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Coverage | Newsletter | Intel | Events
Coverage | Newsletter | Intel
January 28, 2021
GameStop's wild stock ride on Wall Street got so crazy recently that Robinhood and other platforms had to press pause on any more trades in those shares, as well as other affected stocks.
Betterment, the robo-investing platform that focuses on consumers with longer-term investment goals, was largely spared in all the excitement.
But Dan Egan, the fintech startup's managing director of behavioral finance and investing, was naturally paying close attention to what was happening. His job is to "keep an eye on how people actually make decisions," he told Protocol.
He shared his thoughts Thursday morning shortly after Robinhood announced the suspension of trades in GameStop and other stocks.
This interview has been edited for clarity and brevity.
What's your reaction to what happened?
Bubbles and mania always happen. At some level, what we're seeing right now is nothing new. But there's also a lot that is different or that is new. Psychologically, there's a huge difference between something costing anything like five cents, and it being free. When something becomes free, we over-consume. We don't think about whether or not we really care about what we're doing.
Another element is accessibility. It is now in your pocket. You can get push notifications from trading apps, etc. It's on a small screen that often is devoid of a lot of other context.
A broad-based context that is important to keep in mind is that we are in a pandemic. People are not able to go out and do a lot of the usual things that make them feel like a part of society and have connections to other people. We've got social media and so on that concentrate and funnel them during a time of a lack of connection into feeling that they are part of a movement or a tribe. There's obviously a psychological repugnance to the idea of short selling, and the fact that hedge funds are the 1% and we should destroy them. It became much more of a social movement game where they say, "Can we actually put a hedge fund out of business?"
There's a couple of things going on now that we need to be aware of. Robinhood gets paid for order flow. I have no idea if there's anything [conspiratorial about] Robinhood saying, "We don't want more risk from all this GameStop stuff. We're going to stop allowing people to trade it." That can happen without any kind of conspiracy theory or any kind of [belief that], "Oh, they're rewarding the people who actually pay them."
But I do think it's worth saying that Robinhood's traders or whatever, they don't pay them. The market makers and the hedge funds are the people who pay them. So right now, Robinhood's actual customers, the people who actually pay them, are telling them, "Hey, could you slow down this kind of trading? Because we're not sure that we can manage the risk of it right now."
How was Betterment affected?
Betterment invests our clients in low-cost diversified portfolios and exchange-traded funds. So some part of our clients' money would have been in GameStop and AMC and so on, but they're in it through diversified ETFs.
What do you think about Robinhood's decision to suspend trading? There's the view that it actually may hurt them long term.
Absolutely. When you brand yourself as the company that is helping the little guys take on the big guys and redistribute the wealth, and then exactly at the point in time when that is happening, you shut it down, it's very clear you shouldn't call yourself Robinhood.
Clearly, there's more focus on fintech trading platforms, and even some skepticism about the use of these types of apps and platforms. This was underscored by the comments of Massachusetts Secretary of the Commonwealth Bill Galvin, who also filed a legal complaint against Robinhood, which he has accused of turning a risky financial activity into a game. How do you view concerns about investment platforms?
Robinhood and other brokerages, they don't care if you're good at trading or if you're making money or not: They're completely indifferent to it. They care that you are trading.
On the other hand, we charge 0.25% of our clients' money that we manage. If we lose money, we lose revenue. The kind of analogy I have here is that you would never tell somebody, "Oh, you're just learning to ski? Go to the top of the mountain and take the toughest trail down," because they're likely to really get hurt. You start off on bunny slopes and you learn how to do stuff there, and then you go slightly steeper, and then you build up muscle memory, the ability to read the ground.
The same thing is true of investing. I don't mind people who like DIY trading, per se. But I don't like it when a company puts a person up at the top of the mountain, with no experience and no ability to understand what they are getting into in ways that can dramatically hurt them, then just [lets] them loose. You should only let people who have shown that they can really handle the full gamut of options trading derivatives margins, etc. They should prove that they really can handle what they're getting into. And I don't think that a lot of the brokerages do that well.
