“A more flexible approach is needed,” Gov. Newsom said in rejecting a bill that would require crypto companies to get a state license.
Strong bipartisan support wasn’t enough to convince Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.
The Digital Financial Assets Law seemed like a legislative slam dunk in California for critics of the crypto industry.
But strong bipartisan support — it passed 71-0 in the state assembly and 31-6 in the Senate — wasn’t enough to convince Gov. Gavin Newsom that requiring crypto companies to register with the state’s Department of Financial Protection and Innovation is the smart path for California.
After months of “extensive research and outreach,” Newsom said Friday, he came to the conclusion that “a more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.”
With debates over how to regulate digital assets underway in D.C., he also argued that “it is premature to lock a licensing structure in statute without considering … forthcoming federal actions.”
The bill’s proponents blasted the veto.
“Crypto Bros 1, Consumers 0,” the Consumer Federation of California, the bill’s sponsor, said in a statement.
“Strong bipartisan majorities in the Legislature and a broad coalition of support apparently aren’t as important as the opposition of some rich crypto bros and big tech,” executive director Robert Herrell said.
Assemblymember Tim Grayson, who introduced the bill, denounced the crypto market for being as “underregulated at best and deliberately rigged against everyday consumers at worst,” arguing that “a financial market cannot be considered healthy if there are no guardrails in place to protect consumers from scams and bad actors.”
The crypto industry, on the other hand, was ecstatic.
Jake Chervinsky, the Blockchain Association’s head of policy, said in a tweet that Newsom “deserves serious respect for making the right call,” adding that what the California governor did “takes guts, & he did it for all the right reasons.”
Katherine Dowling, general counsel and chief compliance officer at Bitwise, agreed, saying, “The veto is 100% the right decision and his reasoning is spot on.“
“The bill would have been harmful to current crypto businesses and innovation in the state of California,” she told Protocol. “We need collaboration and discourse to establish clear, purpose-built regulations, not a patchwork quilt of potentially competing and conflicting regulations.”
The crypto industry had warned that California could end up repeating the mistakes of New York, where a controversial licensing requirement for crypto companies ended up driving major companies like Kraken out of the state.
“There’s always a risk that overregulating any new industry stifles innovation in a way that even the regulator may come to regret,” Omid Malekan, who teaches blockchain and cryptocurrencies at Columbia Business School, told Protocol. “This is particularly true for crypto because it is a global industry.”
Miles Jennings, general counsel for crypto at Andreessen Horowitz, praised Newsom for demonstrating “a strong show of support for the Web3 industry,” adding in a tweet, “He’s given us a great opportunity to help CA lead Web3.”
But it’s not clear if Newsom’s move signals an indefinite laissez-faire regime in the Golden State.
Newsom actually offered a more nuanced explanation for the veto. He noted that he shared the bill’s “intent to protect Californians from potential financial harm while providing clear rules for crypto-businesses operating in this state.”
He cited financial reasons for rejecting the plan, saying “standing up a new regulatory program is a costly undertaking, and this bill would require a loan from the general fund in the tens of millions of dollars for the first several years.”
Suzanne Martindale, head of California’s Division of Consumer Financial Protection, had also cited the challenges of setting up a new licensing structure, saying in a June interview with Protocol that the DFPI would have to “pivot quite substantially to implement a new licensing program that may indeed override some of the work that we were contemplating doing on the regulatory and administrative level.”
The DFPI had no comment on Newsom’s veto. But in her earlier interview, Martindale had suggested that a new licensing program, besides being potentially expensive and complicated, may not even be necessary.
She said existing state law already gave the state “broad definitional jurisdiction over financial products and services.”
“Starting at the high level, I am not someone who says, ‘Oh, there’s a new technology involved. Therefore, we need entirely new laws,’” she said. But California regulators, she stressed, “know we need to act … We are getting complaints where people are just straight-up being defrauded,” she added.
Marc Fagel, the SEC’s former regional San Francisco director, said the Newsom veto highlights the dilemma faced by states in figuring out how to deal with crypto.
“Crypto is proving a difficult high-wire act for legislators and regulators,” he told Protocol. “I suspect they’re all trying to balance well-justified concerns about crypto’s legitimacy and hazards with the political risks of regulating something which is proving popular and lucrative. And as usual, it falls on enforcement bodies to clean up the messes.”
