Power

Out of charity and self-interest, tech lobbies for the 'little guys' in D.C.

The coronavirus crisis has exposed the extent to which the fortunes of some of tech's biggest businesses are tied to some of the country's smallest ones.

Julia Hartz

Eventbrite President Julia Hartz said she realized quickly how devastating shelter-in-place orders were going to be for her company's small-business partners.

Photo: Steve Jennings/Getty Images for TechCrunch

Julia Hartz was pacing a groove into her living room carpet one night in early March. That day, Hartz, who runs the online ticketing platform Eventbrite, had spoken with at least half a dozen operators of concert and event venues who'd been forced to shut down as COVID-19 crept across the country.

"I'd hit that point of: This is horrific," Hartz recalled.

Though it was already late on the West Coast, Hartz called her lobbyist, Heather Podesta of D.C.-based Invariant, to deliver what she described as a "heartfelt monologue" about what the impending crisis was going to do to small businesses like the ones Eventbrite serves.

"What I said to her was, 'I will put as much effort and time and resources behind making sure the people who are making decisions quickly about relief understand the importance of live event producers in our society … and how on-the-edge all of these business owners are," Hartz said.

This, of course, wasn't pure altruism. The COVID-19 pandemic has exposed the extent to which the fortunes of some of tech's biggest businesses are tied to some of the country's smallest ones. In early April, with most of the country in various states of lockdown, Eventbrite had to lay off nearly half of its own staff.

But these tech heavyweights have something that their small business counterparts often don't: sophisticated policy teams and high-profile lobbying contacts. Now, some of these tech companies — and individual executives within them — are using whatever influence they have in Washington and in their state and local governments to back the businesses that make their platforms work.

Seeking a win-win

After that call with Podesta, Hartz started reaching out to other tech companies that are similarly reliant on small businesses.

In early May, Eventbrite teamed up with Airbnb, Etsy, Thumbtack and Upwork on a letter to Congress, urging lawmakers to make the next round of federal stimulus loans more accessible to sole proprietors and businesses with only a few employees. Eventbrite, Airbnb and Etsy had also lobbied Congress on small business issues in the lead-up to passage of the CARES Act. For these companies, which rely on event venues, small retailers, home-share hosts and gig workers for revenue, the work is strategic.

"If paid events aren't happening, we're not generating revenue," Hartz said.

Other efforts have taken a more philanthropic bent. The D.C.-based firm 202works, which matches companies with policy experts, recently launched a pro-bono task force focused on helping small businesses hit by COVID-19 navigate government aid programs and receive policy support. That team, which includes the policy heads of tech companies such as Lyft and Spotify, is chaired by former FEMA director James Lee Witt.

All of the initiatives aim to ensure that tiny companies don't go unnoticed by lawmakers juggling competing interests. "We're talking about the smallest of small businesses," said Althea Erickson, Etsy's vice president of global public policy, of the average Etsy seller. "They often fall in the cracks, in between relief that's provided for workers' unemployment and the benefits provided to businesses through credit loans and other programs."

Setting aside loans

Under the CARES Act, Congress set aside $349 billion in forgivable loans for small businesses through the Paycheck Protection Program. But almost as soon as the money became available, loads of small businesses started reporting trouble accessing it. That included many of the electricians, plumbers and other professionals who list their services on Thumbtack, said CEO Marco Zappacosta.

"One of the themes I've heard in my calls with some of these pros is just them feeling left out," Zappacosta said.

Some banks prioritized existing customers when doling out loans, making it difficult for sole proprietors who didn't already have large business accounts with banks to obtain funds.

Another complication was the PPP program's mandate that businesses spend 75% of their loans on payroll. For businesses that closed due to the pandemic, or didn't have any employees to begin with, that meant only a small fraction of the loan was usable. And it gave those businesses only eight weeks to spend that money on payroll in order for the loan to convert into a grant.

In their letter to Congress, Eventbrite, Airbnb, Thumbtack, Etsy and Upwork asked to extend the loan period to the end of the year, set aside a portion of PPP loans that would be $100,000 or less, and allow companies to use a larger percentage of their loans on rent and utilities, among other necessities. The HEROES Act, recently passed by the House of Representatives, would extend the PPP program and carve out 25% of PPP funding for businesses with 10 or fewer employees.