That's a point Galvin raised. Do you think that Robinhood is doing that, exposing amateurs to unnecessary risk?
Robinhood definitely has made it easier. They have made it easier to get yourself into trouble. By virtue of not understanding how things work under the hood, they've done it in a way that makes it seem like a fun game rather than serious investment.
What are your thoughts on the push for new or more regulation? How do you see it affecting your business?
We're a fiduciary. We're held to that high standard already. None of the concerning regulations are a problem for us because we already do all these things.
From our point of view, it's great. More and more consumers should have the option to be treated by an expert in a way where they can trust those options, where they don't have to be second guessing or considering whether or not they're getting taken advantage of. I do think that regulation always needs to be done carefully so that it benefits consumers, and it doesn't just shut down choice.
Overall, do you think what happened and the reactions also hurt other platforms like Betterment?
Yeah. One of our competitors doing something really bad and getting lumped in together, definitely there's the possibility of that. I think people are expecting the ability to do these things now. It's just a question of using a provider who seems to have a good reputation. There's lots of choices out there.
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Benjamin Pimentel
Benjamin Pimentel ( @benpimentel) covers 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 Signal at (510)731-8429.
Protocol | Policy
Senate infrastructure bill: Who’s winning and losing in tech?
The $1 trillion bill covers everything from cyber to electric vehicles. But who's best positioned to seize the opportunity?
The $1 trillion infrastructure bill includes $550 billion in new spending.
Photo: Al Drago/Bloomberg via Getty Images
August 5, 2021
Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. 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.
August 5, 2021
There's a little something — and in some cases, a lotta something — for everyone in the bipartisan infrastructure bill that's currently getting hammered out in the Senate.
The $1 trillion bill includes $550 billion in new spending, of which tens of billions of dollars will go toward broadband expansion, low-income internet subsidies, electric vehicle investments, charging stations, cybersecurity and more. The outpouring of federal funding gives anyone from telecom giants to device manufacturers a lot to like.
Of course, even in a bill that stretches across more than 2,700 pages, not everyone got what they wanted.
The final details of the bipartisan agreement are still being finalized — and the package still faces a fight in the House. But Protocol looked at which companies and corners of the tech sector stand to benefit most from the deal.
Who's winning?
Telecom giants, but mostly Comcast
The infrastructure bill includes a whopping $65 billion to expand broadband connectivity, including a $42.5 billion grant program that will directly fund broadband deployment in unserved and underserved parts of the country. There's also more than $14 billion set aside in internet subsidies for low-income Americans, an extension of the existing Emergency Broadband Benefit program, which will be renamed the Affordable Connectivity Program.
The bipartisan agreement also does away with some parts of President Biden's initial proposal that were the least popular with the telecom industry, including more-aggressive requirements regarding network speed and provisions that would have targeted grant funding to municipal, government-run networks.
In theory, this plan is good news for all the telecom giants: AT&T, Charter, Verizon and more. But the one that's best positioned to seize the moment is Comcast, said Blair Levin, former executive director of the National Broadband Plan and current policy adviser to New Street Research.
"They have a head start because they invested 10 years ago in trying to accomplish the same goal, which is trying to get the currently unconnected people online," Levin said, citing Comcast's low-cost Internet Essentials program. "By virtue of the staff, the relationships, the understanding of messaging and the importance of digital literacy, Comcast has skated to where the puck is going."
That said, the entire industry — that includes cable, fiber, even wireless providers — does stand to benefit from a law that puts so many billions toward expanding the pool of potential customers with relatively few strings attached for providers. The bipartisan deal also mitigated industry fears that funding might pour into fiber development in areas where cable and other alternatives already exist. "This bill ended up going with priority being for areas that are either not served at all, or areas that have lower availability," said Joel Miller, senior director of telecom policy for the tech trade group ITI, which counts Verizon and Motorola as members. "Eligible areas being defined the way they are allows wireless options to be included in funding."
