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.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep Reading Show less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep Reading Show less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins