News Center

How To Build A Crowdsourced Company, From the Ground Up

By Mike Montgomery

We have all heard the traditional story. You have an idea and take it to an angel investor early on — or a venture capital firm after developing a prototype — to get funding. But this model has its drawbacks. Investors can make demands that a founder might not agree with. Many VCs are only interested in an exit, not building a sustainable company, and VC-backed companies often fall just as quickly as they rise.

What if there were a better way? Dirk Ahlborn, the CEO and co-founder of Hyperloop Transportation Technologies, thinks there is.

Back in 2012, Ahlborn was part of an online business incubator called JumpStartFund that harnessed the power of online communities. “If you think about it, you do everything online: your dry cleaning, your groceries, even finding love — but building businesses still very much happens offline,” he says. Ahlborn recognized the power of online crowdsourcing platforms like Kickstarter to bring people together, and he wanted to find the best way to harness the wisdom of passionate communities.

The opportunity arrived in the summer of 2013 when Elon Musk published a famous white paper proposing the hyperloop concept: massive magnetized tubes that could carry passengers at 700 mph from Los Angeles to San Francisco.

Ahlborn thought the project would be a perfect fit to show how a crowdsourcing business model would work and asked Musk for permission to put it on the JumpStartFund platform. Ahlborn invited anyone to participate as long as they were willing to work in exchange for stock options. After sifting through hundreds of applications, he enlisted the help of 100 engineers. Many of them had day jobs at places like Boeing, NASA, Google and Airbus.

Read the full article here.

Staying In A D.C. Hotel For Inauguration Weekend? Prepare To Be Gouged

By Mike Montgomery

This weekend will be a historically busy one for Washington D.C. Today, Donald Trump was sworn in as the 45th president of the United States in front of the U.S. Capitol, where his fans were out en masse to watch. Saturday, hundreds of thousands will flood the streets of the city to protest his presidency.

No matter which side of the fence they’re on, every D.C. visitor staying in a hotel had one thing in common: They all paid an insane amount for lodging.

We did some research into rooms this coming weekend and found that hotels are jacking up their prices by more than 800%. Book a room at the Fairmont in Georgetown earlier in January and you would have paid $190 per night for a room with a king bed. The weekend of the inauguration? That same room will cost you $1,600 per night (and you’ll have to book for at least three nights.)

Prices won’t be any better in Dupont Circle. A room at the Kimpton Carlyle Hotel, which would typically go for $99 per night, will cost you $899 per night the weekend of the inauguration.

It is a shame that these absurd rates put hotel rooms out of reach for most Americans who might want to either see democracy in action or protest the people who are soon to be running the country.

Read the full article here.

Hemant Taneja Asks: How Will We Balance A Future With Fewer Jobs And Longer Lifespans?

Venture capitalist Hemant Taneja sees a huge problem looming for America. Technology is increasingly taking over jobs that were once done by people. As this trend accelerates, there will be fewer and fewer people who need to work.

But at the same time, we are living a lot longer. And while ideas like a universal basic stipend might take care of paying all of those people who no longer have to work — what will they do with their days? Work gives our lives meaning as much as it fills our wallets. Are we destined to be sloths who simply consumer entertainment like the dystopian vision laid out in the movie Wall-E or the book Ready Player One?

Taneja thinks we can do better.

“Are we creating a world of technology that replaces human potential or are we unleashing human potential?” asked Taneja. “What do we want to be as a society?”

Taneja, a managing director at General Catalyst Partners, discussed these issue with CALinnovates Chief Evangelist Kish Rajan during an interview for the A Step Ahead podcast. Taneja believes that technology needs to work harder to include humans in the equation or risk cutting them out altogether. That means thinking about solutions to the unintended consequences of technology before we are faced with them as a society. Social platforms, he argued, should have seen the risk of something like fake news coming and gotten out in front of the problem in a responsible way.

“The right thing would be for the innovation sector to think about responsible innovation and for large tech platforms to handle their power with care and algorithmic accountability,” said Taneja.

If not, the government will eventually come in and impose regulations on the industry that could stifle innovation. Taneja believe that now is the time for Silicon Valley to take a hard look inward and decide how it can innovate more responsibly going forward.