Electric bus and charging-station makers, but mostly Tesla and Proterra
The infrastructure bill sets aside $7.5 billion to build a network of electric vehicle charging stations across the country. It's about half what the Biden plan initially proposed, but it's still a massive cash infusion. And who dominates the electric vehicle charging station market in the U.S. today? Tesla.
Until last month, Tesla's superchargers were open only to Tesla vehicles. Not so coincidentally, CEO Elon Musk recently announced that that was about to change, as the company prepares to expand access to other electric vehicles later this year. That makes Tesla eligible for some of that $7.5 billion in the bill, which requires that eligible stations "serve vehicles produced by more than one vehicle manufacturer."
The Zero Emissions Transportation Association, which represents Tesla among others, applauded the introduction of the bill. "Building hundreds of thousands of new charging stations will facilitate electric vehicle consumer adoption, especially in rural, hard-to-reach areas," Joe Britton, ZETA's executive director, said in a statement earlier this week.
ZETA also represents Proterra, the largest e-bus manufacturer in the U.S., which also stands out as a winner, given the bill's $5 billion investment in low- and zero-emission school buses. That and President Joe Biden's latest executive order that aims to make electric vehicles 50% of automobile sales by 2030, in part through consumer incentives, could give a boost to the whole electric vehicle industry.
Amazon (Disclosure: My husband works for Amazon)
The ecommerce giant has been on an infrastructure lobbying blitz this year, spending nearly $10 million on infrastructure issues in the first six months of 2021, according to an analysis by The Washington Post. The company pushed lawmakers on causes including electric vehicle charging and infrastructure investments in general. After all, few companies, particularly in the tech world, are quite as dependent on the country's actual physical infrastructure — i.e., roads and bridges — as Amazon is.
Jeff Bezos had been an early proponent of Biden's $2 trillion plan when it was introduced in the spring, writing in a statement, "We support the Biden administration's focus on making bold investments in American infrastructure. Both Democrats and Republicans have supported infrastructure in the past, and it's the right time to work together to make this happen."
The Cybersecurity and Infrastructure Security Agency
While a lot of the winners on our list are tech companies, it's hard to overlook the boost that the bill would give to CISA, a fledgling agency within the Department of Homeland Security that was only created in 2018. The bill includes $1 billion in grant funding to be administered over four years by CISA to help states address their cyber vulnerabilities.
CISA is increasingly taking a leading role in addressing a spate of ransomware attacks that have crippled physical infrastructure, from oil pipelines to hospitals. On Thursday, CISA Director Jen Easterly announced a new collaboration with Microsoft, Amazon and Google to counter ransomware and cloud-computing attacks.
Increased funding for states will, of course, help cybersecurity vendors. But it also stands to benefit a much broader range of tech companies as states look to replace legacy systems that often lead to vulnerabilities. "Even though the money is going to go to state and local governments, they're probably going to be reaching toward commercial solutions for a lot of this," said Mike Flynn, ITI's senior director and former staffer on the Senate Homeland Security and Governmental Affairs committee. "It's not just cybersecurity providers that are going to benefit."
Who's losing (so far)?
Cryptocurrency exchanges like Coinbase
Coinbase CEO Brian Armstrong broke his own no-politics rule this week with a feisty Twitter thread, shredding some aspects of the bill that deal with cryptocurrency. Specifically, Armstrong objected to a part of the bill that would require even miners and node operators to report their transactions to the IRS like traditional brokers. Such a provision would "have a profound negative impact on crypto in the US and unintentionally push more innovation offshore," Armstrong wrote.
A trio of senators have since introduced an amendment to exempt miners and some others from the requirement, which Armstrong and civil liberties groups like Fight for the Future have been promoting. The Blockchain Association, which is made up of more than 100 crypto companies and groups, also supported the amendment.
