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Bradley Tusk: What a Biden administration might do to Big Tech

On this week's Source Code Podcast, Tusk talks tech politics, mobile voting and more.

Bradley Tusk

Bradley Tusk thinks no matter who wins the election, the next two years could be tough for Big Tech.

Photo: Tusk Ventures

Times like these in the tech industry are sort of Bradley Tusk's sweet spot.

There's an election looming, Big Tech CEOs are being dragged in front of Congress seemingly every other week, privacy legislation is being debated and created across the country, and regulators are looking into everything from self-driving cars to the future of telehealth. And Tusk, after a long career at the intersection of tech and politics — as an advisor to Uber, a deputy governor for Illinois, a campaign manager for Mike Bloomberg, a managing partner at Tusk Ventures and more — has a pretty good grasp on all of it.

On this week's Source Code Podcast, we caught up with Tusk to talk about what the election means for the tech industry, whether the story changes depending on who wins, and why he sees stability as the most important goal going forward. We also talked about the state of mobile voting, why Prop 22 could change the ride-sharing business across the country, and what he thought of Brian Armstrong's note about Coinbase being a "mission-focused company."

Below are excerpts from the interview, edited for length and clarity.

In your recent letter to companies and founders, you wrote that the big pro of a Joe Biden presidency was stability. That was the word you kept using over and over again. Why is stability the thing?

I think the thing that everyone would love — by the way, I think this is even true on the Republican side to some extent — is a boring presidency that's relatively calm. Not the anxiety and chaos that we have with [President] Trump every single day. I think people really want that. Look: Companies, investors, markets, they like predictability. Volatility is a problem. The question of whether Biden in a democratic Senate is better for the economy than Trump and a Republican Senate? It depends. If it were Bernie Sanders, different question, but with a moderate Democrat, then the question just becomes, can you emotionally handle four more years of this? And for most people, the answer is no.

I talk to some people who say that if Biden wins, it's going to be a lot easier for tech companies in some ways. Then I talk to others who say, no, he's going to make Sen. Elizabeth Warren the Attorney General and she's going to tear down tech. Do you have a sense one way or the other?

I think the answer is, it depends. If you're Amazon, Facebook, Google, if you're any of the really big tech companies, I think from a political and regulatory standpoint, the next four years, or at least two years of the Democratic Senate and a Biden White House, could be pretty tough. For a few reasons.

One, ideologically, Democrats have long supported things like tougher antitrust regulations, a privacy framework like what they have in Europe, potentially repealing Section 230 of the Communications Decency Act. This has been on the list of policies that Democrats have wanted for a while.

But two, and I think this is much more concerning if you're Big Tech: If you're Biden, or [House Majority Leader Nancy] Pelosi, or [Sen. Chuck] Schumer, you need to give the far left stuff to keep them busy. You want to make all the big decisions, you want to handle the major initiatives, the first hundred days. You don't want to be hijacked by [Rep. Alexandria Ocasio-Cortez] and the Green New Deal and all that stuff, which means you have to give them issues that they care about and have substance to work on, so they don't feel like they're getting blown off.

If you're Joe Biden, do you really care if Facebook is one company, or if Instagram, Whatsapp and Facebook are three separate companies? No! Not in the slightest, right? Do you care if AWS and Amazon are the same or different? No! And by the way, Schumer, Pelosi and Biden, the average age is pretty close to 80 in that group. I don't think most of them know what any of this stuff is.

So I think the biggest threat to Big Tech is not even just ideology, it's that it's in the political interest of the centrist Democratic leadership to make them the sacrificial lamb to keep the far left busy.

Whoever wins, there's going to be so much to deal with: We have COVID, the economy, health care, just so many fights to fight. Is tech even going to be a priority? Are we going to get to any of this in two years, regardless of who wins?

We may not. I think it depends. Part of the way to break it up is administrative action versus legislative action, right. So if Biden is president, whoever the Attorney General is will inherit at least an existing antitrust prosecution against Google. They at the very least have to decide whether to continue that or not.