Senate Republicans have rejected the HEROES Act. But in a video tweeted this week, Florida's Marco Rubio, who chairs the Small Business Committee, said he expects Senate Republicans to soon introduce legislation that would give businesses more than eight weeks to spend the money. "For those asking about whether the time is going to be extended, we have the votes to do that," Rubio said. "The only issue now is, can we do it without other things being added to it that prevent us from getting this passed?"

It's unclear how Democrats and Republicans on Capitol Hill will resolve that issue. But Chris Lehane, the one-time damage-control specialist in the Clinton White House who is now Airbnb's senior vice president for global policy and communications, said that, at least for now, there's a bipartisan understanding in Congress that this community of small businesses needs more help.

"So many members, to their credit, remember what happened in 2008 and 2009, where there was a perception that the big corporations had been taken care of, but the little guy hadn't," Lehane said. "There was a real sensitivity to it this time around."

'Knocking on that bigger door'

Airbnb, which recently laid off nearly 2,000 workers, also built a tool for hosts to contact federal lawmakers with stories and requests, and the company set up online educational programs to help guide those conversations. During negotiations around the CARES Act, the tool funneled 100,000 calls and emails into Congress.

Eventbrite built its own platform to help event creators get the most up-to-date information about federal loans. It circulated a questionnaire to the same people, asking how their businesses had been affected and what type of assistance they were seeking. Eventbrite used those responses to inform multiple letters to Congress and one to the White House.

Among the respondents in that campaign were the co-owners of PianoFight, a San Francisco restaurant and event space that typically hosts 85 events a month, but has been closed since mid-March. PianoFight received some federal aid related to the pandemic, but Dan Williams, the venue's executive director, said his team has been reluctant to spend it due to continued uncertainty about how, exactly, they're allowed to do so.

For Williams, having a conduit like Eventbrite dealing with the state and federal government has been critical. "Just the fact that we're able to at least tag along with someone who's knocking on that bigger door we wouldn't normally have access to is appreciated," Williams said.

It's not only Main Street businesses benefitting from these alliances. Some smaller tech firms are, too. When the COVID-19 crisis hit, Eric Dy, CEO of the startup Bloomlife, was on the verge of applying for Food and Drug Administration approval for a device that women can wear to help them monitor their pregnancies for complications. Knowing that the FDA would be consumed getting COVID-19 tests to market, Dy wondered whether his own approval would be on hold.

Moreover, he wondered if Bloomlife's device might be useful for pregnant women who need a telehealth tool right now to usher them through the pandemic. So Dy got in touch with the pro-bono task force formed by 202works. Its members contacted the FDA to seek answers on the timeline for his application and helped him draft a letter to members of Congress, including California Sen. Kamala Harris, who recently sponsored a bill focused on maternal health for black women.

"This kind of stuff feels so distant from what a company like ours would be able to access," said Dy, who runs an 18-person team of primarily data scientists and engineers. "It seems like a whole different world."

Of course, there's no guarantee that all the lobbying in the world will save the millions of small businesses that are hurting. During his time heading FEMA, Witt recalled, the agency would poll small businesses that had been affected by major disasters; typically, around 40% never reopened. "I think this is going to probably be a lot worse than the 40%, simply because of the magnitude of it and the duration they've been shut down," he said.

Those are lousy odds — not only for small businesses like PianoFight, but for the tech platforms built around them. "When we get hit super-hard, they can't just back away and say, 'OK, good luck,'" Williams said. "They need us to survive, too."

Fintech

Can crypto regulate itself? The Lummis-Gillibrand bill hopes so.

Creating the equivalent of the stock markets’ FINRA for crypto is the ideal, but experts doubt that it will be easy.

The idea of creating a government-sanctioned private regulatory association has been drawing more attention in the debate over how to rein in a fast-growing industry whose technological quirks have baffled policymakers.

