Source Code

Source Code: Welcome to a new kind of tech publication

Your five-minute guide to what's happening in tech this Wednesday, from the app that crashed the Iowa caucus to the reasons behind Tesla's remarkable run.

Welcome to Source Code

Good morning, and welcome to Protocol! If you don't know what Protocol is, that's OK. We're a new publication from Robert Allbritton, the publisher of POLITICO, dedicated to covering the people, power and politics of tech. Today is our launch day. Check out protocol.com to see the stories of the day as well as a note from Tim Grieve, our executive editor, about who we are and what we're up to.

But before you do that, let me introduce myself. My name is David Pierce, and I'm Protocol's editor at large. This is Source Code, our daily briefing on the most important stories in tech. Normally, this newsletter won't start with a long preamble from me — it'll be a quick, fun and essential way to start your weekdays. If we do it right, you should be ready to win the day before you finish your coffee. Maybe even before it's done brewing.

I have more to tell you about Protocol and Source Code, but we'll get to that later. Let's get to the news.

People Are Talking

Steve Wozniak says he still appreciates his weekly paycheck from Apple—even though it's only $50 or so:

  • "It's small, but it's out of loyalty, because what could I do that's more important in my life? Nobody's going to fire me. And I really do have strong feelings always for Apple."

Clearview AI has a right to collect people's photosaccording to its CEO, Hoan Ton-That:

  • "There is a First Amendment right to public information. So the way we have built our system is to only take publicly available information and index it that way." (Ton-That will be on "CBS This Morning" today, and the interview should be … something.)

The Iowa chaos is a bad sign, Joshua Greenbaum, CTO at the U.S. Vote Foundation, told Protocol's Charles Levinson:

  • "What we're seeing is there's a tech bro culture trying to impose itself on the election world." (More on Iowa down below.)

Is Facebook too involved with Libra? Mastercard CEO Ajay Banga thinks so:

  • "It went from this altruistic idea into their own wallet. If you get paid in Libra … which go into Calibras, which go back into pounds to buy rice, I don't understand how that works."

The Big Story

How an app crashed a caucus

Last March, Gerard Niemira, the CEO of a company called Shadow Inc., told Protocol's Issie Lapowsky that Democratic election tech was a "tangled morass." He said this in the midst of talking about how he could fix things.

But Shadow's app was at the center of Monday's Iowa caucus debacle. It took a while, but we now have a much clearer picture of what happened:

  • The app, which was designed to make it easy to tabulate and share caucus data, was built in only a couple of months and given to caucus volunteers with little training or testing.
  • Motherboard got screenshots of the app, which volunteers had to install on their personal phones through a third-party testing service before going through a complicated login and security system (that didn't actually work). Even in the best case, that process is roughly as intuitive as reading hieroglyphs. And they had to do it this way because they didn't have enough time to go through an app store review process.
  • In Iowa, The NYT reports, only a quarter of the 1,765 precinct chairs even managed to download and install the app.

The mess up has had immediate consequences. Nevada — which had planned to use Shadow's app for its caucuses in a few weeks — announced that it's changing plans. And the whole idea of using tech in elections is suddenly up for debate (again).

Niemira told Bloomberg that he is "really disappointed that some of our technology created an issue that made the caucus difficult." He blamed the issues on "a bug in the code that transmits results data into the state party's data warehouse."

Read Issie's story to find out why the problem is so, so much deeper than that.

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Reimagining Markets Everywhere

Nasdaq Technology is reshaping the future of global markets by redefining what a marketplace can be.

Learn more here.

Electric Cars

Tesla's meteoric rise continues

Every day this week, Tesla's share price has gone on a virtually unprecedented upward journey. It seems impossible, outlandish, ridiculous, overblown. Until it happens again the next day.

  • Tesla's stock closed at $887.06 on Tuesday, up more than $107 from just the day before. (And it was still climbing after hours.) Only a month ago it closed at $443.
  • In case you're wondering: yes, that's insane.

The weirdest part is that no one seems to know exactly why it's happening. It's a squeeze on the market's most-shorted stock! It's a bunch of amateur investors who just think Elon Musk is hella cool! It's Saudi Arabia! No, it's China! Maybe listeners just really liked "Don't Doubt Ur Vibe"!