Benjamin Pimentel ( @benpimentel) covers crypto and 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 Google Voice at (925) 307-9342.
It’s not all cartoon bears and therapy pigs — work conferences are a good place to talk about the future of work.
“We want people to be able to work in whatever way works for them with flexible schedules, in meetings and out of meetings,” Slack chief product officer Tamar Yehoshua told Protocol at Dreamforce 2022.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Dreamforce is primarily Salesforce’s show. But Slack wasn’t to be left out, especially as the primary connector between Salesforce and the mainstream working world.
The average knowledge worker spends more time using a communication tool like Slack than a CRM like Salesforce, positioning it as the best Salesforce product to concern itself with the future of work. In between meeting a therapy pig and meditating by the Dreamforce waterfall, Protocol sat down with several Slack execs and conference-goers to chat about the shifting future.
Throughout the conference, one of Slack’s main rallying cries was that we should cut down on meetings. At both the Slack keynote and a live interview with Pivot’s Kara Swisher, Slack CEO Stewart Butterfield declared his hope that people always feel empowered to turn down meetings in the future (and reaffirmed his disdain for the so-called work metaverse).
The “fewer meetings” mantra stems from Slack’s workplace research consortium Future Forum as well, according to its executive leader Brian Elliott. Finding time for deep focus is a priority for many workers, he said, and he’s glad to see this idea at the forefront of Slack’s product. Elliott has helped implement the idea into Slack at large with no-meeting Focus Fridays and Maker Weeks. Salesforce even picked up the practice post-acquisition. That said, it’s not a one-size-fits-all approach, nor is it one that can be implemented without significant buy-in.
“Those kinds of practices and policies, you can’t just top-down mandate them,” Elliott said. “You actually need people to pilot them and experiment with them to figure out what works, and then you need to adapt them to different organizations.”
One of Slack’s main rallying cries throughout Dreamforce 2022 was that we should cut down on meetings.Photo: Lizzy Lawrence/Protocol
Instead of just a dead calendar event, Butterfield’s vision is a comprehensive, easily digestible record of the meeting that makes sense, even if you didn’t attend. Essentially, it’s an elevated version of meeting minutes. This is part of the goal behind Slack canvas, a collaborative document embedded within channels and built from Salesforce-owned Quip.
“We had an instance of something similar to canvas that we called boards internally, two or three years ago,” Tamar Yehoshua, Slack VP of product, told Protocol. “We got it to dog-food, and there were just too many rough edges. Then the Salesforce acquisition came, and we knew with Salesforce, we would get Quip.”
Despite Slack’s rallying cry against meetings, a lot of Dreamforce 2022 took place in person.Photo: Lizzy Lawrence/Protocol
Yehoshua described canvas as a “persistent, real-time layer” of work that she thinks will streamline relevant information. But whether it will reduce the need to attend synchronous meetings remains to be seen.
“We want people to be able to work in whatever way works for them with flexible schedules, in meetings and out of meetings, so it doesn’t have to be this ‘I’m on a 30-minute video call in order to get anything done,’” Yehoshua said.
Canvas and the general availability of video huddles were the main Slack announcements at Dreamforce, accompanied by hundreds of Slack-specific sessions over the conference’s three days. Tamara Jensen, a principal technical project manager at T-Mobile, spoke at a Slack-related session about how to cancel more meetings. She’s leading her company’s efforts to replace unnecessary meetings with Slack, though adoption has been uneven across various teams.
“It depends on which role you’re in,” Jensen said. “As a product person, you talk all day long. As an engineer, you’re in less meetings.”
No matter what Slack does, Jensen said some people are just going to have some meeting FOMO. It’s in our nature to worry about what essential information we might have missed.
“That does take a little bit of training,” Jensen said. “People have to get comfortable saying no, and trust that it’s going to be offline and available to them.”
Hybrid work and figuring out better ways to communicate was not just top of mind for Slack execs, but for Dreamforce attendees, too. Several Dreamforcers talked to Protocol about the pitfalls of making work equally inclusive for office-goers and those working from home, such as including remote workers in a video meeting where most people are Zooming from a conference room.
