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.

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.

Nancy Sansom is the Chief Marketing Officer for Versapay, the leader in Collaborative AR. In this role, she leads marketing, demand generation, product marketing, partner marketing, events, brand, content marketing and communications. She has more than 20 years of experience running successful product and marketing organizations in high-growth software companies focused on HCM and financial technology. Prior to joining Versapay, Nancy served on the senior leadership teams at PlanSource, Benefitfocus and PeopleMatter.

While there remains debate among economists about whether we are officially in a full-blown recession, the signs are certainly there. Like most executives right now, the outlook concerns me.

In any case, businesses aren’t waiting for the official pronouncement. They’re already bracing for impact as U.S. inflation and interest rates soar. Inflation peaked at 9.1% in June 2022 — the highest increase since November 1981 — and the Federal Reserve is targeting an interest rate of 3% by the end of this year.

Facing a volatile market and a largely grim outlook deep into 2023, executives are naturally focused on doing more with less and protecting their cash flow. As leaders look for opportunities to increase efficiency across the business, they tend to prioritize the invoice-to-cash process last.

In partnership with Wakefield Research, Versapay surveyed 1,000 C-level executives at companies with a minimum annual revenue of $100 million on their accounts receivable digital transformation efforts. Our research revealed that companies whose AR operations are most impacted by current indicators of the recession also have yet to make significant headway with digital transformation — and their customer experience is paying the price.

With customer retention doubly important during a downturn, B2B companies can’t afford to neglect their buyers’ experience in the billing and payment process.

Accounts receivable has the most immediate impact on cash availability. So, it's not surprising that CFOs are feeling the brunt of the current economic climate’s effects: inflation, rising interest rates and labor shortages topped CFOs’ list of the biggest headaches facing their AR.

When inflation soars, cash in hand today is worth more than it will be tomorrow. Rising material and production costs put pressure on profit margins, and growing interest rates increase the cost of borrowing. Any delay in receiving payments has a powerful effect on operating capital.

Companies that have not yet completed their AR digital transformation (our research finds this is most businesses) leave money on the table by not doing so.

Companies that are early in their AR digitization efforts are more likely to be impacted by the effects of the recession, and our research confirms this.

Among executives who identified supply chain disruptions as a source of strain for their AR team, 53% said they have a great deal of work left to do in digitizing their AR. This was substantially higher than the average response across all executives (at any stage in their AR transformation journey) of 32%.

Similarly high, at 49%, was the proportion of executives who identified rising interest rates as a source of strain for their AR team stating they're still early on in their AR digitization efforts.

Companies with higher rates of automation in their invoice-to-cash process are better equipped to face economic headwinds simply because they can bring cash in faster.

But, slow internal processes only account for one part of why businesses get paid late. The other — larger, I’d argue — reason why B2B companies get paid late is due to customer disputes and dissatisfaction. This is a challenge that automation alone can’t solve because it requires suppliers to foster more collaboration and transparency with their buyers.

For this reason, companies trying to optimize cash flow during the current downturn should make customer experience in the invoice-to-cash process their focus.

Invoice disputes are typically caused by issues such as missing or damaged goods and conflicting expectations around credits and discounts. What we found, however, is that the culprit is often not the goods or services themselves, but human error and miscommunication during the payment process.

A customer’s negative experience during the payment stage can have more consequences for a business’s bottom line than one might think. Most executives we surveyed said miscommunication in the payment process has led to their company losing future revenue or getting paid less than they’re owed (82% and 85%, respectively).

But poor customer experience is too often part and parcel of B2B billing and payments. And executives are aware of the problem: 72% of C-level executives willingly admit their AR department is not customer-oriented enough (CFOs understand this even more, with 81% agreeing).

In the absence of tools designed especially for accounts receivable (on the supplier’s end) and accounts payable (on the buyer’s end) to collaborate, finance departments must rely on traditional methods of communication like email and phone. This makes it difficult for customers to get clarity on important information like payment terms and deadlines, creating a disconnect between suppliers and their customers.

This confusion ultimately delays payments, directly impacting the bottom line. Typical AR automation tools don’t solve this problem, instead they focus only on improving back-office tasks like invoice creation and cash application. Even where artificial intelligence excels, like matching incoming payments with their corresponding invoices, exceptions will still emerge and those require human collaboration to resolve. These are important and powerful digital tools for AR, but unless they consider CX, they only go halfway.

A Collaborative AR Network addresses the root causes of delayed payments by making it easier for AR departments to collaborate with their customers over the cloud.

Versapay is the first AR automation solution designed to address the human side of AR by empowering buyers and suppliers to work together to solve challenges in real time. Our Collaborative AR Network is what you get when you combine industry-leading AR automation, a next-generation B2B payments network and all the collaboration tools we’ve come to expect from modern cloud-based apps.