And I think there are some very strong arguments as to why they may not, because ultimately this felt like a very rushed political deal by Trump and [Attorney General William] Barr, and it may be in Trump's political interest to do something against Google before the election. But the Biden Justice Department may say "this is a much harder case to make than the one against Facebook," for example.

The other half of the battle is legislative. I don't think Schumer, Biden, Pelosi, the people really running the place, are going to spend time on these tech issues. So for AOC, Elizabeth Warren, [Sen.] Sherrod Brown, how big a priority is this? If it's the number one priority, I see Pelosi and Schumer saying, "Knock yourself out, have at it." And I don't think Biden's going to veto anything that comes from a Democratic Congress.

Even then, I don't think you can get done at the same time new antitrust regulations, a national privacy framework, and repealing Section 230. I think you have to pick one.

Which would you bet on being the one they pick?

On 230, the upside is you'd get bipartisan support, because the conservatives are convinced that Twitter and Facebook are out to get them. So if you for some reason wanted something bipartisan, 230 is a pretty good one.

And then number two would be privacy. That's probably the most impactful and important. Because yes, they could pass new regulations, but the Justice Department already has pretty significant ability to go after companies on antitrust violation grounds. So the one that will be the most meaningful will be privacy. So if the left said, "we really, really want to do this," I would imagine that's what they would pick.

The very first thing I thought of when you said you would do this interview was, "I have to ask him about the Coinbase memo." Because it has sparked this fascinating discussion about, what is a company's job in the world? And right now, that debate has never been more obvious. So what did you make of that?

So first of all, we're an investor in Coinbase. Let me disclose that.

Brian is a really, really smart guy. He's an unusual guy. I don't think a totally conventional person creates an incredible cryptocurrency trading platform. And it feels like every successful tech founder's kind of a weird person, right? What I liked about it, even though it's not where I've come out in my own business, was that it was very honest. And it was very transparent, and very candid.

It's not clear that employees shouldn't have the right to have a dissenting point of view, or to create something that may not be a safe space. So I think in some ways, the way that Coinbase handled it was very clear, and no one has any doubt as to what their obligation is as a company, which is to make money for its investors. And I respect that. And, you know, I thought what Expensify did was pretty bold, and maybe a little bolder than what Coinbase did, in a way. But again, I respected that too. And if you believe that four more years of Trump is an existential threat to democracy and the planet, I understand the feeling that you've got to act on it.

The thing I had a hard time with over Brian's memo was just trying to figure out if what he's asking for is even practical. I don't know if you can run a company outside of politics right now.

Yeah, absolutely. What Brian's trying to do may not be feasible, but I respect the attempt to provide clear, bright rules to employees, to say this is what we are and this is what we're not. Whether that succeeds, I don't know.

Though the question is this: If Biden wins, does that separation come back a little bit? Where politics is not completely the dominant force in everyone's mindset, everyone's life all the time? If Biden is some version of Sleepy Joe — and I think I would be pretty happy if he was — it's just like, let's have some peace and quiet.

Protocol | China

Everything you need to know about the Zhihu IPO

The Beijing-based question-and-answer site just filed for an IPO.

The Zhihu homepage.

David Wertime/Protocol

Investors eager to buy a slice of China's urban elite internet will soon have the chance. Zhihu, a Beijing-based question-and-answer site similar to the U.S.-based Quora, has just filed for an IPO to sell American Depositary Shares on the New York Stock Exchange.

What does Zhihu do?

Zhihu is China's largest online Q&A platform — the name comes from the expression "Do you know?" in classical Chinese. It was founded 10 years ago by Yuan Zhou (周源), a former journalist, and spent two years as an invite-only online platform. It quickly built a reputation as a source for quality answers and has drawn a community of elite professionals, including ZhenFund managing partner Bob Xu and venture capitalist Kai-Fu Lee, also an early investor.

Over time, the Chinese-language Zhihu has become more mainstream, and now says it hosts 315.3 million questions and answers contributed by 43.1 million "creators." (Quora, about one year older than Zhihu, had almost 61 million questions and 108 million answers by the end of 2019). The website has grown into a content platform where people also keep diaries, write fiction and blog as social media influencers.