Dreamforce had a panel about how to lead in a flexible work world, with speakers like Vimeo CEO Anjali Sud and Calendly CEO Tope Awotona. The main takeaway from that panel was, as Sud put it, “Nothing is sacred.” Now is the time to experiment and test out different hybrid and remote policies. Sud said her executive team is dispersed across nine time zones, from Switzerland to Seattle. Instead of all leaders flying to headquarters once a month, every executive hosts a meetup in their hometown.
“It’s tough as executives because what your employees are looking for is certainty,” Sud said. “Part of our job is to know where we can have a philosophy and certainty, but also where we need to be agile and flexible. At Vimeo, we’re just experimenting.”
With all that experimentation, companies are split on whether to ditch or reunite with the full-time office model. But it’s clear that remote work will remain popular with employees even as the pandemic wanes.
“The bet essentially is which model is going to perform better over the next five years, and I would bet on the one that is more attractive to talent, because talent actually drives business results,” Elliott said.
Despite Slack’s rallying cry against meetings, a lot of Dreamforce was — you guessed it — meetings. Between people dutifully taking notes at keynote panels and groups huddling with Humphry Slocombe ice cream in Adirondack chairs outside Moscone Center, connecting synchronously was the ultimate goal of Dreamforce. After years of being unable to come together, Dreamforce attendees were happy to fill their time with live, serendipitous chatter.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America’s technology leadership.
Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.
From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: “intellectual property protection is vital for American innovation and entrepreneurship.”
Patents are the primary means of protecting IP — trademarks, copyrights, and trade secrets offer additional IP protection — and represent a rule-of-law guarantee akin to a deed’s role in protecting land ownership. The founders of the United States wrote patent protection into the Constitution to “promote the progress of science and the useful arts.” Abraham Lincoln revered patents for adding “the fuel of interest to the fire of genius.”
In today’s knowledge-based economy, IP rights play a foundational role. “Core R&D is the first step in getting good products into people’s hands,” said John Smee, senior VP of engineering and global head of wireless research at Qualcomm. “Everything from smartphones to the Internet of Things, automotive and industrial innovation begins as a breakthrough within our research labs.” At Qualcomm, Smee said, strong IP laws help the company confidently conduct cutting-edge 5G and 6G wireless research that will make its way into products ranging from everyday consumer goods to the factory floor.
Semiconductor companies, in particular, are fiercely protective of their IP because it’s their primary competitive advantage. Chip companies go to extraordinary lengths to protect their IP by maintaining black boxes only accessible to one person per fab, choosing highly secure operating locations, and keeping R&D teams separate from fab operations teams.
On the legal side, America’s Semiconductor Chip Protection Act of 1984 bestows legal protection of chip topography and design layout IP while the EU’s Legal Protection of Topographies of Semiconductor Products of 1986 protects IC design. These regulations “have encouraged firms to continue to innovate,” according to the findings of Qualcomm’s and Accenture’s report, Harnessing the power of the semiconductor value chain.Having a high-quality patent portfolio also helps companies build out their ecosystem, should they choose to license, through advising, training, support for launches, assistance in expanding to new markets, and much more.
Licensing democratizes innovation and invention— it makes the cutting-edge IP developed by one firm accessible to a broad range of others. As such, it allows other companies to skip the R&D step and jump right into building on the innovator’s foundation. This lowers the barrier to entry for upstart companies while providing a steady return on investments for the companies who have the resources to dedicate to heavy R&D.
An outsize economic impact
IP protection also has an outsized impact on the US economy and helps create good higher-paying jobs. A report from The United States Patent and Trademark Office (USPTO) found that in 2019 industries that intensively use IP protection account for over 41% of U.S. gross domestic product (or about $7.8 trillion) and employ one-third of the total workforce — that’s 47.2 million jobs. In 2019, the average weekly earnings of $1,517 for workers across all IP-intensive industries was 60% higher than weekly earnings for workers in other industries.
Workers in IP-intensive industries were more likely to earn higher wages as well as participate in employer-sponsored health insurance and retirement plans, the USPTO report found.
But patent laws are often subject to much debate — one person’s idea of protection is another’s view of monopoly. That’s where organizations like LeadershIP come into play. The group brings together experts on IP and innovation to debate issues at the intersection of research, policy, and industry.
