Source Code: Your daily look at what matters in tech.
To give you the best possible experience, this site uses cookies. If you continue browsing. you accept our use of cookies. You can review our privacy policy to find out more about the cookies we use.
enterprise| enterpriseauthorTom KrazitNoneAre you keeping up with the latest cloud developments? Get Tom Krazit and Joe Williams' newsletter every Monday and Thursday.d3d5b92349
February 22, 2021
There are meme stonk traders, and then there are BlackRock customers. Those in the latter category will soon be able to use a new data management cloud service built in partnership with Snowflake, the first such collaboration deal struck by the data warehousing darling.
Some of Wall Street's biggest financial services companies use BlackRock's Aladdin cloud service to manage their portfolios and analyze risk. Modern professional investors have a voracious appetite for data that can inform their decisions, and need a sophisticated service that can quickly gather, sort and process reams of investment data, said Sudhir Nair, managing director and global head of Aladdin, BlackRock's technology arm.
The partnership will allow Aladdin users to "combine the multitude of datasets that many organizations struggle to get their arms around today, and at the end of the day, just build, innovate and create analytics reporting in a way that's just much more streamlined than what they've been used to with traditional sort of data warehousing or data management capabilities," Nair said.
Snowflake's technology will underpin the Aladdin Data Cloud, which will be a new option for Aladdin customers later this year and replace the current Aladdin Data Warehouse. This will allow Aladdin users to take advantage of one of the aspects of Snowflake's technology that helped turn it into the biggest software IPO of all time: It is very easy for two Snowflake users to share data with one another, even across different companies.
Even inside sophisticated technology companies, important data tends to settle into different buckets, making it harder to mix all that data and understand the big picture. And on top of this data balkanization, every year brings a new mountain of data to add to the pile.
Financial services companies used to have distinct roles for traders, data scientists and software developers, but "the days of the separation of duties are over," said Matt Glickman, vice president of customer and product strategy for Snowflake. That means investment professionals need to be more involved with data analysis, and making it easier for companies to share data across internal departments and with external partners becomes even more important.
BlackRock is in the process of transferring Aladdin to Microsoft's Azure cloud service, Nair said, a migration that is expected to be completed over the next 18 months. Snowflake runs on all three major U.S. clouds, and customers of one cloud service can share data with Snowflake customers using other cloud services.
BlackRock is also the first company in a new "Powered by Snowflake" effort that the company hopes will bring new business and live up to the expectations set by its record IPO. Snowflake is expected to report its fourth-quarter earnings next week.
Tom Krazit
Tom Krazit ( @tomkrazit) is a senior reporter at Protocol, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET and paidContent, and served as executive editor of Gigaom and Structure.
Politics
A Bloomberg-backed ‘tech co’ is building campaign tools for the left and right
The stealthy firm, which has been buying political tech firms for more than a year, is backed by Emma Bloomberg's philanthropic group.
The new firm, called Tech co., is backed by Michael Bloomberg's daughter, Emma Bloomberg.
Image: Clayton Cardinalli
February 24, 2021
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
February 24, 2021
A new company backed by Michael Bloomberg's daughter Emma Bloomberg has been quietly buying political tech firms and going on a hiring spree, as it seeks to create a digital organizing platform that operates "outside of a traditional 'Red/Blue' partisan paradigm."
Neither the existence of the firm, called simply Tech co. for now, nor its high-profile funder have been previously reported, though it's been up and running for at least a year. But a spate of recent job listings seeking data scientists, behavioral scientists and engineers have circulated through the insular political tech whisper mill, sparking curiosity as the startup prepares to emerge from stealth mode this spring.
