Month: October 2020

A lot has been made of the open memo that Coinbase CEO Brian Armstrong published nearly two weekends ago, essentially barring political activism at work because he sees it as a distraction. He also made it clear that employees who disagreed with the decision — and he foresaw that some would not be happy — were free to leave.

“I recognize that our approach is not for everyone, and may be controversial. I know that many people may not agree, and some employees may resign. I also know that some of what I’ve written above will be misinterpreted, whether accidentally or on purpose. But I believe it’s the right approach for Coinbase that will set us up for success long term, and I would rather be honest and transparent about that than equivocate and work in a company that is not aligned,” he wrote.

Perhaps owing to an almost immediate backlash, Armstrong sent a separate, internal memo the next day detailing separation packages for employees who might be upset and looking for the exits. Coinbase was willing to be very generous, too, offering four months’ severance pay for those who have been at the exchange for less than three years, and paying longer-term employees six months of severance. (Worth noting: Coinbase also gives employees up to seven years to exercise their stock options.)

Whether Armstrong expected that more than 60 employees of Coinbase’s staff of 1,200 would take him up on the offer is something only he knows. As he disclosed in a follow-up post yesterday, that’s how many people had alerted the company by its October 7th deadline that they are quitting, and Coinbase expects the number to inch higher, based on a “handful” of ongoing conversations.

Either way, if I were Armstrong, I might be a little nervous about that number. Though small in the grand scheme of the company’s ambitions, that’s 60-plus people who have Coinbase on their resume, institutional knowledge about the company in their head, and potentially money in the bank, between their severance and equity.

More worrisome, they might also have a bit of an axe to grind against a company that told them it was changing the world, then changed the terms of its pact with them in the middle of an already trying time for most people.

That frustration — if it exists — could come out in potential leaks to the press, though presumably every employee had to sign a lengthy non-disparagement agreement on their way out the door.

The bigger threat is that one or numerous of these employees might now start their own crypto-related business, or else join rival companies that could use their skills. (Non-compete agreements are famously difficult to enforce in the state of California.) As crypto enthusiasts like to say, it’s still early innings when it comes to decentralized finance.

Certainly, taking on Coinbase is a very tall order at this point. Two years ago, when the company closed on $300 million in Series E funding, it did so at a post-money valuation of more than $8 billion, putting it leaps and bounds ahead of numerous other crypto exchanges.

No matter what you think of Armstrong’s new policy, there aren’t a lot of founders with the stuff to grow a company as strong and fast as he has, either.

Still, it happens all the time that people launch companies to take down other companies. It’s human nature.

Given that a number of former Coinbase employees has already raised funding for projects after leaving Coinbase, combined with so many investing dollars sloshing around out there looking to be put to use, the risk of this happening to Coinbase because of Armstrong’s memo and its aftermath may be small. But it isn’t zero.

Source: Tech Crunch

Welcome back to Human Capital where we discuss the latest in labor, and diversity and inclusion in tech.

This week’s eyebrow-raising moment came Wednesday when the U.S. Department of Labor essentially accused Microsoft of reverse racism (not a real thing) for committing to hire more Black people at its predominantly white company.

And that wasn’t even the most notable news items of the week. Instead that award goes to Uber engineer Kurt Nelson and his decision to speak out against his employer and urge folks to vote no on the Uber-sponsored ballot measure in California that aims to keep drivers classified as independent contractors. I caught up with Nelson to hear more about what brought him to the point of speaking out. You can read what he had to say further down in this newsletter.

But first, I have some of my own news to share —  Human Capital is launching in newsletter form on Friday, Oct. 23. Sign up here so you don’t miss out.

Now, to the tea.

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Stay Woke

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Coinbase loses about 5% of workforce for its stance on social issues

Remember how Coinbase provided an out to employees who no longer wanted to work at the cryptocurrency company as a result of its stance on social issues? Well, Coinbase CEO Brian Armstrong said this week that about 5% of employees (60 people) have decided to take the exit package, but that there will likely be more since “a handful of other conversations” are still happening.