In addition, several efforts are underway to help inventors get their ideas into the marketplace. The Inventors Patent Academy (TIPA), for instance, is an online learning platform aimed at guiding inventors through the benefits of patenting and the process of obtaining a patent. TIPA has designed its program to make patenting more accessible and understandable for groups historically underrepresented in the patent-heavy science and engineering fields, including women, people of color, people who identify as LGBTQIA, lower-income communities, and people with disabilities.
Closing these gaps would promote U.S. job creation, entrepreneurial activity, economic growth, and global leadership in innovation. Estimates suggest that increasing participation by underrepresented groups in invention and patenting would quadruple the number of American inventors and increase the annual U.S. gross domestic product by nearly $1 trillion.
If we want our nation’s rich history of innovation to continue, experts say, we must create an IP protection ecosystem that helps ensure that tech innovation will thrive.
“With the protection of patents,” Smee said, “there is no limit to where our creativity can take us.”
LA has a housing crisis similar to Silicon Valley’s. And single-family-zoning laws are mostly to blame.
As the number of tech companies in the region grows, so does the number of tech workers, whose high salaries put them at an advantage in both LA’s renting and buying markets.
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.
LA’s tech scene is on the rise. The number of unicorn companies in Los Angeles is growing, and the city has become the third-largest startup ecosystem nationally behind the Bay Area and New York with more than 4,000 VC-backed startups in industries ranging from aerospace to creators. As the number of tech companies in the region grows, so does the number of tech workers. The city is quickly becoming more and more like Silicon Valley — a new startup and a dozen tech workers on every corner and companies like Google, Netflix, and Twitter setting up offices there.
But with growth comes growing pains. Los Angeles, especially the burgeoning Silicon Beach area — which includes Santa Monica, Venice, and Marina del Rey — shares something in common with its namesake Silicon Valley: a severe lack of housing.
According to the most recent Regional Housing Needs Assessment, from 2020, which determines how much housing must be built between 2021 and 2029, Los Angeles needs to construct more than 456,000 units of housing, or around 57,000 per year, to keep up with demand. But the city is anticipated to build just short of 231,000 in that period, or around 29,000 per year. And the flood of new tech workers is only exacerbating the problem.
The average tech salary in Los Angeles ranges from $114,000 for marketing and design positions to more than $148,000 for developers and engineers. This beats out the median annual household income in LA county, which is just over $71,000, according to the U.S. Census Bureau.
High salaries put tech workers at an advantage in both the renting and buying markets, but it’s major liquidity events, such as a company being acquired or going public, that allow people to put down massive down payments or all-cash offers that really give them an edge, said Matt Canzoneri, CEO and co-founder of home-buying platform DwellWell. “They’re not relying on their high paychecks,” Canzoneri said. “They all of a sudden come into a windfall of cash that shakes up the market.”
Developers are more likely to build and price rental units and homes for purchase at rates that people in tech can afford, but are out of others’ budget.
The city’s IPO activity really started picking up in 2021, when companies including Dave and Rivian went public. According to data from PitchBook, the region saw 18 tech IPOs in 2021. That’s more than double the number of IPOs it had in 2020, when seven companies IPO’d, and more than triple the number of tech IPOs in 2019, when five tech companies went public.
LA has also seen a lot of M&A activity in the last few years, PitchBook data shows. In 2021, 434 tech deals took place in the region, worth an average of $377.6 million. That’s up from 284 deals in 2020 worth an average of $246.2 million.
Developers are more likely to build and price rental units and homes for purchase at rates that people in tech can afford, but are out of others’ budget. And with the sheer lack of housing units overall, people who don’t make enough money are getting pushed out of certain areas.
According to apartment rental platform RentCafe, the average apartment for rent in Santa Monica costs $3,958, with 95% of the apartments in the area costing more than $2,000 per month. Meanwhile, the average home value is more than $1.9 million, according to Zillow. In Los Angeles overall, the average rent is $2,734, with 74% of the apartments costing more than $2,000 per month. Houses cost $972,828 on average.
Though tech aggravates the housing problem, tech may also provide unconventional solutions: Construction tech companies can create additional housing at a much faster pace than traditional development projects. “We have to look at clever ways of innovating and building our way out of the supply deficit, and one of the ways that we can do that is to limit the time and cost of constructing a home,” said Aisling Carlson, a local startup founder. “Technology can play a key role in adding value there.”