But even so, Armstrong argued that levying these requirements even on intermediaries like Coinbase would put the cryptocurrency industry on unequal footing with traditional financial institutions. "Policymakers play a critical role in ensuring that tech innovation can flourish in the United States," Armstrong wrote. "I hope that they keep this in mind and don't impose draconian burdens on an industry that will play a major role in the innovative future of our country."
Muni networks
When Biden first introduced his infrastructure plan, proponents of municipal networks had high hopes that the bill might radically redefine the market by prioritizing government-run networks and infusing the telecom industry with a raft of new, more affordable competitors. But those provisions, which have been controversial among both Republicans and telecom giants, dropped out of the bipartisan deal.
"To me, it looks like the goals of changing the market have been deferred in the effort of developing a bipartisan compromise," said Christopher Mitchell, director of the Community Broadband Networks Initiative with the Institute for Local Self-Reliance. "The focus is putting money into areas that have nothing, as opposed to trying to be more aggressive and fix the market for everyone."
There are still reasons to support the bill, Mitchell said in a tweet this week, like the fact that it will "give states a shot to show that they are better at distributing money than the federal government."
The bill also doesn't write municipal networks out completely. It says states cannot exclude co-ops, nonprofits, local governments and others when it's considering which providers to give funding to. That, Levin pointed out, goes against laws in states across the country that outright forbid municipal networks.
In theory, that could mean a leg up for muni networks in those states compared to the status quo. But in practice, Levin said, "There may be a tendency to say, 'In this competitive program, they're all eligible. They just didn't win.'"
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Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. 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.
August 5, 2021
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
July 15, 2021
When the COVID-19 crisis crippled societies last year, the collective worldwide race for a cure among medical researchers put a spotlight on the immense power of big data analysis and how sharing among disparate agencies can save lives.
The critical need to exchange information among hundreds of international agencies or departments can be tough to pull off, especially if it's medical, financial or cybersecurity information that is highly protected by regulatory guardrails.
In addition, government agencies and their valuable databases are often in the crosshairs of hackers bent on acts of cyber warfare. The U.S. Department of Homeland Security identifies 16 "critical infrastructure sectors," such as transportation and drinking water, that are vital to the nation. These are areas whose assets, systems and networks, whether physical or virtual, are considered so essential "that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety," the report reads.
A walled garden
With this kind of backdrop, government security officials around the world must seek out and employ the very best security measures, and that's where confidential computing comes in. The confidential computing approach protects critical information by isolating sensitive data in a protected, hardware-based computing environment during processing. It allows governments to share the results of machine-learning inferencing on highly-protected or sensitive data sets without requiring them to share the data sets themselves.
Here's how it works: While data is traditionally encrypted at rest and in transit, confidential computing protects data while it's being processed, using hardware-based techniques to isolate data, specific functions or an entire application from the operating system, hypervisor or virtual machine manager. Confidential computing defines protected private memory areas — called enclaves or trusted execution environments (TEE) — to increase the security of application code and data. The transmitted information is encrypted and then decoded once inside the enclave — think of it as a high-tech walled garden. It's impossible to view the data or operations performed on the data in the TEE if you're on the outside. The TEE ensures that only authorized code can access the data, keeping information away not only from cloud or infrastructure providers but also from external threat actors. If the code is altered or tampered, the TEE denies the operation, protecting it from unauthorized use and manipulation.
The result of this approach is that government agencies could enjoy the benefit of cloud-scale machine-learning inferencing without giving up any intellectual property, sensitive criminal investigations or other potentially damaging information to malicious hackers.
"The ability to securely collect, collate, and process data across organizations has always been a challenge for governments," said Hugh Eaton, the vice president of worldwide government at Microsoft. "This is especially true for agencies involved in program benefits and fraud prevention, law enforcement and the criminal justice system, critical infrastructure and defense organizations. Confidential computing helps to remove these barriers, allowing agencies to meet their commitments to the people and communities they serve."