Armstrong noted how some people worried his stance would push out people of color and other underrepresented minorities. But in his blog post, Armstrong said those folks “have not taken the exit package in numbers disproportionate to the overall population.”

Trump’s DOL goes after Microsoft for committing to hire more Black people

Microsoft disclosed this week that the U.S Department of Labor Office of Federal Contract Compliance Programs regarding its racial justice and diversity commitments made in June. Microsoft had committed to double the number of Black people managers, senior individual contributors and senior leaders in its U.S. workforce by 2025. Now, however, the OFCCP says that could be considered as unlawful discrimination in violation of Title VII of the Civil Rights Act. That’s because, according to the letter, Microsoft’s commitment “appears to imply that employment action may be taken based on race.”

“We are clear that the law prohibits us from discriminating on the basis of race,” Microsoft wrote in a blog post. “We also have affirmative obligations as a company that serves the federal government to continue to increase the diversity of our workforce, and we take those obligations very seriously. We have decades of experience and know full well how to appropriately create opportunities for people without taking away opportunities from others. Furthermore, we know that we need to focus on creating more opportunity, including through specific programs designed to cast a wide net for talent for whom we can provide careers with Microsoft.”

This comes shortly after the Trump administration expanded its ban on diversity and anti-racism training to include federal contractors. While this does not fall into the scope of that ban, it’s alarming to see the DOL going after tech company for trying to increase diversity. However, it does seem that the effects of the ban are making its way into the tech industry.

Joelle Emerson, founder and CEO of diversity training service Paradigm, says she lost her first client as a result of the executive order. While it’s not clear which client it was, many of Paradigm’s clients are tech companies.

Crunchbase report sheds light on VC funding to Black and Latinx founders

It’s widely understood that Black and Latinx founders receive not nearly as much funding as their white counterparts. Now, Crunchbase has shed some additional light on the situation. Here are some highlights from its 2020 Diversity Spotlight report.

• Since 2015, Black and Latinx founders have raised more than $15 billion, which represents just 2.4% of the total venture capital raised 
• In 2020, Black and Latinx founders have raised $2.3 billion, which represents 2.6% of all VC funding through August 31, 2020.
• Since 2015, the top 10 leading VC firms in the U.S. have invested in around 70 startups founded by Black or Latinx people.
• Andreessen Horowitz and Founders Fund are the two firms with the highest count of new investments in Black or Latinx-founded companies since 2015.

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Gig Work

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Uber engineer encourages people to vote no on Uber-backed Prop 22

Going against his employer, Uber engineer Kurt Nelson penned an op-ed on TechCrunch about why he’s voting against Prop 22. Prop 22 is a ballot measure in California that seeks to keep rideshare drivers and delivery workers classified as independent contractors. I caught up with Nelson after he published his op-ed to learn more about what brought him to the point of speaking out against Prop 22. 

“It was a combination of COVID affecting unemployment and health insurance for a bunch of people, getting close to the election and not having seen anyone who is really former Uber or Uber or former any gig companies saying anything,” Nelson told me. 

Plus, Nelson is on his way out from Uber — something that he’s been forthcoming about with his manager. He had already been feeling frustrated about the way Uber handled its rounds of layoffs this year, but the company’s push for Prop 22 was “the final nail in the coffin.”

Uber’s big arguments around why drivers should remain independent contractors is that it’s what drivers want and that it’d be costly to make them employees. Uber has said it also doesn’t see a way to offer flexibility to drivers while also employing them.

“I think it’d be really challenging,” Uber Director of Policy, Cities and Transportation Shin-pei Tsay told me at TC Sessions: Mobility this week. “We would have to start to ensure that there’s coverage to ensure that there’s the necessary number of drivers to meet demand. That would be this forecasting that needs to happen. We would only be able to offer a certain number of jobs to meet that demand because people will be working in set amounts of time. I think there would be quite fewer work opportunities, especially the ones that people really have said that they like.”