Modal Living, which builds prefab “accessory dwelling units,” sees a heavy concentration of business in Southern California, according to CEO Colin Jube. Adding another unit to a backyard offers “a really good solution for places like LA that have a lot of single-family neighborhoods,” Jube said. California offers a reimbursement of up to $40,000 for households that build an additional unit on their property.
“If you take any average single-family neighborhood in LA or anywhere, there’s really no way to get new, affordable housing into that neighborhood,” Jube said. “It’s built out, and typically zoning will not allow for apartment buildings or other types of housing types. So ADUs are a great way … to add housing density.”
Adding another unit to a backyard offers “a really good solution for places like LA that have a lot of single-family neighborhoods.”
And ADUs aren’t the only things that can be prefabricated. Some companies are building entire homes before they hit a plot of land, often at a much quicker rate than traditional construction. In a city where the construction of new units of housing is slow going, prefabricated housing can be a fix, said Steve Glenn, CEO of Plant Prefab. This kind of building “can make the construction process more efficient from a labor standpoint, from a productivity standpoint, and from a time standpoint, to make it less costly to actually build.”
Though construction tech like this sounds exciting in theory, these solutions must go hand-in-hand with something less cool: Los Angeles zoning laws. “There are way more people that need housing than housing exists,” Jube said. “At its core, that’s really a zoning issue. LA in particular … has a disproportionate amount of single-family zoning.”
A study released in March by UC Berkeley’s Othering and Belonging Institute found that 78% of residential land in the greater Los Angeles area is zoned for single-family housing.
This means there’s fewer housing units per square mile. From there, it’s basic economics of supply and demand: If construction isn’t keeping up with the increasing demand for housing, prices go up and inevitably get too expensive for the people who’ve lived in the city their whole lives.
For reference: In the Bay Area, which is also feeling a housing crunch, 85% of all residential land is zoned for single-family-only dwellings.
“There’s a housing crisis everywhere. But it’s particularly bad in those two cities, and both of those cities suffer from some of the same issues,” Jube said. “Developers that would otherwise be happy to build higher-density projects simply aren’t allowed to because of zoning.”
More than three-quarters of residential land in the greater Los Angeles area is zoned for single-family housing, but the city and the state are working to make room for more housing units and to rezone.Photo: Nat Rubio-Licht/Protocol
And often, tech’s decision makers are all in on this kind of zoning, with the posh Bay Area town of Atherton being a prime example. Tech executives from Netflix, Google, Electronic Arts, and others wrote strongly worded notes to the city council after it proposed legalizing the construction of multifamily properties. Billionaire tech investor Marc Andreessen wrote to the council that apartment buildings would “MASSIVELY decrease our home values” and “IMMENSELY increase the noise pollution and traffic.”
But it’s not all doom and gloom. LA and the state are working on a number of solutions, including the recently approved LA Housing Element, which requires the city to rezone to make room for a minimum of 255,000 units of housing and could rezone for up to 1.4 million, LA city planner Matthew Glesne told Protocol. Two bills also received support from state legislators in late August that boost home-building by allowing developers to construct housing units on commercial land.
But the city has a long way to go. “We have the second fewest homes per adult of major cities in the country,” Glesne said. “Certainly the lowest income among us pay the price for that.”
Protocol data researcher AJ Caughey assisted with reporting on this story.
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.
The San Francisco Board of Supervisors approved a policy that the ACLU and EFF argue will further criminalize marginalized groups.
SFPD will be able to temporarily tap into private surveillance networks in certain circumstances.
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.
Ripple chairman and co-founder Chris Larsen has been funding a network of security cameras throughout San Francisco for a decade. Now, the city has given its police department the green light to monitor the feeds from those cameras — and any other private surveillance devices in the city — in real time, whether or not a crime has been committed.
This week, San Francisco’s Board of Supervisors approved a controversial plan to allow SFPD to temporarily tap into private surveillance networks during life-threatening emergencies, large events, and in the course of criminal investigations, including investigations of misdemeanors. The decision came despite fervent opposition from groups, including the ACLU of Northern California and the Electronic Frontier Foundation, which say the police department’s new authority will be misused against protesters and marginalized groups in a city that has been a bastion for both.
“Civil rights are certainly under attack nationally, and it is concerning that San Francisco, which is the city that historically has been a refuge for the oppressed and a celebrated center of activism, would move to this policy forward,” said Jennifer Jones, staff attorney for the ACLU of Northern California.