As a result, AR departments are able to bridge the divide between them and their customers and enjoy:

In this bear market, improving customers’ experience of the actual transaction process is a measure that businesses can’t ignore if they hope to preserve cash flow.

Nancy Sansom is the Chief Marketing Officer for Versapay, the leader in Collaborative AR. In this role, she leads marketing, demand generation, product marketing, partner marketing, events, brand, content marketing and communications. She has more than 20 years of experience running successful product and marketing organizations in high-growth software companies focused on HCM and financial technology. Prior to joining Versapay, Nancy served on the senior leadership teams at PlanSource, Benefitfocus and PeopleMatter.

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.

Jesse Powell tells Protocol the bureaucratic obligations of running a financial services business contributed to his decision to step back from his role as CEO of one of the world’s largest crypto exchanges.

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.

Kraken is going through a major leadership change after what has been a tough year for the crypto powerhouse, and for departing CEO Jesse Powell.

The crypto market is still struggling to recover from a major crash, although Kraken appears to have navigated the crisis better than other rivals. Despite his exchange’s apparent success, Powell found himself in the hot seat over allegations published in The New York Times that he made insensitive comments on gender and race that sparked heated conversations within the company.

Powell hit back by declaring “Back to dictatorship” in a tweet and inviting employees uncomfortable with the company’s culture to leave with four months’ pay. The program was called “jet ski,” as in “You can ride a jet ski off to your next adventure,” he explained in an interview with Protocol in July.

In another interview Thursday, Powell said he is not about to take a jet ski himself to another venture: He’s remaining as board chair and will focus on Kraken’s product development and on advocacy related to crypto regulations. But he also acknowledged, “I honestly don't consider myself to be an amazing manager.”

He said he’s giving up the CEO role because “there's a lot of stuff that I don't enjoy doing as CEO.” He is passing on that torch to COO David Ripley.

In an interview with Protocol, Powell elaborated on his decision, how the workplace dispute reshaped Kraken, and his concerns and fears about “bad proposals” in the ongoing battle over crypto regulations.

This interview was edited for clarity and brevity.

Why are you stepping down?

I like to think of it as stepping up into the chairman role, getting a nice promotion. I've been doing the same job for the last 11 years now. Personally, I’m ready to do something new. The company has gotten to a really good place. Our culture is better and stronger than ever. We've just ironed out a five-year strategic plan. We're in a really good, strong position where I feel like it's a good time to make the change.

The company has gotten to a size where there's a lot of stuff that I don't enjoy doing as CEO of a 3,000-plus-person company. What I really enjoy is the product. So this will allow me to spend more time working directly on the product and less time dealing with all the random business obligations that the CEO has.

Also, I'm looking forward to spending more time on advocacy work, which I think is getting to be more important for the industry. We are starting to see increased attention from the legislature and the velocity of sort of bad proposals coming out is increasing. I think I can provide more value by focusing on those things where I think I'm really good at and enjoy doing.

And I think Dave [Ripley] is better suited. His skill set is a stronger skill set for the needs of the company at this stage.

What are some of the CEO tasks that you don't really enjoy anymore?

Oh, there's a lot of stuff. As the company gets bigger and more professional, we're working on having the option to be a public company, getting all of our things in order. Another level of professionalism that's required, another level of reporting and documentation, and lots of box checking and meetings with auditors and things like that.

There's a lot of extra making sure that everything is in order, and that's all super important, especially for a financial services company. You want to know you're not overlooking things.

That part of the job is really not interesting to me. I'm much more like a zero-to-one kind of guy. I like to take something that's nothing and turn it into something. I really enjoy the product work.

The CEO potentially has to be the primary point of contact for a lot of regulatory work. For example, anytime we get a license for something, the CEO is going to get fingerprinted, fill out these documents with all the personal information and get interviewed and all of this stuff. There's a lot of stuff specific to being a financial services company that is kind of a drag.

And I honestly don't consider myself to be an amazing manager. I think Dave is a really great people manager. I really more so enjoy the work as an individual contributor, like getting into the weeds on the product stuff.

The balance of where my time was going was just increasingly less on the product stuff that I enjoy and more on sort of the bureaucratic parts of running a big business, especially a financial services company that's heavily regulated.

In the context of recent events, people are likely asking if this is Jesse Powell taking a jet ski to sail off to another venture.

[Laughs.] No, I'm not. I still plan to stay incredibly involved with the business. Maybe my work week goes down from 80 hours to 40 hours or something like that. You know the chairman of the board still has a significant number of responsibilities. We'll be adding more board members and forming more committees. We'll be doing a lot more at the board level.