Illustration: Christopher T. Fong/Protocol

Regulating crypto is complicated. That’s why Sens. Cynthia Lummis and Kirsten Gillibrand want to explore the creation of a private sector group to help federal regulators do their job.

The bipartisan bill introduced by Lummis and Gillibrand would require the CFTC and the SEC to work with the crypto industry to look into setting up a self-regulatory organization to “facilitate innovative, efficient and orderly markets for digital assets.”

Keep Reading Show less
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.

Every day, millions of us press the “order” button on our favorite coffee store's mobile application: Our chosen brew will be on the counter when we arrive. It’s a personalized, seamless experience that we have all come to expect. What we don’t know is what’s happening behind the scenes. The mobile application is sourcing data from a database that stores information about each customer and what their favorite coffee drinks are. It is also leveraging event-streaming data in real time to ensure the ingredients for your personal coffee are in supply at your local store.

Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.

Keep Reading Show less
Jennifer Goforth Gregory
Jennifer Goforth Gregory has worked in the B2B technology industry for over 20 years. As a freelance writer she writes for top technology brands, including IBM, HPE, Adobe, AT&T, Verizon, Epson, Oracle, Intel and Square. She specializes in a wide range of technology, such as AI, IoT, cloud, cybersecurity, and CX. Jennifer also wrote a bestselling book The Freelance Content Marketing Writer to help other writers launch a high earning freelance business.
Enterprise

Alperovitch: Cybersecurity defenders can’t be on high alert every day

With the continued threat of Russian cyber escalation, cybersecurity and geopolitics expert Dmitri Alperovitch says it’s not ideal for the U.S. to oscillate between moments of high alert and lesser states of cyber readiness.

Dmitri Alperovitch (the co-founder and former CTO of CrowdStrike) speaks at RSA Conference 2022.

Photo: RSA Conference

When it comes to cybersecurity vigilance, Dmitri Alperovitch wants to see more focus on resiliency of IT systems — and less on doing "surges" around particular dates or events.

For instance, whatever Russia is doing at the moment.

Keep Reading Show less
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.

Policy

How the internet got privatized and how the government could fix it

Author Ben Tarnoff discusses municipal broadband, Web3 and why closing the “digital divide” isn’t enough.

The Biden administration’s Internet for All initiative, which kicked off in May, will roll out grant programs to expand and improve broadband infrastructure, teach digital skills and improve internet access for “everyone in America by the end of the decade.”

Decisions about who is eligible for these grants will be made based on the Federal Communications Commission’s broken, outdated and incorrect broadband maps — maps the FCC plans to update only after funding has been allocated. Inaccurate broadband maps are just one of many barriers to getting everyone in the country successfully online. Internet service providers that use government funds to connect rural and low-income areas have historically provided those regions with slow speeds and poor service, forcing community residents to find reliable internet outside of their homes.

Keep Reading Show less
Aditi Mukund
Aditi Mukund is Protocol’s Data Analyst. Prior to joining Protocol, she was an analyst at The Daily Beast and NPR where she wrangled data into actionable insights for editorial, audience, commerce, subscription, and product teams. She holds a B.S in Cognitive Science, Human Computer Interaction from The University of California, San Diego.
Fintech

How I decided to exit my startup’s original business

Bluevine got its start in factoring invoices for small businesses. CEO Eyal Lifshitz explains why it dropped that business in favor of “end-to-end banking.”

"[I]t was a realization that we can't be successful at both at the same time: You've got to choose."

Photo: Bluevine

Click banner image for more How I decided series

Bluevine got its start in fintech by offering a modern version of invoice factoring, the centuries-old practice where businesses sell off their accounts receivable for up-front cash. It’s raised $240 million in venture capital and about $700 million in total financing since its founding in 2013 by serving small businesses. But along the way, it realized it was better to focus on the checking accounts and lines of credit it provided customers than its original product. It now manages some $500 million in checking-account deposits.

Keep Reading Show less
Ryan Deffenbaugh
Ryan Deffenbaugh is a reporter at Protocol focused on fintech. Before joining Protocol, he reported on New York's technology industry for Crain's New York Business. He is based in New York and can be reached at rdeffenbaugh@protocol.com.
Latest Stories
Bulletins