But, as Nelson notes, Silicon Valley prides itself on tackling difficult problems. 

“We’re a tech company and we solve hard problems — that’s what we do,” he said.

In response to his op-ed, Nelson said some of his co-workers have reached out to him — some thanking him for saying something. Even prior to his op-ed, Nelson said he was one of the only people who would talk about Prop 22 in any negative way in Uber’s internal Slack channels. And it’s no wonder why, given the atmosphere Uber has created around Prop 22. 

During all-hands meetings, Nelson described how the executive team wears Yes on 22 shirts or has a Yes on 22 Zoom background. Uber has also offered employees free Yes on 22 car decals and shirts, Nelson said.

As for Nelson’s next job, he knows he doesn’t “want to touch the gig economy ever again,” he said. “I know that for a fact. I’m done with the gig economy.”

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Union Life

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Kickstarter settles with NLRB over firing of union organizer

Kickstarter agreed to pay $36,598.63 in backpay to Taylor Moore, a former Kickstarter employee who was fired last year, Vice reported. Moore was active in organizing the company’s union, which was officially recognized earlier this year. As part of the settlement with the National Labor Relations Board, Kickstarter also agreed to post a notice to employees about the settlement on its intranet and at its physical office whenever they reopen. 

In September 2019, Kickstarter fired two people who were actively organizing a union. About a year later, the Labor Board found merit that Kickstarter unlawfully fired a union organizer.

NLRB files complaint against Google contractor HCL America

It’s been about a year since 80 Google contractors voted to form a union with US Steelworkers. But those contractors, who are officially employed by HCL America, have not been able to engage in collective bargaining, according to a new complaint from the National Labor Relations Board, obtained by Vice.

The complaint states HCL has failed to bargain with the union and has even transferred the work of members of the bargaining unit to non-union members based in Poland. The NLRB alleges HCL has done that “because employees formed, joined and assisted the Union and engaged in concerted activities, and to discourage employees from engaging in these activities.”

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News bites

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• Games Industry Biz published a damning story about sexual assault, racism and other abusive behavior at Twitch.
• Google is providing cash awards to 76 startups through a racial equity initiative announced in June
• White Ops is changing its name because the company just realized, “The name White Ops represents something different than what we’ve intended. It perpetuates a toxic association of good and bad with color and race.“

Source: Tech Crunch

Picture yourself in the role of CIO at Roblox in 2017.

At that point, the gaming platform and publishing system that launched in 2005 was growing fast, but its underlying technology was aging, consisting of a single data center in Chicago and a bunch of third-party partners, including AWS, all running bare metal (nonvirtualized) servers. At a time when users have precious little patience for outages, your uptime was just two nines, or less than 99% (five nines is considered optimal).

Unbelievably, Roblox was popular in spite of this, but the company’s leadership knew it couldn’t continue with performance like that, especially as it was rapidly gaining in popularity. The company needed to call in the technology cavalry, which is essentially what it did when it hired Dan Williams in 2017.

Williams has a history of solving these kinds of intractable infrastructure issues, with a background that includes a gig at Facebook between 2007 and 2011, where he worked on the technology to help the young social network scale to millions of users. Later, he worked at Dropbox, where he helped build a new internal network, leading the company’s move away from AWS, a major undertaking involving moving more than 500 petabytes of data.

When Roblox approached him in mid-2017, he jumped at the chance to take on another major infrastructure challenge. While they are still in the midst of the transition to a new modern tech stack today, we sat down with Williams to learn how he put the company on the road to a cloud-native, microservices-focused system with its own network of worldwide edge data centers.

Scoping the problem

Source: Tech Crunch

Starting this weekend, everyone of voting age in the U.S. will begin seeing informational videos at the top of Instagram and Facebook offering tips and state-specific guidance on how to vote through the mail. The videos will be offered in both English and Spanish.