I'm still going to be very actively involved in the product development of the company, the company’s brand, user experience, and things like that. It's more so moving from an explicit kind of an executive leadership management role to the role of an adviser, individual contributor, at a level where I can be in fewer meetings that I don't enjoy.

You're stepping down at a time when the crypto market is reeling from a serious crash, and also on the heels of the workplace controversy that you faced earlier this year. Did those contribute to your decision?

No, definitely not. I don't like that I'm going out at the bottom of the market. It would have been nice to bow out six months ago and take credit for the full rise to the top.

There's just never a perfect time to do this. And of course, there's this transition phase. This is not actually going to be effective for several more months, probably at the soonest January 2023. We still have to backfill Dave's role, bring the new COO in, have Dave start handing off his responsibilities to the new COO, before he starts taking on a significant number of my responsibilities.

We ran a long process to evaluate over a dozen other candidates for this role, as well. This process has existed long before the workplace controversy. That doesn't have anything to do with it. In fact, that whole incident, I think, served to just embolden and galvanize the team. I think it was great and that we were able to get out a lot of bad fits from the company. We ran an employee engagement survey, following the jet ski program, and people are more engaged and satisfied with their work than ever.

The whole thing was really a blessing in disguise. It just turned out really positively for the whole company. Following that, we actually got just a surge in new job applicants, an unprecedented number of new job applicants, a lot of people saying they're tired of the woke workplaces where they're at and they would love to work in a place like Kraken with the kind of culture that we have.

You mentioned that you wanted to focus on bad proposals that have emerged in the conversation around regulation. What are some examples that you hope to address directly in this new role?

There's a lot of dangerous things happening in the world all the time, specifically in the U.S. Much of the world looks to Washington for policy and just ends up copying what the U.S. does. I think we have kind of an outside influence. What we do reverberates around the world. There's some language and some legislation that has come up that's sort of indirect attacks on crypto. I don't know if it's done intentionally, or if the authors of the legislation just really don't understand what the implications are of the language.

It’s stuff like the tax implications of doing certain crypto trades or exemptions to the size of a taxable transaction. The Tornado Cash thing is a good example of something that has really dangerous implications for the whole space. We don't think that OFAC can actually sanction a smart contract. I think the implications of that are really scary and dangerous.

The SEC just said that they feel because there's a concentration of Ethereum nodes in the United States that gives the United States full jurisdiction over the Ethereum network. I think it is a huge overreach, and we need to push back on that.

There have been other statements in legislation that sort of tried to capture DeFi in a way that tried to put it under the standard BSA [Bank Secrecy Act] rules [where] basically any transaction that happens on a blockchain has to have sender and recipient personal information attached to it, effectively treating it just like the banking system, which would mean a ton of the value of it is destroyed.

We don't want to shoot ourselves in the foot. I think crypto is a national security issue, a national economic issue. I think we need to be supportive of it as we were with the internet. I think it would be a disaster if we created some laws that just basically forced all the bitcoin companies to go offshore.

How do you react to initiatives within the industry to implement more KYC and AML rules?

I think it's a really delicate balance to strike. You want to satisfy legitimate concerns about criminal use of proceeds or money laundering and things like that. But at the same time, you don't want to create a complete panopticon surveillance state where everyone's transactions are fully monitored and approved by some state authority.

As we just saw in Canada with the trucker protests, when the government disagrees with you, they will freeze your bank accounts for protesting and, you know, due process be damned. You can come fight for your money later. That's something that I think we didn't think we would see in the West. I get scared that that kind of thing will happen when the government has the ability to freeze funds and to identify the people involved in every single transaction.

I think the implications are really scary. I think people have a right to financial privacy. I don't think you should have everything that you do, every purchase that you make, published for the whole world to see on a blockchain forever for all time. It's just something we need to watch out for.

It was reported that your successor, Dave Ripley, wants to focus more on small retail traders. Can you elaborate on that, especially in the context of how some of the push for regulation was due to the crash and the perception that a lot of real retail consumers are getting hurt?

I don't think that that's the case with this regulation stuff. I think we've been through many cycles in crypto. Obviously, crypto is not an exception in this market. I mean, the whole stock market has lost [considerable] market cap. I think people, when they don't know if they're gonna be able to afford gas or groceries next week because of inflation and the energy shortages, they just don't have as much money to speculate.

People got wrecked in the stock market. I think they're feeling the pain at the gas pump. Any kind of risky investment class of asset is taking a hit now because of the uncertainty.