Jones said the new surveillance authority is particularly troubling given the number of cameras that have been funded by one donor in particular: Larsen. “The fact that there is a very vast private camera surveillance network infrastructure already in place does make the passage of this policy very concerning,” she said.
Larsen has reportedly spent around $4 million since 2012 to buy more than 1,000 security cameras in the city in what he describes as an effort to combat crime. The cameras are clustered in business districts, including Fisherman’s Wharf, Japantown, Lower Polk, Mid-Market, the Tenderloin, and Union Square. “I’m from San Francisco, and I believe in this city. In many ways, tech has contributed to the disparity and problems that we see in San Francisco today,” Larsen told Protocol in a statement after the Board of Supervisors’ vote. “As members of the community, I believe it’s our job to help solve these problems by reinvesting in the city and making it safe.”
While the cameras are paid for by Larsen, the networks are monitored and run by neighborhood coalitions known as community benefit districts. Those districts, not Larsen, will ultimately have to agree to give the SFPD access to their cameras under the new policy, and some have already said they will. In his statement, Larsen also expressed support for the approach. “The decision reached by the SF Board of Directors strikes a reasonable balance to help with public safety while maintaining the proper controls to protect privacy and civil liberties which will ultimately make San Francisco a safer place for everyone,” Larsen said.
The SFPD released its own statement following the decision, writing, “Cameras are necessary tools that can lead to the identification, arrest, and prosecution of individuals engaging in criminal activity in our city. The criminal justice system depends on the participation of victims and witnesses. The video footage they provide will enhance their ability to seek justice.”
The Board of Supervisors’ decision can be traced back to a 2019 ordinance that ironically was meant to curb government adoption of new, potentially dangerous forms of technology. That ordinance, which both the ACLU and EFF supported, requires any government agency looking to deploy new technology to first seek approval from the Board of Supervisors as a way of ensuring some oversight in the process.
That ordinance has already been put to the test. In October 2020, plaintiffs represented by the ACLU and EFF sued, alleging the SFPD sidestepped the approval process when it used a network of 300 security cameras to surveil Black Lives Matter protesters following George Floyd’s murder. A San Francisco Superior Court ultimately sided with the city, however, because it found SFPD had also used the cameras to surveil the Pride Parade in 2019, before the ordinance went into effect. According to that court, the ordinance only required city agencies to seek approval to deploy technology they weren’t already using. The ACLU and EFF called the court’s reading of the ordinance “unsupported,” and are currently appealing that decision.
Now that the city has approved the SFPD’s use of these cameras, Jones argues there’s little stopping police from surveilling marginalized groups. “We’re concerned that this will further criminalize folks we know have historically been the target of government surveillance, whether that’s Black people, activists, LGBTQ people, and Muslims,” Jones said. She noted that because police will be able to use this power to investigate misdemeanors, it could lead to frequent, around-the-clock monitoring of neighborhoods over minor infractions.
The Board of Supervisors’ decision is part of a turnabout in San Francisco, which had in recent years moved to reduce police power and funding. In 2019, San Francisco passed a facial recognition ban for police and government agencies. The following year, in the midst of racial justice protests, Mayor London Breed diverted $120 million in police funding to issues including housing, health care, and education.
But by the end of 2021, Breed was calling for more emergency police funding and arguing that the city needed to “change course on how we handle public safety.” Months later, the city’s district attorney, Chesa Boudin, was ousted from office after critics — many of them from the tech industry — launched a campaign accusing him of going too easy on crime.
San Francisco is, of course, not alone in changing course on prior efforts to tamp down on police power. Facial recognition bans all across the country are now being reversed, and just this week, New York Gov. Kathy Hochul announced plans to put cameras inside New York City subway cars. “If you think Big Brother is watching you on the subways,” Hochul said during her announcement, “you are absolutely right.”
Boudin, for one, was also a proponent of Larsen’s camera network and its promise to take the load off of police. In 2020, he met with Larsen and community benefit district leaders to discuss the potential of the cameras and the limits of policing. “We don’t have a good law enforcement response right now,” The New York Times quoted Boudin as saying during those meetings. “It takes 10 cops to do a single drug bust, costs $20,000 or something. And I don’t want my attorneys to be doing this for no benefit on the street.”