The vote-by-mail videos will run on Facebook for four straight days in each state, starting between October 10 and October 18 depending on local registration deadlines. On Instagram, the videos will run in all 50 states on October 15 and October 16, followed by other notifications with vote-by-mail information over the next two days.

The videos let voters know when they can return a ballot in person, instruct them to sign carefully on additional envelopes that might be required and encourage returning ballots as soon as possible while being mindful of postmarking deadlines. Facebook will continue providing additional state-specific voting information in a voting information center dedicated to the 2020 election.

Even more than in past years, app makers have taken up the mantle of nudging their users to vote in the U.S. general election. From Snapchat to Credit Karma, it’s hard to open an app without being reminded to register — and that’s a good thing. Snapchat says it registered around 400,000 new voters through its own reminders and Facebook estimates that it helped 2.5 million people register to vote this year.

Voting rights advocates are concerned that 2020’s rapid scale-up of vote-by-mail might lead to many ballots being thrown out — a worry foreshadowed by the half a million ballots that were tossed out in state primaries. Some of those ballots failed to meet deadlines or were deemed invalid due to other mistakes voters made when filling them out.

In Florida, voters that were young, non-white or voting for the first time were twice as likely to have their ballots thrown out compared to white voters in the 2018 election, according to research by the ACLU.

Adding to concerns, state rules vary and they can be specific and confusing for voters new to voting through the mail. In Pennsylvania, the most likely state to decide the results of the 2020 election, new rules against “naked ballots” mean that any ballot not cast in an additional secrecy sleeve will be tossed out. In other states, secrecy sleeves have long been optional.

Facebook gets ready for November

Since 2016, Facebook has faced widespread criticism for rewarding hyper-partisan content, amplifying misinformation and incubating violent extremism. This week, the FBI revealed a plot to kidnap Michigan Governor Gretchen Whitmer that was hatched by militia groups who used the platform to organize.

Whether the public reveal of that months-long domestic terrorism investigation factored into its decisions or not, Facebook has taken a notably more aggressive posture across a handful of recent policy decisions. This week, the company expanded its ban on QAnon, the elaborate web of outlandish pro-Trump conspiracies that have increasingly spilled over into real-world violence, after that content had been allowed to thrive on the platform for years.

Facebook also just broadened its rules prohibiting voter intimidation to ban calls for poll watching that use militaristic language, like the Trump campaign’s own effort to recruit an “Army for Trump” to hold its political enemies to account on election day. The company also announced that it would suspend political advertising after election night, a policy that will likely remain in place until the results of the election are clear.

While President Trump has gone to great lengths to cast doubt on the integrity of vote-by-mail, mailed ballots are a historically very safe practice. States like Oregon and Colorado already conduct their voting through the mail in normal years, and all 50 states have absentee voting in place for people who can’t cast a ballot in person, whether they’re out of town or overseas serving in the military.

Source: Tech Crunch

China now has a tool that lets users access YouTube, Facebook, Twitter, Instagram, Google, and other internet services that have otherwise long been banned in the country.

Called Tuber, the mobile browser recently debuted on China’s third-party Android stores, with an iOS launch in the pipeline. The landing page of the app features a scrolling feed of YouTube videos, with tabs at the bottom that allow users to visit other mainstream Western internet services.

While some celebrate the app as an unprecedented “opening up” of the Chinese internet, others quickly noticed the browser comes with a veil of censorship. YouTube queries for politically sensitive keywords such as “Tiananmen” and “Xi Jinping” returned no results on the app, according to tests done by TechCrunch.

Using the app also comes with liabilities. Registration requires a Chinese phone number, which is tied to a person’s real identity. The platform could suspend users’ accounts and share their data “with the relevant authorities” if they “actively watch or share” content that breaches the constitution, endangers national security and sovereignty, spreads rumors, disrupts social orders, or violates other local laws, according to the app’s terms of service.