<p>"Tech co. believes that a more equitable world will be built by people with organizing superpowers. To achieve this vision, we are building one seamless, intuitive, and intelligent platform that integrates data, tools, and experiences to give anyone those superpowers," reads one job <a href="https://boards.greenhouse.io/techco/jobs/5085859002" rel="noopener noreferrer" target="_blank">listing</a> for chief technology officer. The position describes Tech co. as building "a variety of technologies, from mobile apps to enterprise software tools." </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
</div>
</div></p><p>According to four sources familiar with the company, Tech co. grew out of Emma Bloomberg's philanthropic firm Murmuration, a nonprofit dedicated to public education reform. Murmuration declined to comment for this story, but in a May 2020 podcast <a href="https://web.archive.org/web/20210116045603/http://www.resistancedashboard.com/node/712" rel="noopener noreferrer" target="_blank">interview</a>, its vice president of communications Brian Reich said, "We provide data and analytics and strategic support to organizations working to improve public education in this country."</p><p>In the interview, Reich said Murmuration wanted to give local campaigns that have the potential to impact public education the same access to sophisticated data analysis tools that national campaigns have. "It's very rare that you see an integrated platform or intelligent data being used in advocacy campaigns and municipal-level races," Reich said. </p><p>Tech co. appears to have broader ambitions than just education reform. "Tech co. is the non-education specific version of the same thing," one source familiar with the company's plans said. The source said the company wants to use its philanthropic funding not just to build and acquire products, but to invest heavily in research and experimentation that will inform its tools. One job <a href="https://web.archive.org/web/20201101042503/https://boards.greenhouse.io/techco/jobs/4923790002" rel="noopener noreferrer" target="_blank">listing</a> from October sought a behavioral scientist capable of designing randomized controlled trials.</p><p>What makes Tech co. unique among most political or advocacy firms — but perhaps fitting for a Bloomberg-backed outfit — is the fact that it's recruiting and acquiring from both the left and the right. In 2019, Murmuration acquired a data analytics and CRM software firm called Crowdskout, which <a href="https://www.opensecrets.org/parties/expenddetail.php?cmte=RNC&txt=Crowdskout+LLC&cycle=2018" rel="noopener noreferrer" target="_blank">worked</a> with the Republican National Committee before the 2018 midterms. But it also bought a company called Organizer, which built a canvassing <a href="https://techcrunch.com/2012/09/11/organizer-electionear-disrupt/" rel="noopener noreferrer" target="_blank">app</a> backed in part by Democratic mega-donor and Facebook co-founder Dustin Moskovitz. Now, both of those tools are part of Tech co.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
</div>
</div></p><p>"Tech co. is building on the foundation of products including Organizer, Crowdskout, and other existing tools and products," one job <a href="https://web.archive.org/web/20201101042503/https://boards.greenhouse.io/techco/jobs/4923790002" rel="noopener noreferrer" target="_blank">listing</a> reads. "We are building capabilities that live beyond a 4-year election cycle, and outside of a traditional 'Red/Blue' partisan paradigm."</p><p>Another listing <a href="https://boards.greenhouse.io/techco/jobs/5085859002" rel="noopener noreferrer" target="_blank">described</a> Tech co.'s clients as "organizations engaged in political and social advocacy" that work "on a multi-partisan basis."</p><p>More recently, following the 2020 election, Tech co. also acquired Tuesday Company, a firm that spun out of Hillary Clinton's 2016 campaign and made a tech-based organizing app called Team. Tuesday Company's CEO Michael Luciani wouldn't confirm that Tech co. was the buyer, but in an email to Protocol, he said the company changed ownership at the end of 2020 and is continuing operations. "We were purchased by an issue advocacy group, and they are using our relational organizing tech to strengthen their ability to build communities," Luciani said. </p><p>The party-blind nature of this work is unusual. Political vendors, both in the digital space and outside of it, have historically operated on opposite sides of a firewall, rarely taking on clients in competing parties. Intra-party rifts between challengers and incumbents have at times created <a href="https://www.wired.com/?p=1951038" rel="noopener noreferrer" target="_blank">awkward</a> dynamics for companies selling their services even within a single party.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
</div>
</div></p><p>"My understanding is it's definitely non-partisan, but it's Bloomberg-y, so, pretty progressive," said one Democratic digital strategist familiar with the company's work.</p><p>Tech co. has recently been hiring aggressively from both the private sector and the insular world of political tech. The company's CEO, Evan Burfield, previously ran a political tech incubator called 1776 in Washington. Another top executive, Dan McSwain, worked on President Obama's 2008 digital team. The company has also lured talent away from some of the biggest players in the Democratic data space, including BlueLabs Analytics. </p><p>Tech co. is certainly not the first company to try to create an all-in-one tech platform for campaigns and advocacy groups. It's not even the first to do it with the support of a mega-rich donor. Before the 2016 election, former Google CEO Eric Schmidt invested in a similar firm, called The Groundwork, which also tried to build a one-stop-shop for digital organizers large and small. It landed some work with the Clinton campaign, but shortly after the election, its funding dried up, and it went out of business. </p><p>More recently, <a href="https://www.protocol.com/reid-hoffman-alloy-political-data-dnc" target="_self">Alloy</a>, a Reid Hoffman-backed political data firm that wanted to give progressive advocacy and voter registration groups access to better data, also <a href="https://www.protocol.com/alloy-reid-hoffman-shutting-down" target="_self">closed up</a> shop. And then there was Hawkfish, the Michael Bloomberg-backed data firm that worked on the former New York City mayor's presidential campaign in 2020, before <a href="https://www.vox.com/recode/2021/2/5/22268692/hawkfish-closure-mike-bloomberg-democrats-data" rel="noopener noreferrer" target="_blank">shutting</a> down earlier this year. Sources familiar with Tech co. say the company is not related to Hawkfish.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
</div>
</div></p><p>"If we've learned nothing else from this last year, and particularly if Bloomberg learned nothing else from this last year, it's that no donor, no matter how rich, is going to fund something indefinitely," the Democratic digital operative said.</p>Tech co. may have advantages that those firms did not. For one thing, its acquisition strategy means it already owns a suite of tools that campaigns and organizations on both sides of the aisle have used. That could help the company avoid being seen as just another Big Tech interloper, a reputation other recent digital and data firms have <a href="https://nymag.com/intelligencer/2019/09/facebook-silicon-valley-democratic-party.html" rel="noopener noreferrer" target="_blank">found difficult to shake</a>. Sources say the company is also hoping that its deep-pocketed philanthropic funding could help it overcome one of the biggest challenges that political tech firms face: the fact that elections only come around every few years. In between, companies still need to survive.
Keep Reading
Show less
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Sponsored Content
Building better relationships in the age of all-remote work
How Stripe, Xero and ModSquad work with external partners and customers in Slack channels to build stronger, lasting relationships.
Image: Original by Damian Zaleski
February 21, 2021
February 8, 2021
Every business leader knows you can learn the most about your customers and partners by meeting them face-to-face. But in the wake of Covid-19, the kinds of conversations that were taking place over coffee, meals and in company halls are now relegated to video conferences—which can be less effective for nurturing relationships—and email.
Email inboxes, with hard-to-search threads and siloed messages, not only slow down communication but are also an easy target for scammers. Earlier this year, Google reported more than 18 million daily malware and phishing emails related to Covid-19 scams in just one week and more than 240 million daily spam messages.
<p>To keep the lines of communication wide open in this new reality, organizations are adopting new cloud solutions at a rate CIOs expected to see years from now. In fact, 79% of CIOs agree that the pandemic will force their organizations to digitally transform faster than planned, according to <a href="https://slack.com/blog/transformation/people-partners-systems-slack" rel="noopener noreferrer" target="_blank">J.P. Morgan</a>. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
</div>
</div></p><p>But executive leaders know it takes more than just adopting a communication platform or software bundle to build relationships remotely. You have to find the <em>right</em> solution that meets both your internal and external collaboration needs. That's why competitive businesses today are turning to Slack, the <a href="https://slack.com/features/channels" rel="noopener noreferrer" target="_blank">channel-based messaging platform, </a>to close communication gaps with partners and customers in the age of remote work. Companies can securely collaborate with external parties using <a href="https://slack.com/help/articles/360017938993-What-is-a-channel" rel="noopener noreferrer" target="_blank">Slack channels</a>, a single place to share files and messages, in the same <a href="https://slack.com/resources/using-slack/setting-up-a-shared-channel" rel="noopener noreferrer" target="_blank">Slack workspace</a> through <a href="http://slack.com/connect" rel="noopener noreferrer" target="_blank">Slack Connect</a>.</p><p>With Slack Connect, organizations can build stronger customer and partner relationships through real-time communication. And unlike email—which leaves users open to the risk of spam and phishing—companies and external parties receive communications only from <a href="https://slackhq.com/introducing-new-layers-of-enterprise-grade-security" rel="noopener noreferrer" target="_blank">verified members in Slack channels</a>. Plus, Slack workspace administrators can maintain control over data and monitor external access. </p><p>Here's a closer look at how teams at Stripe, Xero and ModSquad are using Slack Connect to engage customers, prospects and partners in real-time and close deals faster. </p><h4>Stripe: Expediting sales deals while building lasting relationships with customers</h4><p><a href="https://stripe.com/" rel="noopener noreferrer" target="_blank">Stripe</a> is an online payment provider with a mission to support e-commerce. The Stripe sales team works with early-stage startups all the way through global Fortune 500 companies, and uses Slack Connect to engage with customers, keep communication organized and teams in sync, and jump on sales opportunities.</p><p>Jeanne DeWitt Grosser, head of Americas revenue and growth at Stripe, says communicating with prospective customers in Slack has been instrumental in maintaining engagement and closing deals.</p><p class="pull-quote">"Historically, the gold standard of a deep relationship in sales was getting the person on text," says DeWitt Grosser. "Now the gold standard is getting them into a Slack channel."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
</div>
</div></p><p>Usually at the beginning of a sale, DeWitt Grosser explains, reps used to double down on communication using the "law of 2x." Essentially, you start with a meeting and then follow up a week later. But this strategy no longer makes the cut: A lot could change in a week, and Slack is more in line with the tempo of the digital workplace. </p><p>"In Slack channels, the dialogue with the prospect happens in real time, as opposed to the next time you align your schedules," DeWitt Grosser says. "This kind of personal, persistent connection grows customer loyalty and retention."