Zhihu users do not look like China as a whole. Most than half are men, most live in "Tier 1" cities and more than three-quarters are under 30 years old.

Zhihu continues to emphasize the quality of its content. "Zhihu is also recognized as the most trustworthy online content community and widely regarded as offering the highest-quality content in China," its prospectus says.

Zhihu's financials

Zhihu registered for its IPO via the Jumpstart Our Business Startups Act, a.k.a. the JOBS Act, which has reduced disclosure requirements for companies with less than $1.07 billion in annual revenue. Zhihu's revenue doubled from 2019 to 2020, but still only reached $207.2 million, and the company is short of profitability with a 2020 net loss of $79.3 million. The company says it's "still in an early stage of monetization" with "significant runway for growth across multiple new monetization channels."

Trend lines are good. Zhihu has managed to double revenue while keeping expenses largely constant, with selling and marketing aimed at growing Zhihu's user base as the biggest single expense.

The company is trying to diversify its revenue streams. In 2019, 86.1% came from advertising. 2020 saw advertising account for 62.4% while "content-commerce" — meaning native advertising — took in 10%. The rest was mostly paid memberships.

What's next for Zhihu

After years of evincing a relaxed attitude toward monetization, Zhihu is putting itself in the hot seat to do just that. Zhihu is betting that monetizing Chinese web users will get easier over time. The prospectus describes "significant growth potential" in China's "online content community market" and says average revenue per user in China is expected to more than triple from about $55 in 2019 to about $199 in 2025, with revenue in the overall market reaching a projected $200 billion in 2025.

The company looks like it will basically try everything to monetize, and see what sticks. It plans to "ramp up our online education service" and to "continue to explore other innovative monetization channels, such as content e-commerce and IP-based monetization."

The prospectus also mentions AI frequently, touting Zhihu's AI content moderation tool wali as well as a "question routing system" and "feed recommendation and search systems." However, the depth and quality of content remains far more important to Zhihu's success. Users have joked on Zhihu about the poor quality of its wali filter.

What could go wrong?

Zhihu could fail to turn a profit. Like most content platforms, Zhihu has found it hard to monetize its traffic and the vast amount of free content at its core. The platform was built on the premise that anyone can acquire professional knowledge easily, which means users are not inclined to pay.

Since 2016, Zhihu has tried many monetization models: paid physical/virtual events, online courses taught by its top creators, premium memberships and paid consulting services. None have been a hit. Zhihu Live, the paid virtual event product, attracted a lot of public attention in 2016 and 2017, but since then its popularity has waned. According to the prospectus, Zhihu currently has 2.4 million paying members, or only 3.4% of its monthly active users.

Zhihu also faces intense competition. Defined narrowly, it has no rivals, with would-be contenders like Baidu Zhidao and Wukong, owned by ByteDance, falling by the wayside. But Zhihu has positioned itself as something more: a community for diverse content. In this regard, it's competing with big public-facing social media platforms such as the Twitter-like Weibo and Bilibili. While Zhihu's 68.5 million monthly active user base is growing fast, Weibo has over 500 million and Bilibili over 200 million. Zhihu differentiates itself with the quality and depth of its content, but maintaining that creates inevitable tension with the business imperative to expand.

Like every content platform in China, Zhihu is subject to rigid state censorship and faces harsh penalties for failing to police speech itself. Politically-sensitive questions are nowhere to be found on the platform, while other topics including transgender rights have been censored in the past. Even so, in March 2018, Zhihu was taken off every mobile app store for seven days at the request of Beijing's municipal Cyberspace Administration. Authorities did not specify why, but the suspension probably related to subtle criticisms of Xi Jinping on the platform; Zhihu promised to "make adjustments."

Zhihu's prospectus is largely mum on the censorship question, perhaps because the company feels it's gotten good enough at doing it. Zhihu says it has a "comprehensive community governance system" that combines "AI-powered content assessment algorithms" with the ability of users to report each other as well as "proprietary know-how." These resemble the same tools most big Chinese social media platforms use to censor content and keep in Beijing's good graces.