The most compelling explanation I've heard goes like this: Tesla has a long history of getting in its own way, with things like ill-advised tweets and inefficient production lines. But now, Gartner analyst Michael Ramsey told me, Tesla's starting to nail the basics:

  • "They've always had a super strong brand and have always had major flaws," Ramsey said. "And they still have flaws. It's just that the big flaws seem like they're fading."
  • Tesla's getting better at building factories, better at running them, better at delivering on promises, better at keeping its CEO out of trouble.

Whatever the reason, it looks like Musk's unusual compensation plan is going to work out. There's an increasingly plausible world in which Tesla makes Musk the world's richest person.

Have you bought or sold Tesla stock in the last couple of months? What made you move? How high do you think it's going? Send me a note: david@protocol.com.

Politics

The White House 5G dream, now with Big Tech

In an interview with the WSJ, Larry Kudlow said that the White House is working with American tech companies to build "an American soup-to-nuts infrastructure for 5G." That's what Trump has been asking for, Kudlow said.

  • Dell, Microsoft, and AT&T are all part of the project, the WSJ reports, and they could have a system running within 18 months.
  • Surprised? Well, you're not alone: One source at a U.S. telecoms association told Protocol's Adam Janofsky that they hadn't heard of the project before reading the WSJ story either.

The project's focus is on building cloud services and software that can run on top of virtually any company's hardware — because no American company is set up to compete head-on with Huawei in the 5G infrastructure business. Kudlow even allowed for the possibility that the America-first plan might need to include European companies like Nokia and Ericsson.

If you're skeptical, you're still probably not alone. "There were U.S. alternatives [to Huawei], but they essentially went bankrupt," NYU professor Sundeep Rangan told Adam. "Taxpayers would be very confused about the government investing money into an industry that already has low margins and had to consolidate."

This is just the latest in a number of Trump administration moves designed to fight Huawei's 5G dominance. Kudlow echoed the party line on that front, calling the company "a threat to our national security."

Making Moves

  • Michael Ronen, the U.S. head of SoftBank's Vision Fund, is leaving the company. He expressed … "issues" about SoftBank, according to the FT, and had been planning to leave for several weeks. The FT also reports that Ron Fisher, SoftBank's vice chairman, could be in the hot seat.
  • Splunk hired former Okta Chief Security Officer Yassir Abousselham as its own CISO. Splunk's previous CISO, Joel Fulton, is starting his own cybersecurity company.
  • Dan Houser, a co-founder of Rockstar Games, is turning the "extended break" he took last year into a permanent departure from the company. His last day will be March 11.
  • Liz Schimel, the head of business for Apple News, is leaving amidst a rough first year for Apple News+. Bloomberg says Apple is "seeking to hire a notable name from the publishing world" to replace her.

In Other News

Everything else you need to know

  • 28.6 million people have already signed up for Disney+. That's more than analysts expected from the service's first quarter and puts the service already nearly on par with Hulu (which has been around for … many quarters). Here's hoping Baby Yoda gets a cut of the proceeds.
  • The hot new job title in Silicon Valley? Ethicist. Protocol's Linda Kinstler dug into what it's like trying to be the moral center of the tech industry. (Spoiler: tough.)
  • Foxconn hopes to "gradually" restart factories in China starting next week, in the wake of closures resulting from the coronavirus outbreak. Reuters reports that it could take one to two weeks for the plants to get back up to full speed.
  • Andreessen Horowitz is launching a new life-sciences venture fund, with $750 million to invest. "Bio is not the 'next new thing' — it's becoming everything," the partners wrote in the blog post announcing the fund.
  • Twitter announced new guidelines for how it handles "synthetic and manipulated media." Execs say it will either delete content that's been faked or changed in order to deceive viewers, or add a label saying what's happened. But the bar is high, and the onus for finding stuff is on users.
  • Instagram reportedly brought in about $20 billion in ad revenue last year. Facebook doesn't report Instagram's specific financials, but Bloomberg's figure places Instagram above the $15.1 billion in ad revenue that we now know YouTube made last year.
  • The owner of the NYSE wants to take over eBay. Intercontinental Exchange is reportedly interested in a deal in excess of $30 billion but says eBay "has not engaged in a meaningful way."
  • Tinder may be in GDPR hot water. Ireland's Data Protection Commission announced a formal inquiry into "ongoing processing of users' personal data," as well as how the company has communicated with users.