</p><p>Often sales reps have to communicate with a variety of departments to seal the deal. Instead of emailing them separately and creating silos, Stripe's account executives and solution architects set up a Slack channel with key customer stakeholders, like developers, the head of payments and a finance representative. </p><p>"When you need to move quickly, email is not the right format: It's more formal and responses take longer," says James Dyett, Stripe's head of global product sales and payments optimizations. "Slack has super powers. It's a much better experience." </p><h4>Xero: Working with external partners like they're on the same team</h4><p>If the pandemic has taught us one thing, it's that relationships matter. Whether it's launching a marketing campaign with a partner or hiring contractors to complete a specific project, we can't—and shouldn't—try to do everything ourselves. <br><br>When it comes to nurturing partnerships in the midst of the pandemic, <a href="https://www.xero.com/" rel="noopener noreferrer" target="_blank">Xero</a>, a cloud-based accounting software company, affirms that working in Slack Connect has been a game changer. Justine Wallendorf, New Zealand partner marketing manager at Xero, says Slack Connect helped her team launch a joint online marketing campaign with partners, <a href="https://www.figured.com/en-us/figured-xero" rel="noopener noreferrer" target="_blank">Figured</a> and <a href="http://paysauce" rel="noopener noreferrer" target="_blank">Paysauce</a>. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
</div>
</div></p><p>The three companies were offering a complete software solution for farmers looking to manage their business digitally. By coming together in one Slack channel, #xero-partners, the sales and marketing teams across all three businesses could connect and ensure alignment on: </p><ul class="ee-ul"><li>Immediate universal access to all campaign details</li><li>Consistent messaging across sales enablement deliverables, such as one pagers and slide decks</li><li>Quick feedback and turnaround times for deliverables</li><li>Clear leadership signoffs</li></ul><p class="pull-quote">"Working in Slack Connect guaranteed that everyone was beating the same drum and speaking the same language, positioning our partnership as best as possible in the market," Wallendorf says.</p><h4>ModSquad: Winning customer loyalty with exceptional customer support</h4><p>With so much uncertainty in the world, efficient and reliable customer support is akin to a safe harbor in a storm. That's why Slack customer, <a href="https://modsquad.com/" rel="noopener noreferrer" target="_blank">ModSquad</a> has its support teams troubleshoot customer issues in real time with Slack Connect.</p><p>As a customer experience outsourcer, ModSquad knows good customer service. Each day, ModSquad's global crew of experts—the Mods—help their customers engage with their audiences online through customer support, content moderation, community management and social media. </p><p>ModSquad works with its clients in Slack Connect to set up service level agreements and incorporate support dashboards. With the <a href="https://slack.com/apps/A0108APQFQC-geckoboard" rel="noopener noreferrer" target="_blank">Geckoboard Slack integration</a>, ModSquad monitors clients' incoming calls and chats—without ever leaving Slack. Whenever the team sees an uptick in activity or service impacting issues, they can quickly alert clients and internal teams for quick resolution. The team also relies on a <a href="https://slack.com/apps/A9WFQ3M0B-zendesk" rel="noopener noreferrer" target="_blank">Zendesk Slack integration</a> to track service desk tickets, troubleshoot and resolve issues.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
</div>
</div></p><p>According to Steve Henry, senior vice president, client services at ModSquad, Slack channels also help build a culture of transparent communication and trust with clients.</p><p>"Establishing trust with our clients is very important, and Slack provides a crucial component for all of our efforts" Henry says. "With Slack, we can provide world-class support solutions and improvements for our clients, driving efficiencies while growing their business in the process."</p><h4>In an all-remote world, Slack Connect builds strong partnerships</h4><p>Slack Connect is available for <a href="https://slack.com/pricing/paid-vs-free" rel="noopener noreferrer" target="_blank">all paid plans</a>. If you're already a customer but new to Slack Connect, feel free to <a href="http://slack.com/contact" rel="noopener noreferrer" target="_blank">reach out</a> or learn more on <a href="https://slack.com/resources/using-slack/setting-up-a-shared-channel" rel="noopener noreferrer" target="_blank">how to get started</a>. And if you want to see how others are using Slack Connect to work with external partners, check out a few of our recent <a href="https://slack.com/blog/collections/slack-connect-shared-channels-shared-success" rel="noopener noreferrer" target="_blank">customer stories</a>. </p>
Keep Reading
Show less
Protocol | Fintech
PayPal wants to be an all-in-one super app. It has its work cut out.
CEO Dan Schulman sees payments, shopping, investing and budgeting all being integrated together, but he's not the only one thinking that way.
PayPal hopes its app will run your financial life. Some day.
Image: PayPal
February 16, 2021
Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.
February 11, 2021
PayPal CEO Dan Schulman thinks there are too many financial apps. So he wants to build a "super app" for consumers to manage payments, shopping, savings, investing, budgeting, crypto and identity — all in one place.
It's an ambitious undertaking still years away from actual fruition. It also highlights the multi-dimensional battle that's only just emerging between banks, fintech players like Affirm, PayPal, Square and Stripe, as well as big tech companies like Google and Apple. All these players want to be the go-to provider for consumers' finances.