Rather than blocking sites that are beyond the purview of Beijing and tracking individuals using VPNs to circumvent the Great Firewall, China now has an app that gives its people a glimpse into the Western internet — with the caveat that their digital footprint may be under close watch by the authorities.

Much about the app remains unclear, such as its origin and the motive behind it. The operator of the app’s official website (上海丰炫信息技术有限公司) is 70% owned by a subsidiary of Qihoo 360, a Chinese cybersecurity software giant. It remains to be seen whether the app will take off.

This is an updating story.

Source: Tech Crunch

TuSimple and Waymo are in the lead in the emerging sector of autonomous trucking; TuSimple founder Xiaodi Hou and Waymo trucking head Boris Sofman had an in-depth discussion of their industry and the tech they’re building at TC Mobility 2020. Interestingly, while they’re solving for the same problems, they have very different backgrounds and approaches.

Hou and Sofman started out by talking about why they were pursuing the trucking market in the first place. (Quotes have been lightly edited for clarity.)

“The market is massive; I think in the United States, $700-$800 billion a year is spent on the trucking industry. It’s continuing to grow every single year,” said Sofman, who joined Waymo from Anki last year to lead the effort in freight. “And there’s a huge shortage of drivers today, which is only going to increase over the next period of time. It’s just such a clear need. But it’s not going to be overnight — there’s still a really long tail of challenges that you can’t avoid. So the way we talk about it is the things that are hardest are just different.”

“It’s really the cost and reward analysis, thinking about building the operating system,” said Hou. “The cost is the number of features that you develop, and the reward is basically how many miles are you driving — you charge on a per mile basis. From that cost-reward analysis, trucking is simply the natural way to go for us. The total number of issues that you need to solve is probably 10 times less, but maybe, you know, five times harder.”

“It’s really hard to quantify those numbers, though,” he concluded, “but you get my point.”

The two also discussed the complexity of creating a perceptual framework good enough to drive with.

“Even if you have perfect knowledge of the world, you have to predict what other objects and agents are going to do in that environment, and then make a decision yourself and the combination knows is very challenging,” said Sofman.

“What’s really helped us is a realization from the car side of the of the company many, many years ago that in order to help us solve this problem in the easiest way possible, and facilitate the challenges downstream, we had to create our own sensors,” he continued. “And so we have our own lidar, our own radar, our own cameras, and they have incredibly unique properties that were custom designed through five generations of hardware that try to really lean into the kind of most challenging situations that you just can’t avoid on the road.”

Hou explained that while many autonomous systems are descended from the approaches used in the famous DARPA Grand Challenge 15 years ago, TuSimple’s is a little more anthropomorphic.

“I think I’m heavily influenced by my background, which has a tinge of neuroscience. So I’m always thinking about building a machine that can see and think, as humans do,” he said. “In the DARPA challenge, people’s idea would be: Okay, write a dynamic system equation and solve this equation. For me, I’m trying to answer the question of, how do we reconstruct the world? Which is more about understanding the objects, understanding their attributes, even though some of the attributes may not directly contribute to the entire self-driving system.”

“We’re combining all the different, seemingly useless features together, so that we can reconstruct the so-called ‘qualia’ of the perception of the world,” continued Hou. “By doing that we find we have all the ingredients that we need to do whatever missions that we have.”

The two found themselves in disagreement over the idea that due to the major differences between highway driving and street-level driving, there are essentially two distinct problems to be solved.

Hou was of the opinion that “the overlap is rather small. Human society has declared certain types of rules for driving on the highway … this is a much more regulated system. But for local driving there’s actually no rules for interaction … in fact very different implicit social constructs to drive in different areas of the world. These are things that are very hard to model.”

Sofman, on the other hand, felt that while the problems are different, solving one contributes substantially to solving the other: “If you break up the problem into the many, many building blocks of an AV system, there’s a pretty huge leverage where even if you don’t solve the problem 100% it takes away 85%-90% of the complexity. We use the exact same sensors, exact same compute infrastructures, simulation framework, the perception system carries over, very largely, even if we have to retrain some of the models. The core of all of our algorithms are, we’re working to keep them the same.”