One More Thing

The Amazon van coming to a street near you

As you know, as FedEx and UPS know, and as everyone knows, Amazon is interested in taking more control over deliveries. It's working on drones, adorable robots, and who knows what else, but one of its more interesting plans might be a plain-old van. It's working with Rivian to manufacture 100,000 purpose-built vehicles and showed off some early designs on Tuesday. I can't believe I'm saying this, but the van is … kind of adorable? It pairs some Pixar-cuteness with an electric drivetrain, Alexa-powered smarts, and some seriously complicated ideas about packing efficiency. Coming to your Prime-subscribing curb in 2021.

A MESSAGE FROM NASDAQ

Reimagining Markets Everywhere

Nasdaq Technology is reshaping the future of global markets by redefining what a marketplace can be.

Learn more here.

That's it for us today. Source Code will come from me every morning, and you can always reach me at david@protocol.com or by replying to this email. (I'd love to see where you're reading this; I'll feature whoever sends a Protocol photo from the most remote location in tomorrow's newsletter.) But every day you'll also be seeing the work of Protocol's newsletter editor Jamie Condliffe and our terrific team of reporters. And I hope you'll see your own contributions here, too! Have a question or a story idea? Get a new job / have a birthday / sell your company / pull off an elaborate hack the likes of which the world has never seen? We want the Source Code community — the business leaders and tech insiders also getting this email — to hear all about it. (If you don't want to get this email anymore, you can unsubscribe below. I'll try not to hold it against you.)

Welcome to Source Code — I'm thrilled you're here, and I'm so excited to do this together.

Thoughts, questions, tips? Send them to me, david@protocol.com, or our tips line, tips@protocol.com. See you tomorrow.


Enterprise

Microsoft Exchange Online users face a key security deadline Saturday

The company will start disabling a highly vulnerable login option, known as "basic authentication," beginning on Oct. 1 — though customers will have one chance to buy more time to transition off the system.

Microsoft has been seeking to prod businesses to move off basic authentication for the past three years, but "unfortunately usage isn’t yet at zero," it said in a post earlier this month.

Illustration: Christopher T. Fong/Protocol

Microsoft is about to eliminate a method for logging into its Exchange Online email service that is widely considered vulnerable and outdated, but that some businesses still rely upon.

The company has said that as of Oct. 1, it will begin to disable what's known as "basic authentication" for customers that continue to use the system.

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Kyle Alspach

Kyle Alspach ( @KyleAlspach) is a senior reporter at Protocol, focused on cybersecurity. He has covered the tech industry since 2010 for outlets including VentureBeat, CRN and the Boston Globe. He lives in Portland, Oregon, and can be reached at kalspach@protocol.com.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

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James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Fintech

Gavin Newsom shows crypto some California love

“A more flexible approach is needed,” Gov. Newsom said in rejecting a bill that would require crypto companies to get a state license.

Strong bipartisan support wasn’t enough to convince Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.

Photo: Jerod Harris/Getty Images for Vox Media

The Digital Financial Assets Law seemed like a legislative slam dunk in California for critics of the crypto industry.

But strong bipartisan support — it passed 71-0 in the state assembly and 31-6 in the Senate — wasn’t enough to convince Gov. Gavin Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Workplace

Slack’s rallying cry at Dreamforce: No more meetings

It’s not all cartoon bears and therapy pigs — work conferences are a good place to talk about the future of work.

“We want people to be able to work in whatever way works for them with flexible schedules, in meetings and out of meetings,” Slack chief product officer Tamar Yehoshua told Protocol at Dreamforce 2022.

Photo: Marlena Sloss/Bloomberg via Getty Images

Dreamforce is primarily Salesforce’s show. But Slack wasn’t to be left out, especially as the primary connector between Salesforce and the mainstream working world.

The average knowledge worker spends more time using a communication tool like Slack than a CRM like Salesforce, positioning it as the best Salesforce product to concern itself with the future of work. In between meeting a therapy pig and meditating by the Dreamforce waterfall, Protocol sat down with several Slack execs and conference-goers to chat about the shifting future.

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Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

LA is a growing tech hub. But not everyone may fit.

LA has a housing crisis similar to Silicon Valley’s. And single-family-zoning laws are mostly to blame.

As the number of tech companies in the region grows, so does the number of tech workers, whose high salaries put them at an advantage in both LA's renting and buying markets.

Photo: Nat Rubio-Licht/Protocol

LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.

But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.

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Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

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