<p>Schulman believes that consumers only want to use eight to 10 apps, and that the rest are going to be essentially superseded by super apps. In China, Alipay has become <a href="https://www.protocol.com/ant-ipo-what-you-need-to-know">known for</a> its wide range of services. </p><p>"What a super app wants to do is turn all of those separate apps into a connected ecosystem where you can streamline and control data and information between those apps, between the act of shopping, the act of paying for that," Schulman said. "And then you have this common platform and common data that allows machine learning and artificial intelligence to kick in and give personalized recommendations to those consumers."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
</div>
</div></p><p>Schulman's vision, which he is laying out Thursday at PayPal's investor day, includes three major areas: payments, shopping and financial services.</p><p>This mega app needs to include a range of digital payments offerings, both online and offline, Schulman said, which need to be easily connected across merchants. This includes "not just any financial institution, credit card, debit card, ACH, but we'll also include things like rewards points redemption, utilizing cryptocurrency as a funding instrument, utilizing central bank issued digital currencies, when that becomes a reality."</p><p>Since payments are PayPal's historical strength, this is one area it could have some advantages against competitors. But Apple Pay and Google Pay have their own locked-in user bases on mobile devices, and Square has its Cash App. </p><p>For financial services, PayPal intends to partner, but Schulman said it would still be a "seamless PayPal experience," though some products could be built internally. Expect this offering to include services such as high-yield savings accounts, direct deposit, check-cashing and investing. Here PayPal faces intense competition from banks that natively offer financial services plus their own budgeting tools, not to mention aggregators such as Mint and Personal Capital, and startups offering savings tools. </p><p>"Because if somebody is going to be putting their money onto our platform, we want them to be able to grow that money, to invest that money in not just things like crypto, but in individual stocks and other assets that we digitize and allow people to invest in," he said.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
</div>
</div></p><p>While Schulman didn't delineate how PayPal would partner on this, there are a number of banking-as-a-service providers and brokerage-as-a-service companies that offer these types of white-labeled services. In this new fintech world, all sorts of companies can turn on these kinds of financial services, so PayPal's competitors could also make similar moves, giving consumers choice of where to get them. </p><p>There will be other facets to the app over time, too. Bill payment, subscription management and tools to help consumers with budgeting are also part of the mix, Schulman said.</p><p>With shopping, Schulman wants to provide "contextual commerce" by targeting consumers based on things like their wish lists with personalized offers and deals. This could include price monitoring and rewards. The goal is "so that you don't, as a consumer, need to go from one website to another and figure out different payment instruments, but you can do everything from one."</p><p>In this market, PayPal is facing not just Amazon and Shopify, but also "buy now, pay later" companies like Affirm and Klarna, which have honed their offerings over years operating in the sector. </p><p>And that raises the big question hanging over these kinds of super apps: Which companies are really capable of delivering all these services in a single product, in a way that consumers trust with their financial data and to manage their financial lives? PayPal hopes it's one of them, but it will be years before we know if that's true.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
</div>
</div></p>
Keep Reading
Show less
Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.
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
February 23, 2021
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.
February 23, 2021
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.
<p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
</div>
</div></p><p>But building a system that everyone agrees with — and can access — is no small task. There are several companies working on competing projects to verify vaccinations. But beyond that, there are more than a few hurdles that could prevent vaccine passports from succeeding, from antiquated medical records systems to interoperability issues and privacy concerns. Here's how they could actually succeed. </p><h3>Competing projects, similar standards</h3><p>Pretty much since the first blockchain white paper, people have been looking for perfect examples of where a distributed, immutable ledger could be valuable. There's obviously the push to use it for currencies, and companies have tried to use it for things like tracking <a href="https://www.protocol.com/ibm-blockchain-supply-produce-coffee" target="_self">food production</a> and <a href="https://www.govtech.com/products/Blockchain-Voting-Debate-Heats-Up-After-Historic-Election.html" rel="noopener noreferrer" target="_blank">voting</a>, but there are few use cases that have truly taken off, at least so far. "We've been working on this since 2014; we never thought that health care would be the kind of the use case that we take this mainstream," Jamie Smith, the senior director of business development at Evernym, a company focused on using the blockchain as a basis for verifying identities, told Protocol. </p><p>Smith said Evernym had been discussing its concepts with automakers, retailers, telcos, governments, loyalty companies and banks prior to the pandemic. One of those companies was IAG, the airline group that owns British Airways, which had been interested in the idea of contactless travel based on a single identity credential that follows you from the airport check-in to your gate. With the pandemic, that morphed into thinking about ways to verify that passengers have had negative COVID tests, and eventually, that they've received a vaccine. "From our perspective, it was a really easy lift to see," Smith said. "We're doing contactless travel, and we just added verifiable credentials for test results."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
</div>
