ spending patterns offers companies significant ROI in the long term, informing them how a user spends their money, if they have a mortgage, what credit cards they have, who they bank with, who they transact with, etc.

Financial behavior also potentially includes highly personal purchases, such as medications, insurance policies and even engagement rings.

With this laser sharp view into consumers’ wallets, imagine how much more valuable and domineering Google’s advertising platform will become.

Banks must lead the charge in ethical data

When it comes to the digitization of financial services, the old adage “with great power comes great responsibility” rings true.

Customer data is an incredible tool, allowing banks to cater to all consumers wherever they fall on the financial spectrum. For example, by analyzing a customers’ spending habits, a bank can offer tailored solutions that help them save, invest or spend money more wisely.

However, what if being a customer of these services means you’re then inundated with ads that respond directly to your searches and purchases? Or, even more insidiously, what if your bank now knows you so well that they can create a persona for you and proactively predict your needs and desires before even you can? That’s what the future looks like if you’re a customer of the Bank of Google.

It’s not enough to use customer data to refine product offerings. It must be done in a way that ensures security and privacy. By using data to personalize services, rather than bolster revenue behind the scenes, banks can distinguish a deeper understanding of consumer needs and gain trust.

Trust could become the weapon that banks use to defend their throne, especially as consumers become more aware of how their data is being used and they rebel against it. A Ponemon study on privacy and security found that 86% of adults said they are “very concerned” about how Facebook and Google use their personal information.

In an environment where data collection is necessary but contentious, the main competitive advantage for banks lies in trust and transparency. A report from nCipher Security found that consumers still overwhelmingly trust banks with their personal information more than they do other industries. At the same time, trust is waning for technology, with 36% of consumers reportedly less comfortable sharing information now than a year ago, according to PwC.

Banks are in a prime position to lead the charge on ethical data strategy and the deployment of artificial intelligence (AI) technologies, while still delivering what consumers need. Doing so will give them a leg up on collecting data over Big Tech in the long term.

Looking toward a customer-centric, win-win future

The financial services industry has reached a pivotal crossroads, with consumers being given the choice to leave traditional banks and hand over their personal data to Big Tech conglomerates so they can enjoy digital experiences, greater convenience and personalization.

But banks can still win back consumers if they take a customer-centric approach to digitization.

While Big Tech collects consumer data to support their advertising revenue, banks can win the hearts of consumers by collecting data to drive personalization and superior UXs. This is especially true for local community banks and credit unions, as their high-touch approach to services has always been their core differentiator. By delivering personalized interactions while ensuring the data collection is secure and transparent, banks can regain market share and win the hearts of customers again.

Big Tech has written the playbook for what not to do with our data, while also laying the framework for how to build exceptional experiences. Even if a bank lacks the technology expertise or the deep-pocket funding of Facebook, Google or Apple, it can partner with responsible fintechs that understand the delicate balance between ethical data usage and superior UXs.

When done right, everybody wins.

#artificial-intelligence, #bank, #column, #ethics, #finance, #financial-services, #financial-technology, #fintech, #mobile-banking, #opinion, #policy, #startups, #tc

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Reducing the spread of misinformation on social media: What would a do-over look like?

The news is awash with stories of platforms clamping down on misinformation and the angst involved in banning prominent members. But these are Band-Aids over a deeper issue — namely, that the problem of misinformation is one of our own design. Some of the core elements of how we’ve built social media platforms may inadvertently increase polarization and spread misinformation.

If we could teleport back in time to relaunch social media platforms like Facebook, Twitter and TikTok with the goal of minimizing the spread of misinformation and conspiracy theories from the outset … what would they look like?

This is not an academic exercise. Understanding these root causes can help us develop better prevention measures for current and future platforms.

Some of the core elements of how we’ve built social media platforms may inadvertently increase polarization and spread misinformation.

As one of the Valley’s leading behavioral science firms, we’ve helped brands like Google, Lyft and others understand human decision-making as it relates to product design. We recently collaborated with TikTok to design a new series of prompts (launched this week) to help stop the spread of potential misinformation on its platform.