Of course, that was before the city was letting the SFPD watch those videos live — instead of only after a crime had occurred.
While privacy advocates oppose the policy, they did prevail in getting the city to agree to an audit at the end of 15 months. At that point, the policy will be up for reauthorization, and Jones promised, “We’ll be back at the board in full force.”
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.
Vendia, founded by Tim Wagner and Shruthi Rao, wants to help companies build real-time, decentralized data applications. Its product allows enterprises to more easily share code and data across clouds, regions, companies, accounts, and technology stacks.
“We have this thesis here: Cloud was always the missing ingredient in blockchain, and Vendia added it in,” Wagner (right) told Protocol of his and Shruthi Rao’s company.
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.
The promise of an enterprise blockchain was not lost on CIOs — the idea that a database or an API could keep corporate data consistent with their business partners, be it their upstream supply chains, downstream logistics, or financial partners.
But while it was one of the most anticipated and hyped technologies in recent memory, blockchain also has been one of the most failed technologies in terms of enterprise pilots and implementations, according to Vendia CEO Tim Wagner.
“We sometimes joke at Vendia that we love nothing better than a failed blockchain experiment,” Wagner said. “Blockchain has certainly gone through this amazing hype cycle. We’re in that post trough-of-disillusionment phase. Probably half of our deals in the last year are replacements of failed blockchain attempts.”
The operational challenges of blockchain technology, including single-machine limitations, lack of throughput and scalability, high costs, and the difficulty of integration, meant that many pilots failed to deliver value, according to Wagner.
To solve those problems, he and fellow co-founder Shruthi Rao, Vendia’s chief business officer, reimagined the idea of blockchains and distributed ledgers in a cloud-native way, launching Vendia in 2020. Its fully managed and serverless Vendia Share platform for building real-time, decentralized data applications allows customers to more easily share code and data across clouds, companies, geographic regions, accounts, and technology stacks.
Shruthi Rao and Tim Wagner reimagined the idea of blockchains and distributed ledgers in a cloud-native way, launching Vendia in 2020.Photo: Vendia
“We have this thesis here: Cloud was always the missing ingredient in blockchain, and Vendia added it in,” Wagner said. “We took this very different approach, this very cloud-friendly, cloud-scaling-type approach to building it, so at the core of our technology is a cloud-centric blockchain. By building it in the cloud, we have access to essentially unlimited amounts of storage, unlimited amounts of network capacity, unlimited amounts of processing capacity. That makes it possible for us to do things that conventional blockchains can’t: [Deliver] much higher throughput, lower latency, more processing power, lots more parallelism, easier integration.”
Vendia has received $50 million in funding to date. Its customers range from startups to large mid-market and enterprise companies across markets such as settling roaming charges in Africa and Asia for telecom providers; airline supply chains; large-scale construction management; and the mortgage, hospitality, and automotive industries. They include BMW, Aerotrax Technologies, and consulting firm Slalom.
“We typically replace early attempts to use Hyperledger Fabric or Quorum or one of these other systems,” Wagner said. “But a lot of it, frankly, is companies who are staring at the high cost of building it all out in a custom way through a custom development in-house or outsourced versus trying to get it as a platform. One of the hardest things a company can do is ensure that their data and their partners’ data is always correct, consistent, complete, and up to date.”
Prior to starting Vendia, Rao had been head of business development for blockchain at AWS, including its Amazon Managed Blockchain product that supports the open-source HyperLedger Fabric. Wagner had been using the same technology at cryptocurrency company Coinbase.
“The interesting question we kept asking ourselves was, ‘What’s the problem, what’s the missing ingredient here?’” Wagner said. “I would sum it up simply as just saying this first generation of blockchain technology ignored the cloud. They ignored scalability, they ignored cloud integration, they ignored the fact that everyone else was migrating to the cloud.”
Rao said she met 1,092 unique customers while at AWS. No matter what industry they were involved in — financial services, energy, media, entertainment, gaming — they all had one big story of why they were “desperately” trying to use blockchains, according to Rao. The customers said they had many partners, invested in lots of data-making mechanisms — from IoT and mobile to edge computing and digital transformation — but the enormous amounts of data produced by those activities were getting stuck in partner and cloud silos.