From health care to financial protection
There are a host of government challenges that confidential computing could help address in critical areas ranging from digital identity and cybercrime prevention to machine-learning modeling.
In drug development, for instance, partnered health organizations can combine large data sets to unlock the potential of machine learning — when a model with more data is more accurate — but data is sensitive. Each facility can only see its data set and their patient data is protected. No other facility or even the cloud provider can see the data or training model. Each facility that contributed to training the model can use it and receive useful results.
The Spanish Department of Health, for instance, uses a confidential computing platform with privacy-preserving analytics to accelerate the development and validation of clinical algorithms used in drug development models. The platform significantly reduces the time and cost of developing clinical algorithms, per Spanish officials.
Confidential computing can play a critical role in health care outside of drug development. German citizens must have public or private health insurance, and can choose from different providers. Germans who are registered for public health care insurance can request an electronic patient record from their insurance company. This file digitally stores all medical records as well as information on diagnoses, examinations, test results and treatments.
At the same time, the country also has one of the most wide-ranging sets of laws and compliance regulations when it comes to collecting and processing personal data. The German government has strict rules to protect its digital medical records, which contain highly-sensitive information, such as diagnoses, test results and therapy suggestions. Every provider must ensure data protection within the records, such as encryption through protocols and during transmission. Confidential computing now plays a critical role in that safe processing of information.
A similar data-sharing scenario might occur in the financial industry when secure multiparty computation can be used to detect a money-laundering operation and fraud. Multiple banks can, for example, securely combine data without exposing the personal data of customers. Analytics on the aggregated larger data set can detect the movement of money by one user between multiple banks, without the banks accessing each other's data.
In June, the Monetary Authority of Singapore, for instance, sent a note to the CEOs of all the country's major financial institutions noting that they "should implement appropriate data security measures to protect the confidentiality and integrity of sensitive data in the public cloud, taking into consideration data-at-rest, data-in-motion and data-in-use where applicable." Their suggested solution: "confidential computing solutions if available."
This trend will continue to accelerate. "As the operational environment for governments continues to become more complex with the growing sophistication of computer-based attacks, confidential computing will play a critical role in scaling data in the cloud across the private and public sectors globally," said Eaton. "We'll see this both through the infrastructure directly and the services and applications running on top of confidential computing hardware."
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James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Protocol | Workplace
Silicon Valley has a new recruitment strategy: The four-day workweek
Everything you need to know about how tech companies are beta testing the 32-hour week.
Since the onset of COVID-19, more companies have begun to explore shortened workweeks.
Photo: Matteo Colombo/Getty Images
August 5, 2021
Sarah Roach is a reporter and producer at Protocol (@sarahroach_) where she contributes to Source Code, Protocol's daily newsletter. She is a recent graduate of George Washington University, where she studied journalism and mass communication and criminal justice. She previously worked for two years as editor in chief of her school's independent newspaper, The GW Hatchet.
August 5, 2021
At software company Wildbit, most employees are logged off on Fridays. That's not going to change anytime soon.
To Natalie Nagele, the company's co-founder and CEO, a full five days of work doesn't necessarily mean the company will get more stuff done. She pointed to computer science professor Cal Newport's book, "Deep Work," which explains how a person's ability to complete meaningful work cuts off after just about four hours. That book, Nagele told Protocol, inspired the company to move to a four-day workweek back in 2017.
"We kind of jokingly and curiously said, 'Four hours a day times five days a week is 20 hours a week — what are we all doing for 40 hours a week?'" she said. "And that just spurred an experiment to say, 'Could we work less if we applied some of the philosophies from this book?'"
Since the onset of COVID-19, companies have begun exploring ways to make work more flexible, from implementing asynchronous work to extending remote work plans. But a handful of companies went a step further by introducing four-day workweeks, which they said boosts productivity and makes them more attractive than the next employer.
The policy has worked for Wildbit for years, but it's not a one-size-fits-all. Companies that have rolled out similar models have all taken different approaches, some of which never panned out.