Who gets rich?

Here's what we know:

  • Founder, CEO and Chairman Yuan Zhou currently owns 8.2% of Zhihu, with another 8% worth of options, which he can exercise within 60 days of the IPO, held in a separate holding company controlled by a trust of which he is the beneficiary. Following exercise, Zhou will have the vast majority of aggregate voting power.
  • Innovation Works, beneficially owned by Peter Liu and Kai-Fu Lee, owns 13.1% of Zhihu. According to corporate database Qichacha, Innovation Works invested about $153,000 in an angel round in January 2011, then made follow-on investments in the C and D rounds.
  • Tencent owns 12.3%.
  • Qiming Entities owns 11.3%. According to corporate database Qichacha, Qiming invested $1 million in Zhihu's series A, then made follow-on investments in the B, C and D rounds.

Kuaishou, Baidu and Sogou also own stakes, as does SAIF IV Mobile Apps Limited.

Innovation Works' Kai-Fu Lee and Peter Liu, and Qiming Ventures, both of which invested early and often, look like the biggest winners besides founder Zhou.

What people are saying

"Zhihu, if it ever wants to be a truly massive platform, will need to go out of the hardcore knowledge-sharing space, and become more mainstream, more entertaining, and yes, even less intellectual. But to capture that market, who better to partner with than Kuaishou, who built its business on exactly those characteristics?" —Ying-Ying Lu, co-host of Tech Buzz China.

"After separating video content into its own feed, Zhihu is now in competition with Bilibili and [ByteDance-owned] Xigua Video. Education-themed videos used to be one of the important growth drivers for the latter two apps. Now [Zhihu], the app that specialized in educational content, has joined the game." —Lan Xi (pen name), independent tech writer.

David Wertime

David Wertime is Protocol's executive director. David is a widely cited China expert with twenty years' experience who has served as a Peace Corps Volunteer in China, founded and sold a media company, and worked in senior positions within multiple newsrooms. He also hosts POLITICO's China Watcher newsletter. After four years working on international deals for top law firms in New York and Hong Kong, David co-founded Tea Leaf Nation, a website that tracked Chinese social media, later selling it to the Washington Post Company. David then served as Senior Editor for China at Foreign Policy magazine, where he launched the first Chinese-language articles in the publication's history. Thereafter, he was Entrepreneur in Residence at the Lenfest Institute for Journalism, which owns the Philadelphia Inquirer. In 2019, David joined Protocol's parent company and in 2020, launched POLITICO's widely-read China Watcher. David is a Senior Fellow at the Foreign Policy Research Institute, a Research Associate at the University of Pennsylvania's Center for the Study of Contemporary China, a Member of the National Committee on U.S.-China Relations, and a Truman National Security fellow. He lives in San Francisco with his wife Diane and his puppy, Luna.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
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Google’s trying to build a more inclusive, less chaotic future of work

Javier Soltero, the VP of Workspace at Google, said time management is everything.

With everyone working in new places, Google believes time management is everything.

Image: Google

Javier Soltero was still pretty new to the G Suite team when the pandemic hit. Pretty quickly, everything about Google's hugely popular suite of work tools seemed to change. (It's not even called G Suite anymore, but rather Workspace.) And Soltero had to both guide his team through a new way of working and help them build the tools to guide billions of Workspace users.

This week, Soltero and his team announced a number of new Workspace features designed to help people manage their time, collaborate and get stuff done more effectively. It offered new tools for frontline workers to communicate better, more hardware for hybrid meetings, lots of Assistant and Calendar features to make planning easier and a picture-in-picture mode so people could be on Meet calls without really having to pay attention.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Image: Husein Adiz / Iadhina / Protocol

This Sunday on the Source Code podcast: Mike Murphy joins the show to talk about the tech industry's push for vaccine passports. Then Issie Lapowsky talks about Facebook's latest moves in Australia, before Hirsh Chitkara joins to discuss how chess became a streaming giant.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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