People

Silicon Valley’s new stock exchange opens for business

Trading is starting on the Long-Term Stock Exchange. Next up? Attracting a listing.

Eric Ries, sitting in a red chair

"I will view this as a success just if every company from now should have to consider it," says Eric Ries, CEO of the Long-Term Stock Exchange.

Photo: LTSE

A new stock exchange backed by Silicon Valley heavyweights is opening for business Wednesday. The Long-Term Stock Exchange can now trade all U.S. exchange-listed stocks, and it will now start soliciting new listings from companies that commit to policies around diversity, sustainability and long-term planning.

"I will view this as a success just if every company from now should have to consider it," said the LTSE's CEO, Eric Ries. "Just like they have to consider where to list — they have to hear a pitch from NYSE, they have to hear pitch from Nasdaq — we just want them to hear our pitch, too."

Silicon Valley entrepreneur and "Lean Startup" author Ries designed the exchange to reward founders and investors who are thinking years down the road. Quarterly reports are still an SEC regulation, but the LTSE requires companies who list on the exchange to agree to a set of five principles designed to promote long-term thinking, including which stakeholders are important, a company's environmental and community impact, a company's approach to diversity, how a company invests in its own employees, and how it rewards them for its long-term success. The exchange doesn't set strict quotas or standardized rules, like requiring a woman on the board, but companies interested in listing have to set up policies that adhere to the principles to be eligible to list.

As of Wednesday, the LTSE is open to stock trading, but the real challenge will be getting a company to sign on to list specifically with the LTSE or through a dual listing. The exchange is now allowed to solicit listings from companies, a process that can take between 18 and 24 months, but Ries has already been running informational meetings to start familiarizing companies with the LTSE.

"This is for companies who have a big vision, who are investing consistently in innovation, who see the fact that their employees are activists not as a negative but as a positive, who care about sustainability, diversity, equality," Ries said. "This has become a bit of a cliche, but this is for those companies that genuinely believe that corporations can be a force to change the world."

The launch of the LTSE comes at an interesting moment in the markets. Private companies, and particularly the tech startups that share many of the same backers as the LTSE, are already eyeing new paths to going public. Direct listings, favored by Spotify and Slack, were trendy until the SPAC took its place as companies needed cash. Now, everyone is either launching a SPAC, short for a special purpose acquisition vehicle, or taking their company public through a merger with one.

"I hope that people will see this as the next logical step after those more-modest reforms," Ries said. "I never had to sell something like this before where the hardest thing about it for customers is to believe that it exists. I never talked to the CEO who says they think it's a bad idea, they wouldn't want to do it. It sounds too good to be true."

The Long-Term Stock Exchange was an idea Ries had in 2010 when he wrote about it as an epilogue for his 2011 book, "The Lean Startup." "I never imagined having to do this project myself," he said. "That was my favorite thing about being an author, was that you could write things for other people to do."

But the idea stuck with him, and with no one else leading the charge, Ries and his team started working on the LTSE in 2015. They first built software and raised venture capital while pursuing SEC approval for the exchange. In 2019, the LTSE was approved as the 14th public exchange, and shortly thereafter closed a $50 million series B round. It's raised a total of around $90 million from investors including Andreessen Horowitz, Founders Fund, Initialized Capital and Obvious Ventures.

Its roster of backers, and Ries' own background, have labeled it "Silicon Valley's" exchange, although Ries stresses it's open to anyone. But critics have panned the LTSE as a mere marketing exercise that allows companies to escape accountability in the founder-friendly world of Silicon Valley. Others have said that the existing stock market already values long-term thinking; just look at Amazon, which went public as an unprofitable retailer and now has a $1.5 trillion market cap.

"I'm in favor of experimentation, innovation and more competition — so I applaud those trying to make the LTSE work," Harvard professor Jesse Fried told Marker in February. "However, I have trouble seeing why the LTSE is necessary. R&D spending by public firms is at a record high in absolute terms and relative to revenues. Long-term investors have done and continue to do very well."

Nearly a decade after Ries floated his original idea, the LTSE was ready to launch at the end of the first quarter in 2020 and had a whole ceremony and launch planned. But the pandemic forced Ries to call for a delay. "At the time, it was very disappointing to give it all up," he said. (He's also been working on some education ventures during the interlude.) Last month, the team started testing some trades on the LTSE.