Here's a rundown of what a four-day workweek looks like, who wants one, who doesn't and why companies are making the change in the first place.
What does a four-day workweek look like?
A shortened workweek looks different for each company, but the companies that have implemented the policy all have one goal in mind: get more work done in less time.
At Wildbit, Nagele said the customer success team needs to be available five days per week. To ensure the team still gets the same four-day weeks, she said some members of the division work on Fridays and take Mondays off, while the other handful of employees work on Mondays and take Fridays off. Employees across the company don't get a salary cut, she said.
Ecommerce company Shopify rolled out 32-hour weeks during July and August. During those months, Fridays are designated to "rest and refuel," Shopify communications lead Rebecca Feigelsohn told Protocol. She said the company hasn't decided whether it will continue the policy in the coming years.
Kickstarter, on the other hand, is still in the planning stages of a shortened workweek, which it plans to test by mid-2022. Kate Bernyk, the company's communications director, said Kickstarter will test out different schedules depending on the needs of each department.
Who wants a four-day workweek?
Essentially anyone who thinks their business can get the same — if not more — stuff done in less time is game for a shorter workweek.
Companies have run pilots of the work model over the years, but the realization that workers can do more in less time really took off in 2020. At least a dozen companies, including software application company Buffer and marketing platform AWIN, implemented shortened workweeks. In the U.K., more than 1 million companies have thought about logging off earlier in the week since the pandemic began, and thousands more have implemented some version of the policy.
"The majority of workers moving to work remotely overnight were steps we couldn't imagine before the pandemic. People have seen that you can carry on like that, and it's going to be quite stark for people to go back to the office," Joe Ryle, a campaign officer at 4 Day Week, told Protocol. "People are now realizing that's not the way you should be living our lives."
Ryle said there isn't one particular industry moving toward this model — businesses focused on everything from engineering to marketing have begun rethinking their workweeks. For companies that need to make themselves available all the time, like the hospitality and restaurant business, the implementation is a bit more difficult, but he's seen them roll out variations of a shorter workweek.
A handful of countries and government officials have considered the policy as well, including, Spain, Iceland, Ireland and Germany. In California, Rep. Mark Takano introduced a bill last week that would trim the standard workweek from 40 to 32 hours.
Who doesn't want a four-day workweek?
The thing is, almost no one is outwardly against a four-day workweek. But some companies haven't been able to make it work financially.
Wildbit and Kickstarter, and other U.S. companies that have introduced such a policy, are all relatively small; not fast-growing startups pressed by financial goals. Nagele, the CEO at Wildbit, said large companies aren't reaching out to her about the policy as much as smaller ones, which could be because large companies are moving too quickly to sit back and rethink their work day.
"Other companies are setting these goals for you, and in a lot of cases you have venture capitalists or whatever — the big folks that are really demanding this growth and acceleration," she said. "There's not a lot of time to pause and decide how we define work? How do we define enough?"
Gig workers could also become an outlier in a four-day workweek. In the legislation proposed by Takano, the California representative, gig workers wouldn't be included in the work protections, which could create a big pay inequity in the contractor business.
In other cases, shorter workweeks aren't always financially feasible. In 2017, workers in Sweden tested shorter workdays, which improved happiness among employees, but ended up costing too much money. An Amazon unit also tried it out, but the employees working fewer hours got a pay cut. Microsoft Japan ran a pilot in the summer of 2019 and saw a big boost in productivity, but it never continued the policy. Microsoft didn't return a request to comment.
What's the point in working fewer hours?
The bottom line is that a shorter workweek makes a company more competitive and makes workers happier, said Bernyk, Kickstarter's communications lead. And during a time when there's intense competition for tech talent, companies will bend over backwards to win their employees over.
"As we build a future that's more flexible, testing a four-day workweek is a continuation of that work," Bernyk told Protocol.
She added that the shortened workweek is one way to ensure employees are taking a proper break. A few years ago, Kickstarter gave its employees unlimited paid time off, but no one was actually taking a break. Cutting back weekly hours, and implementing a set number of paid time off, carves in a break for everyone at the company, she said.
For Wildbit, which had cut back weekly hours long before the pandemic, Nagele said a four-day workweek is one step closer to completely redefining work hours. It may be a pipe dream right now, but she said she eventually wants employees to figure out when to say "enough" and log out for the day or weekend, regardless of how much time they had spent working in one day.
"Can we say, 'We need to finish this one project and if we can get it done in two months, great. If it takes a month and a half, then fantastic,'" she said.
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Sarah Roach is a reporter and producer at Protocol (@sarahroach_) where she contributes to Source Code, Protocol's daily newsletter. She is a recent graduate of George Washington University, where she studied journalism and mass communication and criminal justice. She previously worked for two years as editor in chief of her school's independent newspaper, The GW Hatchet.
Power
The game industry comes back down to Earth after its pandemic boom
Game company earnings reports this week show a decline from last year's big profits.
The game industry is slowing down as it struggles to maintain last year's record growth.
Photo: Cyril Marcilhacy/Bloomberg via Getty Images
August 5, 2021
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
August 5, 2021
The video game industry is finally slowing down. After a year of unprecedented and explosive growth due to the COVID-19 pandemic, big game publishers and hardware makers are starting to see profits dip from their 2020 highs and other signs of a return to normalcy.
This week alone, Sony and Nintendo both posted substantial drops in profit compared to this time a year ago, with Sony's operating income down more than 40% and Nintendo's down 17%. Grand Theft Auto maker Take-Two Interactive saw a dip in revenue and said its forecast for the rest of the fiscal year would not match last year's growth, while EA posted a revenue bump but an operating income decline of more than 43% compared to this time a year ago. Ubisoft, which reported earnings last month, saw its sales and bookings this past quarter drop by 14% and 21%, respectively, when compared to a year ago.
All three console makers, including Microsoft in its earnings last month, said they were experiencing declines in sales of third-party games on their platforms. Nintendo in particular has not released a big hit since last year's Animal Crossing: New Horizons, and a number of big game delays and launch fiascos like that of CD Projekt Red's Cyberpunk 2077 have resulted in a notable dearth of hits in the first eight months of the year.
In many cases, game companies are still beating Wall Street estimates, as was the case for both EA and Take-Two and others; the industry is undoubtedly continuing to grow in size. But executives are trying to temper expectations around sustaining the level of growth the industry saw during the pandemic.
"We're gratified to see that as we expected, post-pandemic demand was higher than pre-pandemic demand, and the moderation we expected was not as severe as we expected," Take-Two CEO Strauss Zelnick told GamesIndustry.biz. "As we hopefully get out of this difficult time — it's hard to know given what's going on with the delta variant — it's nice to see the new normal for our business is much stronger than the old normal."
This shift wasn't totally unexpected. Analytics firm Newzoo forecast in May that the game industry would actually contract in 2021 by roughly 1%, only because the growth of last year was not in any way a sustainable, realistic indicator of where the industry was headed in the future.
"It is unique, at least in our history, that we project the declining markets for this year," Tom Wijman, Newzoo's games market lead, told VentureBeat at the time. "While we say the forecast is for the market to decline this year, in the long term, or over more than a few years, there is still very healthy growth for the market. And this year is basically the year where we slightly correct for what was a crazy 2020 for the games market."
At the start of the summer, there wasn't yet a strong indication the game industry had hit that slump. But this week's slate of earnings reports finally brought the game industry back down to Earth. Despite the adjustment, there are still obvious signs that the pandemic forever realigned the industry and pushed it further into the mainstream.