In terms of Kraken, retail focus is definitely a priority for us. Where we're investing most of our resources is in bringing in the next billion retail users, much more so than than we're interested in bringing on more business clients or hedge funds or things like that. So Dave’s right when he says our strategy is really to focus the majority of our effort on retail consumers.

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.

Tech offices are doing away with vaccine mandates and health surveys.

“Technology companies and leaders are behaving as if this is now a manageable problem."

The COVID-19 pandemic is “over,” President Joe Biden said on Sunday’s “60 Minutes”: “We still have a problem with COVID. We’re still doing a lot of work on it. But the pandemic is over.”

Biden’s comments earned criticism from those concerned he’s downplaying the seriousness of the virus, which still poses major health risks. But the remarks mirror a shift in the U.S. toward living with COVID as an endemic virus. Many tech employers have relaxed their own COVID restrictions, according to Joe Du Bey, co-founder and CEO of the workplace experience and people operations software maker Eden.

“Technology companies and leaders are behaving as if this is now a manageable problem,” Du Bey told me. “They are returning to the office and to corporate events in a meaningful way.”

More companies have also been letting go of vaccine mandates and dropping symptom questionnaires for employees heading to the office, Du Bey said.

This summer seemed like a “tipping point” for getting rid of these kinds of COVID precautions, Du Bey said.

“Even a few months ago, there was much higher engagement among our vaccine tracking tools, and I was seeing a lot more chatter among our startup community customer base and people I know around requiring it for team events,” Du Bey said.

A similar trend has emerged with Officely, a desk-booking tool that customers use inside Slack. Officely users returned half as many health surveys in August as they did at the peak in March, co-founder and CEO Max Shepherd-Cross told me.

Users also conducted 70% fewer contact traces than they did in March, according to Shepherd-Cross.

“I suggest this means that the actual amount of positive cases in offices is substantially down,” Shepherd-Cross said in a DM. “However, people are still worried about it, hence the smaller drop in companies requiring health surveys.”

AlertMedia, whose emergency communication software was used for contact tracing earlier in the pandemic, has found that customers have “less of a focus” on COVID.

“They’re using us in a bunch of different ways,” said CEO Christopher Kenessey. “We’ll hear our customers say, ‘Hey, I originally bought your product for the COVID use case, to communicate with them, and now we’re using your product for something different.’” (That can include natural disasters, active shooters and political unrest.)

At its own office in Austin, AlertMedia no longer requires employees to get vaccinated or to fill out a health survey before coming to work. The company dropped those policies as other businesses around Austin relaxed precautions like masks and vaccine cards, according to Kenessey.

The vaccine mandate at AlertMedia no longer seemed necessary once employees had a chance to get the shots, Kenessey said.

Much about life at AlertMedia looks close to normal these days. The company had 150 or 200 employees at the grand opening of its new, 68,000-square-foot office in Austin on Tuesday. More than 75% of the company’s 450 employees live in the Austin area, and Kenessey is hopeful that employees will choose to come to the new office three or four days per week.

That said, Kenessey is stopping short of requiring workers to come in.

“You can’t say, ‘We’re going to roll back the mandate to require a vaccine to come to the office,’ but then force people to come to the office,” Kenessey said. “If someone doesn’t feel comfortable, they have the flexibility of not having to come into the office.”

North American offices are busier than they have been since the start of the pandemic, though vacant desks still abound.

According to new data from the desk-booking software provider Robin, workers booked 22% of available desks last week — the first time since mid-June that one in five desks were in use. (It’s worth noting, though, that as some companies cut back on office space, higher utilization rates don’t necessarily mean more employees are showing up to work.)

Return rates vary across different cities, where different industries dominate, the Wall Street Journal reported. In New York, badge swipes tracked by the security provider Kastle Systems found that office attendance jumped from 38% to 46.6% earlier this month. San Francisco saw only a 2.3 percentage point increase to 40.7%.

And if workers are coming to the office more often, it’s not necessarily because they’re less nervous about getting sick. According to research from Slack’s Future Forum, concern about catching COVID isn’t high on the list of reasons why workers stay home.

“I think that is the smallest [part] of the conversation, in some ways,” Brian Elliott, executive leader of Future Forum, told Protocol. “Most of the conversation is about the fact that people want to find a balance between what works for them and the organization.”

And as workers gather in person, COVID cases follow. Google employees have been receiving regular notifications of colleagues’ COVID infections. Several AlertMedia employees tested positive for COVID after returning from a trade show last week, Kenessey said.

“We’re not ready to claim victory here at AlertMedia and say it’s over,” Kenessey said. “But we feel that it’s getting to the point now where you have to kind of live with it, work with it and be thoughtful of your peers, be respectful of them, and do it the right way.”

Additional reporting by Lizzy Lawrence

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