The markets will still have to decide whether Ries' idea has value, and getting a company to actually list on the exchange and agree to its long-term principles will be its next big test. But for Ries, it's still an emotional moment in a yearslong journey from an idea to day one of a new exchange.

"To do it in the midst of the pandemic and these other overlapping crises — I mean, the fires, hurricanes, protests for social justice — all of it coming together in this moment is very overwhelming," he said.

Update: This post was updated Sept. 11 to correct the amount the LTSE has raised.

Policy

Google is wooing a coalition of civil rights allies. It’s working.

The tech giant is adept at winning friends even when it’s not trying to immediately influence people.

A map display of Washington lines the floor next to the elevators at the Google office in Washington, D.C.

Photo: Andrew Harrer/Bloomberg via Getty Images

As Google has faced intensifying pressure from policymakers in recent years, it’s founded trade associations, hired a roster of former top government officials and sometimes spent more than $20 million annually on federal lobbying.

But the company has also become famous in Washington for nurturing less clearly mercenary ties. It has long funded the work of laissez-faire economists who now defend it against antitrust charges, for instance. It’s making inroads with traditional business associations that once pummeled it on policy, and also supports think tanks and advocacy groups.

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Sustainability. It can be a charged word in the context of blockchain and crypto – whether from outsiders with a limited view of the technology or from insiders using it for competitive advantage. But as a CEO in the industry, I don’t think either of those approaches helps us move forward. We should all be able to agree that using less energy to get a task done is a good thing and that there is room for improvement in the amount of energy that is consumed to power different blockchain technologies.

So, what if we put the enormous industry talent and minds that have created and developed blockchain to the task of building in a more energy-efficient manner? Can we not just solve the issues but also set the standard for other industries to develop technology in a future-proof way?

Keep Reading Show less
Denelle Dixon, CEO of SDF

Denelle Dixon is CEO and Executive Director of the Stellar Development Foundation, a non-profit using blockchain to unlock economic potential by making money more fluid, markets more open, and people more empowered. Previously, Dixon served as COO of Mozilla. Leading the business, revenue and policy teams, she fought for Net Neutrality and consumer privacy protections and was responsible for commercial partnerships. Denelle also served as general counsel and legal advisor in private equity and technology.

Workplace

Everything you need to know about tech layoffs and hiring slowdowns

Will tech companies and startups continue to have layoffs?

It’s not just early-stage startups that are feeling the burn.

Photo: Kirsty O'Connor/PA Images via Getty Images

What goes up must come down.

High-flying startups with record valuations, huge hiring goals and ambitious expansion plans are now announcing hiring slowdowns, freezes and in some cases widespread layoffs. It’s the dot-com bust all over again — this time, without the cute sock puppet and in the midst of a global pandemic we just can’t seem to shake.

Keep Reading Show less
Nat Rubio-Licht

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

Entertainment

Sink into ‘Love, Death & Robots’ and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Our favorite picks for your weekend pleasure.

Image: A24; 11 bit studios; Getty Images

We could all use a bit of a break. This weekend we’re diving into Netflix’s beautifully animated sci-fi “Love, Death & Robots,” losing ourselves in surreal “Men” and loving Zelda-like Moonlighter.

Keep Reading Show less
Nick Statt

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.

Workplace

This machine would like to interview you for a job

Companies are embracing automated video interviews to filter through floods of job applicants. But interviews with a computer screen raise big ethical questions and might scare off candidates.

Although automated interview companies claim to reduce bias in hiring, the researchers and advocates who study AI bias are these companies’ most frequent critics.

Photo: Johner Images via Getty Images

Applying for a job these days is starting to feel a lot like online dating. Job-seekers send their resume into portal after portal and a silent abyss waits on the other side.

That abyss is silent for a reason and it has little to do with the still-tight job market or the quality of your particular resume. On the other side of the portal, hiring managers watch the hundreds and even thousands of resumes pile up. It’s an infinite mountain of digital profiles, most of them from people completely unqualified. Going through them all would be a virtually fruitless task.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Latest Stories
Bulletins