For instance, Sony's game business saw its best first fiscal quarter by revenue in history these past three months. The PlayStation 5 also continues to experience crushing demand, far outpacing supply. As noted by Niko Partners gaming analyst Daniel Ahmad, Sony still cannot make its new console fast enough to keep up with demand, while its version of the hardware with a disc drive is now turning a profit. (The discless PS5 is still sold at a loss.) Sony said it was on track to meet its target of 14.8 million consoles sold by the end of its fiscal year in March 2022.
There are a number of other bright spots for the business. EA has raised its forecasts for the rest of the year on the strength of its services business and the launch of a new game in the Battlefield series this fall. Although its earnings report this week was overshadowed by its ongoing sexual harassment and discrimination crisis, Activision Blizzard experienced an outlying operating income jump of more than 50% this past quarter largely on the strength of its King mobile division. Nintendo is also releasing a new console in October, and Microsoft is gearing up for its biggest first-party software launch in years with the release of Halo Infinite this holiday season.
The game industry may not ever experience the surge in growth and uptick in mainstream popularity that it experienced last year, as everyone began looking for new hobbies and rekindled old ones during the shelter-in-place era of the pandemic. But it's undeniable that a new bar has been set for the industry's financial power and cultural importance. All the industry has to do now is continue releasing new games (and make sure they're polished, not buggy) and keep players coming back.
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Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Allocations wants to make it easier to invest in startups as a group
Now valued at $100 million, it's emerging from stealth to challenge Carta and Assure in the SPV market.
Kingsley Advani, CEO of Allocations, wants to make it easier to form SPVs.
Photo: Allocations
August 5, 2021
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
August 5, 2021
Software is eating the world, including the venture industry. Carta and Assure have made it easier than ever for people to band together on deals. AngelList's venture arm debuted new ways to create rolling funds. But the latest startup to challenge the incumbents in the space is Allocations, a Miami-based startup that's making it easy to create and close special purpose vehicles, or SPVs, in hours.
"If you look at Pinduoduo and group shopping, SPVs are group investing," said Kingsley Advani, Allocations' founder and CEO. Instead of one investor having to cough up millions, multiple people can write smaller checks in an SPV and invest as a cohort. It's a trend that's taken off in 2021 as investors compete to get into hot startups.
"Typically for a company like Robinhood or Coinbase or SpaceX back then, if you're an individual, you'd need to do $5 million on your own. SPVs let you dice that up and you can come in with much smaller minimum checks," Advani said.
Launched in 2019, Allocations is emerging from stealth having raised $4 million at a $100 million valuation. Investors include people like r/WallStreetBets founder Jaime Rogozinski and DoNotPay founder Joshua Browder, who not only invested, but also used Allocations to raise his own fund through the service, Advani said.
Allocations is targeting sub-$10 million private equity transactions and is focused on SPVs and funds to start. It's also eyeing a Regulation CF product to allow startups to crowdfund on the service (that one requires more financial regulations to jump through before it can launch). So far, customers have used its platform to create SPVs to invest in startups like Pipe, Relativity Space and BlockFi.
"It allows people to have access to an investment that they wouldn't usually have access to," Advani said.
Advani should know: He got his start investing in tech companies through SPVs. He had done some early investing in bitcoin around 2013, but in 2017, he started an investor group with friends on a Slack chatroom to co-invest in deals. The process of creating an SPV was challenging, and frustrated, Advani decided to build his own tools to make it easier.
"If you look at the $2.9 trillion raised annually [in private equity], only a small subset is done digitally or with technology companies. Most of it is done with lawyers, manual accountants and manual compliance, so there's a huge growth of the digital providers," he said.
Allocations is currently doing $4 million in ARR from the fees it charges for SPV and fund formation. Its ambition isn't to take over fund management and SPVs for bigger firms, but to target emerging fund managers and angel investors. It'll have to compete with existing providers, like Carta and Assure, but as SPVs become more popular, it only grows the pie of who can invest.
"The product is not for Big VC. It's about making a more equitable private equity market and putting investments in the hands of more people," Advani said. "I feel like the VCs have guarded the VC industry for too long, and now the long tail of investors have the chance to participate."
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Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
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