Protocol Index: Cash is pouring into identity authentication
Original image by Ben Sweet / Unsplash

Protocol Index: Cash is pouring into identity authentication

Protocol Index

Good morning, and welcome to Protocol Index, your daily pop-up report about the financial movements that matter to tech during the COVID-19 crisis. Want Index in your inbox each morning? Subscribe here.

Today: Identity authentication is more important than ever, what we've learnt from earnings so far, and what might happen to all those laid-off tech workers.

What Matters Today

  • 5:15 a.m. PDT: Citrix's earnings should offer a look at just how much remote work tools, such as its VPN software, have benefited from stay-at-home orders.
  • 5:30 a.m. PDT: New jobless claims data for last week is released. Deutsche Bank economists expect 5 million new claims, which would mark the third consecutive week of decline in new claims.
  • 6:45 a.m. PDT: Manufacturing and services activity data for April is likely to reflect the dismal reports coming out of Europe this morning. For a sense of the hit: 81% of U.K. service businesses reported a fall in business activity this month.
  • 2 p.m. PDT: Intel hosts a post-earnings conference call. Analysts at Wedbush expect increased demand for notebooks and servers to have boosted the company's results.
  • Also: The House is set to vote on the new stimulus bill today, which should replenish PPP loans.

Layoff Watch

  • Magic Leap is laying off around 1,000 people, about half its staff. Bloomberg reports that the company plans to move away from consumer products, focusing on enterprise instead. Magic Leap is also reportedly considering raising more funding, in addition to the $2.6 billion it's previously raised.
  • Online education startup Lambda School laid off 19 people. I'm interviewing its co-founder and CEO Austen Allred next week — tell me what you want to know from him:

Today's News

As of 4:15 a.m. PDT: Nasdaq Futures: 0.03% | Euro 600: 0.28% | Nikkei: 1.52% | Hang Seng: 0.35%



  • Bill Gurley won't be a partner on Benchmark's next fund, reports The Wall Street Journal. But he'll reportedly continue working with existing portfolio companies.
  • Megan Imbres, Quibi's head of brand marketing, has left the company.
  • An Israeli parliamentary committee stopped police from using cellphone data to enforce quarantines, citing "the great harm inflicted to privacy."



Companies need to know who you are

Digital identity authentication is having a moment, with ForgeRock, Onfido, and BioCatch all announcing funding rounds of $100 million or more in recent days.

  • Onfido makes the tech that banks and others use to verify you with a selfie.
  • "Ultimately we're a remote identification verification company in an increasingly remote working world," the company's CEO and co-founder Husayn Kassai told me.
  • With everyone stuck at home, Kassai said that companies like his have "become more relevant." And Onfido has seen "volumes and demand pick up greater than even our forecasts."

There's obviously huge demand in certain sectors right now, such as payments, telemedicine, and the public sector. But things are actually accelerating across the board.

  • ForgeRock CEO Fran Rosch told me that the startup, which makes digital identity management tools, has "had companies that were using us on the consumer side, and maybe had a different solution on the workforce side" that are now using it to handle remote employees, too.
  • And Onfido is in discussions with governments, mostly in Europe, about how it can help with immunity certificates.
  • Both Kassai and Rosch see digital transformation accelerating now that companies have been jolted into action. Fortune 1000 companies that had plans spanning a two or three year timeframe are "now looking to shorten that," Kassai said.

Increased relevance made raising fairly seamless for the companies, it seems.

  • ForgeRock's existing investors told it that they had instituted additional criteria for any new investments in the current economic climate.
  • But ForgeRock passed even that new higher level of scrutiny because of its growth and technology, Rosch said. Those newly cautious existing investors actually increased their stake in the latest funding round.
  • And "if anything, the round actually closed faster than it normally would have" for Onfido, Kassai told me.

The next big thing, at least for ForgeRock, is a potential IPO. Rosch said the company is set on maintaining growth to achieve that, but conceded that he's "being more cautious with how we're spending money."


  • "My new deal volume will probably fall by a third … not because I don't want to make new investments, but because I'm meeting less companies." — Lightspeed partner Jeremy Liew said looking after his kids and talking to his portfolio companies is reducing the number of deals he has time to look at.
  • "We'll use more AI, more chatbots, more automation. That is permanent change, automation will hit that sector very deeply." — Former Infosys CFO Mohandas Pai said many customer service jobs could be automated away amid the crisis.
  • "I'm not sure if there's a more difficult thing that a CEO of a travel company could ever do than go through this." — Airbnb's Brian Chesky is (unsurprisingly) stressed.
  • "The Vision Fund has been a mess. It has been a case of an organisation with too much money just splashing it around without doing enough due diligence." — Asset Value Investors' Joe Bauernfreund is not happy with SoftBank ... which AVI owns shares in.
  • "I think this is going to burn people out. From an energy focus standpoint, it feels very similar to times that I crunched." — Game developer Forrest Dowling is concerned about his employees.

Everyone's Thinking About

All those earnings, summarized

A bevy of new earnings reports were published yesterday and this morning, which offer some new insight into the state of the tech industry. Here's what you need to know.

  • AT&T withdrew guidance, citing "the lack of visibility." Its media business took a big hit, thanks to lower TV ad revenue.
  • Ericsson's earnings were pretty resilient, and it thinks 5G infrastructure will give it a boost going forward.
  • LG Display's losses almost tripled year-on-year, with a big drop in smartphone and TV demand. The company said it hopes work-from-home measures might improve monitor sales, though.
  • Chipmaker SK Hynix beat profit estimates, though results were still down on last year. Its CFO warned of "a lot of uncertainties about the outlook for supply and prices for servers in the second half," with the company expecting a big drop in smartphone demand.
  • Xilinx's forecast was below estimates, and it didn't provide an annual outlook. Its automotive business has been most affected by the crisis, CEO Victor Peng told Reuters.

Closing Bell

Where does the talent on the market go?

In Sifted this morning, Roxanne Varza, director of Paris startup campus Station F, said "now is the best time to launch a tech startup." One bit in particular jumped out at me: She said that the volume of layoffs at the moment means "it's potentially a great time to build a team." But it will be interesting to see if talent gravitates toward the kind of steady, reliable income that Big Tech can provide over the inherent risk of joining a startup. I expect the likes of Apple and Google may find their hiring managers inundated in the coming weeks.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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