You can see the rest of that last exchange in the video above. This panel and many more from TC Sessions: Mobility 2020 are available to watch here for Extra Crunch subscribers.

Source: Tech Crunch

The pandemic has affected just about every business in the world, but tech has also geared up to fight back in its own way, as we found out from speakers at Disrupt 2020. But technology has opted to take a back seat to frontline workers and find ways to support them rather than attempt to “solve” the issues at hand.

The founders of tech-forward healthcare startups Color and Carbon Health explained their approach in one panel, emphasizing that the startup mindset is a resilient and adaptable one.

“You’re seeing, I think, the distributed nature of the U.S., where at some point it’s clear that you can’t wait for someone to solve your problem, so people just start jumping in and building the solution themselves,” said Othman Laraki, Color’s CEO.

His company took on the issue of bottlenecks in the COVID-19 testing ecosystem, finding that with a few tweaks Color could contribute a considerable amount.

“We realized that there were several assets that we could bring to bear,” he said. “We decided to build a platform to get around some of the logistical constraints and the supply chain constraints around COVID testing. We did that, got large-scale COVID testing lab online, but also repurposed a lot of our digital platforms for COVID testing … I think we’re doing approximately 75% of all the testing in SF right now.”

Carbon Health CEO Eren Bali noted that companies like theirs are important props at a time when the medical infrastructure of the country buckles under pressure.

“At this point the U.S. doesn’t have the best public health system, but at the same time we have best-in-class private companies who can sometimes operate a lot more efficiently than governments can,” he said. “We also just recently launched a program to help COVID-positive patients get back to health quickly, a rehabilitation program. Because as you know even if you survive it doesn’t mean your body was not affected, there are permanent effects.”

This type of at-home care has become increasingly important, both to take pressure off hospitals and frontline workers and to improve accessibility to resources.

“Sometimes the cost of care is a lesser problem compared to the access,” said Laraki. “Like if you need to drive for an hour and take time out of your day, etc., if you’re an hourly worker. That’s what makes healthcare inaccessible.”

Source: Tech Crunch

This afternoon Affirm, a startup focused on providing point-of-sale credit to consumers making online purchases, announced that it has filed to go public.

The filing is confidential, so there’s little to be gleaned about the company’s performance from the news. That Affirm was exploring a public offering was reported by the Wall Street Journal back in July. In the aftermath of that news, TechCrunch tried to understand the valuation that Affirm was said to be targeting in its debut, which we placed at as much as $10 billion.

Affirm has been richly funded throughout its private life. The fintech unicorn has raised private funds in excess of $1 billion, including a $500 million Series G in September of 2020, a $300 million Series F in April of 2019, and a $200 million Series E in December of 2017. Affirm also raised more than $400 million in earlier equity rounds, and a $100 million debt line in late 2016.

Many venture bets are therefore riding on the success of Affirm and its future liquidity.

The company was valued at $2.9 billion at the time of its $300 million Series F last year according to PitchBook data. The company’s most recent valuation is not known. How much of a step-up a $10 billion public valuation would be, therefore, from its final private valuation is not clear.

Affirm will enter warm public markets if it chooses to list in short-order. The third quarter of 2020 was a bonanza of public-market liquidity, as the United States saw its most active quarter of public offerings since at least 2016, partially driven by the craze around SPACs. With retail investors and larger checkbooks alike active in their interest for growth-focused shares, unprofitable tech startups have done well in their recent debuts.

Those that make money have done even better, certain outliers like Snowflake aside.

After a confidential filing, Affirm will wait to hear back from the SEC on its application, and then will have the choice to file a nonconfidential S-1 when it is ready. There is no set timeline here, but once the company’s numbers are public, we’ll be diving into them. Affirm joins other recent companies like Palantir who filed their public offerings confidentially first, before later making them public.

Source: Tech Crunch