</div></p><p>It's a similar genesis for IBM's Digital Health Pass initiative, which leader Eric Piscini said started about two years ago as a way to store people's entire health records in a safe, accessible platform. It also relies on the blockchain for its immutable record of proof, and both Evernym and IBM are part of an open-standards group called the Good Health Pass Collaborative, which aims to bring private credentialed vaccine records to business and people around the world. Companies are working on their own implementations of the standards, but Evernym's Smith said the data is meant to be portable from one passport to another. </p><p>Most of the companies working on passports say their systems are private by design, especially given that they're mainly working off the same open standards. In most cases, the health information only ever remains on a user's phone, but where it asks to verify that the user's information meets a system's standards — such as whether this person has had two COVID vaccines and should be allowed into an office — that information is recorded on a blockchain. "You can, using blockchain technologies, verify that someone has been tested recently, without having access to the underlying data," Piscini said. "I don't know any other technology where you can do that."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
</div>
</div></p><p>Similarly, the nonprofit Commons Project's CommonPass, backed by the likes of Oracle, Microsoft and Salesforce, started out as a project to bring an analog to Apple Health for Android. JP Pollak, a senior researcher at Cornell and founder of the Commons Project, first launched CommonHealth to bring the sort of data and insights that Apple Health offers to iPhone owners to Android users. Last summer, the group started building an app that could take health data and privately share it with others — in that case, it was to help truckers stuck at the borders in <a href="https://www.newtimes.co.rw/opinions/digital-technology-re-opening-africa" rel="noopener noreferrer" target="_blank">East African countries</a> who couldn't easily prove they'd taken COVID tests. This morphed into vaccine credentialing, with the group now working to pull together the various data streams needed to get a project like this off the ground. </p><p>"Health care institutions, EMR vendors, retail pharmacies, state vaccine registries, all issuing people a digital verifiable credential of their vaccination record that they could then use in the app of their choice, to be able to get access to various kinds of services," Pollak said. CommonPass is also working with the Mayo Clinic, as well as Epic Systems and Cerner, two of the largest EMR vendors. </p><h3>Something for everyone </h3><p>With so many competing efforts to become the world's digital vaccine passport, it might seem that the country is heading for some sort of VHS versus Betamax format war for proving everyone has had COVID vaccines. But given that so many of the efforts are using the same standards, and in many cases, looking to embed their tech in someone else's app rather than their own, the race might be less about the best tech winning, and more about various approaches working in different situations. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
</div>
</div></p><p>"The intent is not to be the only company; we don't want to be the proprietary platform that everybody has to use because they have no choice," IBM's Piscini said. "That's not who we are right now: That's the IBM from 30 years ago, not the IBM of today."</p><p>For IBM, though, the selling point is that the company already works with so many other massive companies. Why look elsewhere for a vaccine passport solution if your airline booking system is already powered by IBM? "We believe our network is going to be more valuable than any other because of our scale and our ability to integrate the platform with CRM systems, building systems or stadium systems — we can do that every day," Piscini said.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY2NTc3NS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMTM1MjYyM30._ykxxCyx3_wDbZrYgCcmK0QT2Ue1tZFdP5pf60kOmPU/img.jpg?width=980" id="c81c9" class="rm-shortcode" data-rm-shortcode-id="3967636652192acfdaad341861263bc8" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">IATA's digital passport app.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Photo: IATA</small></p><p>For other companies, it's about securing new partnerships with major players in the hopes of finding that scale. Evernym, for example, is working with International Air Transport Association, the airline industry's trade association, on an air travel-specific app called Travel Pass. IATA is working with airlines and local governments to ensure it has the latest requirements to feed the app's rules engine. "It will say, 'Hey, you're flying JFK to Heathrow, you need a PCR test 48 hours in advance before you can land,'" Evernym's Smith said. "And of course, those policy changes are changing every day." Qatar, Emirates and Etihad Airways are all <a href="https://simpleflying.com/qatar-iata-travel-pass-launch/" rel="noopener noreferrer" target="_blank">expected</a> to start trialing the app in the next few weeks.<br></p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
</div>
</div></p><p>In other instances, the technology will live inside other companies' existing apps; why make someone download yet another app and add another hurdle to compliance? Instead, the experience will be rather like adding a loyalty account or TSA PreCheck number when booking a flight. Airlines and other venues restricting access will require uploading negative test results or vaccine records using one of these services. "You're going to be using the United or the Delta app, and they'll be using our solution or somebody else's, but you will do it via their app," IATA's Travel Pass lead, Alan Murray Hayden, told Protocol.</p><p>The World Health Organization is also working on its own offering, and recently convened the <a href="https://www.who.int/groups/smart-vaccination-certificate-working-group" rel="noopener noreferrer" target="_blank">Smart Vaccination Certificate Working Group</a>. It's built upon the WHO's nearly century-old notion of the "yellow card" vaccination record, which first was used to document that travelers had been inoculated against diseases such as cholera and yellow fever. Evernym Chief Trust Officer Drummond Reed is part of the working group; he said there should be more to share in the coming months. </p><h3>What could go wrong?</h3><p>It's entirely possible that as more people start to get vaccinated, vaccine passports start to become the norm. You walk to work — still masked, of course — scan a QR code reader in the lobby, and are let in. You go out for lunch, and your loyalty card app has a discount for in-store shoppers verifying they're vaccinated. Your concert ticket is also tied to health pass information that you shared earlier in the day with Ticketmaster. But there are more than a few hurdles ahead of the companies rushing to turn these concepts into realities. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
</div>