The intervention successfully reduces shares of flagged content by 24%. While TikTok is unique amongst platforms, the lessons we learned there have helped shape ideas on what a social media redux could look like.

Create opt-outs

We can take much bigger swings at reducing the views of unsubstantiated content than labels or prompts.

In the experiment we launched together with TikTok, people saw an average of 1.5 flagged videos over a two-week period. Yet in our qualitative research, many users said they were on TikTok for fun; they didn’t want to see any flagged videos whatsoever. In a recent earnings call, Mark Zuckerberg also spoke of Facebook users’ tiring of hyperpartisan content.

We suggest giving people an “opt-out of flagged content” option — remove this content from their feeds entirely. To make this a true choice, this opt-out needs to be prominent, not buried somewhere users must seek it out. We suggest putting it directly in the sign-up flow for new users and adding an in-app prompt for existing users.

Shift the business model

There’s a reason false news spreads six times faster on social media than real news: Information that’s controversial, dramatic or polarizing is far more likely to grab our attention. And when algorithms are designed to maximize engagement and time spent on an app, this kind of content is heavily favored over more thoughtful, deliberative content.

The ad-based business model is at the core the problem; it’s why making progress on misinformation and polarization is so hard. One internal Facebook team tasked with looking into the issue found that, “our algorithms exploit the human brain’s attraction to divisiveness.” But the project and proposed work to address the issues was nixed by senior executives.

Essentially, this is a classic incentives problem. If business metrics that define “success” are no longer dependent on maximizing engagement/time on site, everything will change. Polarizing content will no longer need to be favored and more thoughtful discourse will be able to rise to the surface.

Design for connection

A primary part of the spread of misinformation is feeling marginalized and alone. Humans are fundamentally social creatures who look to be part of an in-group, and partisan groups frequently provide that sense of acceptance and validation.

We must therefore make it easier for people to find their authentic tribes and communities in other ways (versus those that bond over conspiracy theories).

Mark Zuckerberg says his ultimate goal with Facebook was to connect people. To be fair, in many ways Facebook has done that, at least on a surface level. But we should go deeper. Here are some ways:

We can design for more active one-on-one communication, which has been shown to increase well-being. We can also nudge offline connection. Imagine two friends are chatting on Facebook messenger or via comments on a post. How about a prompt to meet in person, when they live in the same city (post-COVID, of course)? Or if they’re not in the same city, a nudge to hop on a call or video.

In the scenario where they’re not friends and the interaction is more contentious, platforms can play a role in highlighting not only the humanity of the other person, but things one shares in common with the other. Imagine a prompt that showed, as you’re “shouting” online with someone, everything you have in common with that person.

Platforms should also disallow anonymous accounts, or at minimum encourage the use of real names. Clubhouse has good norm-setting on this: In the onboarding flow they say, “We use real names here.” Connection is based on the idea that we’re interacting with a real human. Anonymity obfuscates that.

Finally, help people reset

We should make it easy for people to get out of an algorithmic rabbit hole. YouTube has been under fire for its rabbit holes, but all social media platforms have this challenge. Once you click a video, you’re shown videos like it. This may help sometimes (getting to that perfect “how to” video sometimes requires a search), but for misinformation, this is a death march. One video on flat earth leads to another, as well as other conspiracy theories. We need to help people eject from their algorithmic destiny.

With great power comes great responsibility

More and more people now get their news from social media, and those who do are less likely to be correctly informed about important issues. It’s likely that this trend of relying on social media as an information source will continue.

Social media companies are thus in a unique position of power and have a responsibility to think deeply about the role they play in reducing the spread of misinformation. They should absolutely continue to experiment and run tests with research-informed solutions, as we did together with the TikTok team.

This work isn’t easy. We knew that going in, but we have an even deeper appreciation for this fact after working with the TikTok team. There are many smart, well-intentioned people who want to solve for the greater good. We’re deeply hopeful about our collective opportunity here to think bigger and more creatively about how to reduce misinformation, inspire connection and strengthen our collective humanity all at the same time.

#column, #facebook, #internet-culture, #mark-zuckerberg, #misinformation, #opinion, #qanon, #social, #software, #tiktok

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