“For these companies, the problem was, ‘We’re not getting access to our data that we need to make real-time decisions in a meaningful time so we can respond to market changes rapidly,’” Rao said. “Irrespective of how much investments they’ve made in AI and ML and analytics and all of these wonderful data-crunching mechanisms, they were just getting a small sliver of data.”
“I would sum it up simply as just saying this first generation of blockchain technology ignored the cloud.”
Wagner, meanwhile, had been vice president of engineering in 2018 and 2019 at pre-IPO Coinbase, which was running some of the largest regulated distributed ledgers in North America.
“I had this just sad realization that while cryptocurrencies and distributed ledgers were sort of working for speculation, they didn’t really work for enterprises,” he said.
Before joining Coinbase, Wagner spent about six years at AWS and started what’s now known as its serverless division — which included AWS Lambda, its serverless compute service — with Rao eventually running business development for the group.
“When I created Lambda, it was about democratizing and simplifying access to the cloud versus going and renting a server from AWS,” Wagner said. “We kind of think of Vendia as a similar idea: It’s about democratizing and simplifying blockchain capabilities for customers who then don’t really have to understand how that works. We deliver it in the SaaS fashion. They don’t have to deploy it, and frankly, they don’t even really have to understand it. They can get the business value out of it without necessarily becoming experts in writing solidity or hiring Hyperledger Fabric developers or any of those pieces.”
Vendia launched just after the start of the coronavirus pandemic, which further highlighted corporate challenges in the supply chain and pressure on the travel industry, particularly airlines.
“It took what was already a wonderful sort of addressable market for us and added a sense of business urgency,” Wagner said. “[It] created even more of an awareness and focus on the limitations and lack of appropriate data-sharing mechanisms, of cross-company data-sharing needs and requirements. The focus on cost-cutting and efficiency and passenger experiences, corporate travel, and the need for corporations to be able to replan their travel — some of those have actually been very beneficial for us.”
One of Vendia’s airline customers has about eight joint-venture partners to get passengers to their destinations. When a customer books a flight from San Francisco to Cancún, Mexico, for example, that airline would fly the passenger from San Francisco to Dallas, and one of its partners would then handle the Dallas-to-Cancún leg of the trip.
The initial passenger booking would come to the airline through its Salesforce CRM system. To convey needed information to its joint-venture partner handling the flight from Dallas to Cancún, in the past, Vendia’s customer would download its Salesforce data into an Excel spreadsheet and clean up some of the macros so it only shared information that the partner needed to see, such as the trip segment, the passenger’s name, the passenger name record number, the date, seat number, and other details. It would then send the information to the partner, which could be using a different CRM system.
“I had this just sad realization that while cryptocurrencies and distributed ledgers were sort of working for speculation, they didn’t really work for enterprises.”
“It’s all very manual, it’s all very duct-tapey, and throw in the fact that they have eight joint venture partners and many, many more code-share and segment-share partners … The point-to-point-to-point integration, especially on these complex flights, becomes that much harder,” Rao said.
Vendia Share instead takes care of orchestrating the data-sharing among the different airlines. The product enables businesses to have full visibility into all activities and transactions without worrying about their origin, as transactions are immutable through the power of distributed ledger technology, according to Rao.
“We make sure that whoever is supposed to get the data gets the data in real time, within five milliseconds, so there’s no back and forth of manual movement,” Rao said. “And everything is on the ledger so you can see who you shared [with], what you shared, when you shared … and you can do fine-grained analysis of what has been shared.”
Support for AWS is generally available, support for Microsoft Azure is in beta, and Google Cloud Platform support is targeted for the first quarter, according to the company.
Vendia announced its latest funding, a $30 million Series B round, led by NewView Capital, in May. The company, which has just under 100 employees, is using that money to scale its engineering and continue building out its cross-cloud platform, including support for Google Cloud Platform.
“There’s just this general idea to meet customers where they are: the cloud that they’re on, the APIs or data access that they prefer to use, the systems that they have their data in, like Salesforce, for example,” Wagner said. “On the go-to-market side … we’ve pushed into automotive, into the travel sector and financial services — that’s kind of where we got started — and they all have some really amazing business networks and use cases for us to tap. But they’re equally exciting and challenging opportunities in health care, in energy and consumer goods, and lots of these other spaces as well. To get there, we need a larger go-to-market team and more collateral. So that’ll be the other opportunity: to use those funds to grow out and expand our sector penetration.”
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.
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