</div></p><p>First off, there's the … reality … of the real world that any digital system has to contend with. For anyone without access to the internet, digital vaccine credentials will prove difficult to acquire, though all the companies Protocol spoke with said they would offer a paper-based QR code for people who don't have smartphones. But there's also the issue of having to corral so many different stakeholders into one system, especially when some health care providers are still reliant on antiquated database systems or <a href="https://www.protocol.com/manuals/health-care-revolution/electronic-health-records-after-coronavirus" target="_self">even paper records</a>. "The amount of inefficiency in the system is tremendous," IBM's Piscini said. </p><p>But in the U.S. at least, all vaccinators are required to report COVID-19 vaccines to their state. Piscini said that even for people who just received a paper copy of their vaccine records, systems like IBM's can likely link up to the state's immunization registry and allow people to import records to a vaccine passport.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY2NTc4My9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzNzg3MTM2M30.RZtqR7F_FuXK1S24V6jVaqUZ0xOSG-gCwj00xU3fxcM/img.png?width=980" id="b0bd3" class="rm-shortcode" data-rm-shortcode-id="11d8002d92c0cd6ef39b12fc7b8dccf8" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">How CommonPass's app shows your records. </small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image: CommonPass</small></p><p>And states are willing to help out, Pollak said, adding that CommonPass has started working with Hawaii to roll out its offering for would-be tourists. "We're seeing a lot of state governments stepping up and doing a really good job with this," Pollak said. "It would be surprising if there wasn't a coordinated federal effort very soon." That being said, while <a href="https://www.cbc.ca/news/canada/north/iceland-covid-passports-canada-1.5904828" rel="noopener noreferrer" target="_blank">many countries around</a> the world are committing to working on vaccine passports, getting a straight answer out of the U.S. government on what it's doing has proven difficult. The State Department, which maintains America's traditional, analogue passports, referred me to Homeland Security, which referred me to the White House. The acting director and chief of staff of the White House's Office of Science and Technology Policy, Kei Koizumi, told Protocol that "OSTP can't discuss projects we are working on before they are publicly announced."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
</div>
</div></p><p>But even with systems in place at a federal level, there's still a fair amount of education that needs to happen before people will trust systems like these. "There's a substantial gap in understanding and knowledge of how these systems work, and people's views, in terms of who should get access to which data," Pollak said. </p><p>"We assume there's a Facebook Borg in the sky, monitoring every interaction," Smith said. "The emergence of verifiable credentials breaks down that mental model, where actually it becomes more like decentralized bits of paper that I can carry around, and no one's to know that I've been sharing this information."</p><p>"Our belief is that if you do the right thing, from a platform point of view, protecting your privacy, and giving you control and access to the platform to everybody who wants to use it," Piscini said. "I think those are very basic things that allow the core of the platform that we build to generate adoption by the individuals."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="8">
</div>
</div></p><p>Even with a system that works, there may still be holdouts to this potential new normal. "Some people are saying, 'I will never get vaccinated,'" Piscini said, "and I don't know if the airlines are going to say, 'Well, maybe you will never fly again.'"</p>
Keep Reading
Show less
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.
Is this a VC bubble, or just the new normal?
Huge deals, little diligence and hyper-fast follow-on rounds have become commonplace. For now.
Things are looking awful frothy, aren't they?
Photo: Drew Beamer/Unsplash
January 16, 2021
Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.
January 15, 2021
The VC industry is "frothy," "overheated" or "bonkers," investors say. Whether this is the new normal or unhealthy signs of an overheated market depends on your point of view — and how well your portfolio is doing.
There are signs that VC has changed all around. In recent months, deal sizes and valuations have spiked in hot deals; due diligence on startups has evaporated as investors compete to get into hot deals first; venture firms are investing much more than they normally do; there are hyper-fast follow-on rounds; and more non-traditional investors are backing early-stage startups.
<p>In one recent example, low-code startup Retool, which helps companies quickly and cheaply build internal software tools, attracted top-tier investors who bid for a round that ended up valuing the quickly-growing company at close to <a href="https://www.bloomberg.com/news/articles/2020-10-20/retool-nears-1-billion-valuation-with-funding-from-sequoia" rel="noopener noreferrer" target="_blank">$1 billion</a>. Sequoia Capital won the deal, leading the Series B. Despite its fast growth and high valuation, Retool's annualized revenue run rate at the time of funding in October was between $5 million to $10 million, according to those familiar with the deal. (It has since jumped higher, one source said.)</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
</div>
</div></p><p>That sort of sky-high revenue multiple is not uncommon for companies that are seeing strong growth and happen to fit into a particular theme that venture investors are chasing. </p><p>This shift started as far back as 2018, when tech's dominance in the market became clearer, some investors say, but has ramped up in the past six months or so. Some point to particular enthusiasm about a post-pandemic economy and perhaps a wave of relief-induced investment once the pandemic actually boosted many startup sectors, such as enterprise, ecommerce and gaming. </p><p>Whatever the original motivation, the surge of investment is being made possible by <a href="https://www.cbinsights.com/research/report/venture-capital-q4-2020/" rel="noopener noreferrer" target="_blank">cash</a> that's flooding into the venture industry, a trend driven by low interest rates, exuberance over unusually strong exits last year in companies such as enterprise software firm <a href="https://www.protocol.com/snowflake-ipo" target="_self">Snowflake</a> and high valuations for late-stage companies, such as gaming company Roblox. </p><p>"Capital is flooding into the VC market because of high returns in VC," Zach Coelius, founder at Coelius Capital, said. "That leads to more investors splashing money around and driving up prices and investing in companies that shouldn't be invested in."</p><p>New macroeconomic conditions — as well as startups growing faster and generating higher revenues than ever before — are behind this, said Chirag Chotalia, partner at Threshold Ventures. Previous "category-defining companies" used to typically exit at $1 billion to $5 billion, but now those outcomes are $10 billion to $30 billion or higher, he said.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
</div>
</div></p><p>"We think about it as the new normal," Chotalia said. "The biggest revelation for me is the size of the outcomes really supports the quote-unquote frothiness in the cycle. In many ways, what was irrational a couple years ago is now much more rational today because of what we're seeing on the exit side."</p><p>Even if the stock market drops, these new startups still have strong fundamentals, he thinks. "The magnitude of the exits is not driven so much by the stock market but by the revenue scale and the growth rate of these companies. I don't see it nearly as cyclical as past cycles," Chotalia said. "Valuations may come down, but not these growth rates. Multiples might be questionable for some portion of companies, but revenues are here to stay, as are the growth rates."</p><h3>'No time to dilly-dally'</h3><p>With the fierce competition for top deals, the rigor of due diligence is declining. Startup deals used to entail days of calls and research at the seed round and weeks at Series A or later. Now seed deals can now be done in hours, and Series As within days.</p><p>"Diligence cycles have become much more compressed," Coelius said. "You don't have time to dilly-dally anymore. It's 24- to 48-hour decision cycles. You have to have done your diligence beforehand."</p><p>Investors have gone beyond "preemptive" deals where they seek to invest in a company before it searches for funding. One new strategy: VC firms might <a href="https://twitter.com/gokulr/status/1349536685214687234?s=21" rel="noopener noreferrer" target="_blank">send</a> a term sheet to a startup even before a "get-to-know-you" meeting; some even hire diligence firms to do this work for them. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
</div>
</div></p><p>"Now it's turned to firms coming in saying, 'I've done all my work; here's a term sheet,'" said Matt Murphy, partner at Menlo Ventures. "It's a way to force something on people before they're even ready."</p><p>"Everyone is saying 'I can't miss the next Snowflake at A or B or C,'" said Semil Shah, founder at Haystack. "It's not just fear of missing out: It's now fear of missing that company that could be a $100 billion company. That fear is sharpened."</p><p class="pull-quote">What was irrational a couple years ago is now much more rational.</p><p>Another aspect that's ratcheting up is the speed of follow-on rounds. Some hot companies are raising a new round in two to three months after a previous one. "It used to be like, 'Damn, I missed it, I'll check in in six to 12 months,'" Murphy said. "Now what everyone is doing is moving to a dynamic of: 'I missed it. It doesn't matter, I'll put a term sheet in two to three months later.'"</p><p>Nontraditional startup investors, particularly in early-stage deals, could also lead to startups getting funded before they're ready. In a recent example, a venture investor pointed to the unusual case of a banking advisory firm leading a deal for an early-stage startup at the Series A. This is a step beyond investment banks leading deals, which has already been common.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
</div>
</div></p><p>The frenzy is especially focused on the hottest deals among top entrepreneurs or companies, Coelius said. It's a maxim among venture capitalists that each year there are <a href="https://stripe.com/atlas/guides/ama-marc-andreessen" rel="noopener noreferrer" target="_blank">15 to 20 startups</a> that will be massively successful, and those are the only companies that matter in driving investors' returns.</p><p>But this filters down to lower-quality deals. For example, companies that are not snapped up by top investors are then backed by newer investors who are trying to break into the industry. And they may be even less diligent than established firms, Coelius said.</p><p>"The risk is always: Mediocre companies raise at high valuations," said Mamoon Hamid, partner at Kleiner Perkins. "If historically you wrote $10 million checks, now you're losing $20 million [when a startup fails]. It's going to happen. But people don't think that way. They think, 'what's the upside,' not the downside."</p><h3>The Icarus effect</h3><p>Valuations are so high at the moment that one new firm, Apeira Capital, is seeking to create synthetic vehicles to essentially short <a href="https://www.wsj.com/articles/overvalued-startups-could-be-shorted-by-new-firm-11607337001" rel="noopener noreferrer" target="_blank">overvalued startups</a>. There are a plethora of companies that may be fundamentally good companies but are just overvalued due to the way that venture capitalists value and invest in them, Apeira founder Natalie Hwang said. </p><p>And despite the flood of cash going into the market, capital is not being distributed evenly, said Deena Shakir, partner at Lux Capital. The proportion of funding that went to female-founded startups in 2020 dropped to 2.3% from 2.8% in 2019, according to Crunchbase. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
</div>
</div></p><p>Venture firms investing much more than they typically do could come back to bite them. One limited partner who requested anonymity said some firms that typically make one to two deals per quarter are now making upwards of seven to nine. If it's true that there are only 15 to 20 truly winning startups in a given year, that pace could push investment returns down.</p><p>"It just can't end well," the investor said. "It almost feels like we're looking at an entire cohort [of investors] that's going to have substandard returns."</p><p>For limited partners, this could lead to trouble when it comes to exits. "There's no price diversity," said Chris Douvos, founder at fund-of-funds Ahoy Capital. "You're just playing the momentum. It's a buy high, sell higher mentality. My concern is, as a whole, the entire industry has conditioned itself to need those kinds of exits for success."</p><p>Many investors today don't think about — or weren't around during — the last real downturn, he added. "Pricing things for perfection and glossing over weaknesses won't hurt you in a one-way market," Douvos said. "But if there's ever a hiccup, you'll have the Icarus effect where the higher you fly, the further you'll fall."</p>
Keep Reading
Show less
Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.
Latest Stories
See more
Most Popular
Bulletins
February 24, 2021 13:10 EST
February 24, 2021 08:17 EST
Get Source Code in your inbox
David Pierce's daily analysis of the tech news that matters.