Listen to the rest of the interview here:

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A Step Ahead: Hemant Taneja

Hey, everyone, Kish Rajan, Chief Evangelist at CALinnovates. Welcome to the latest addition of A Step Ahead. We’re really lucky, this time, to talk to Hemant Taneja, who is the managing director of General Catalyst, a venture and investment firm, in the Silicon Valley. Hemant is not just an investor. He is a tremendous thinker about what’s happening with innovation and technology and its impact on reshaping our entire economy and what that means for our country and our society. He’s a very deep thinker that raises wonderful questions and issues that need to be grappled with as we go down this path of a whole new global economy and how we make the right policies to work within it. It was a very, very thoughtful and interesting discussion, and I hope you’ll enjoy the chat that we had. Hemant Taneja, thank you very much for joining us. We appreciate you being on A Step Ahead.

Hemant Taneja: Thanks for having me. It’s a pleasure.

You bet. Hey, listen, there’s lots to talk about here, as we continue to watch…as we’re recording this, we’re just a couple of weeks away from the inauguration of President Trump. We’re in a very interesting time in our country, and technology has played a interesting role in the politics of the election. I’d love to get into that and some of the related issues with you, but I want to start…you recently published a piece on Medium that I thought was tremendous. We’ll make sure our listeners get a link to it so that they can read it in full. In the piece you talk about all the amazing things that seem to be coming true or are on the precipice of coming into reality, all the amazing innovations that have been dreamed about for a long time, and yet there are…I don’t want to say downsides…but there are meaningful considerations to look at as all these innovations come into fruition. You raised some real cautions or, at least, things to think about. Tell us about that piece and why you wanted to write it.

Yeah. I was basically in my year-end reflection mode as to what are the kinds of things that we’ve been doing? What are the things that resonated with me in terms of what we heard from entrepreneurs over the year? It got to a point where the observation that we were making was, gosh, it’s the same set of people that are working on self-driving cars and self-driving trucks. As I wrote in the article, it’s the same people that are working on life extension and figuring out basic income at the same time. When you add all that up, you basically say, “Okay. There’s 3,000,000 plus truck drivers who we’re going to tell, “Now, you don’t have any jobs anymore, and we’re going to help you live forever or for a lot longer than you’re used to, and, by the way, we’ll put you on a stipend, you know. You have no purpose.”

That’s really what catalyzed the reflection thing. Gosh, in some ways we’re in this amazing time, as you said, when it comes to technology and what technology’s unleashing for us. At the same time, it really is about how we channel the innovation that’s going to determine what kind of society we live in. Choices in front of us are, are we trying to create a world that’s essentially using technology to displace human potential, or are we creating a world that unleashes human potential and maximizes it and creates a more fulfilled society just culturally? What do we want to be as a society is a big question. I think as tech is going mainstream, we need to have a greater sense of purpose in the kinds of things we invest in and the kinds of things we want to create for the future. That’s really what got me thinking about and writing that piece.

Yeah. I think the point is so interesting. By the way, when you say the stipend, you’re talking about the proposal or the idea out there for something that’s being called universal basic income, right?

That’s right. There’s this whole theory today, that, gosh, as jobs go away and you move into a post-work era as a society, how are people going to live? Is the idea that, in a world where there’s a lot of automation, do you end up having to give people some basic stipend that they can live off of, and then they can figure out what to do with their time elsewhere? I think that’s what a lot of folks are thinking through as those that have embraced the idea that tech is not only automating jobs like manufacturing, but it’s slowly going to start taking over lots of knowledge, working classifications are about, as well, whether its medicine or what have you.

Sure.

If it’s a pervasive issue, then what are we going to do, as a species, with out time?

Really, it’s a fascinating thing. Just staying on this for one more minute, about the idea of a universal basic income, clearly there’s lots of different approaches, and we’re quite a distance from anything like that becoming real. At it’s basic concept, you’re talking about what would be some new government program that would come in and provide some basic income, create a floor, if you will, for people to have some ability to sustain themselves as we’re going through this major transformation of the economy. Of course, that’s kind of… that presupposes that we are fundamentally going into an era for some foreseeable future, or unforeseeable future, I should say, where jobs are eliminated and functions in the economy can’t be replaced at the rate by which they’re going away right now. Just that, unto itself, is a pretty concerning set of circumstances.

I think that’s right. That is the theory that has some folks worried and planning ahead. In fact, I recently attended a dinner around ideas for universal basic income. Somebody mentioned, which I thought was fascinating, that in 30 years you might have to pay to work because there just isn’t that much work, and work gives you purpose, and then you may have to pay for it. I mean, I know it sounds like a crazy idea today, but the point is that there’s a real concern around, hey, automation applies to not just physical tasks, but also cognitive tasks, as AI becomes more and more mature. When that starts happening, and it’s more cost-effective to do that as opposed to employing people, isn’t that just going to be a pervasive dynamic across the entire economy?

I’m just curious as to your opinion. How real do you think this concern is about permanent elimination of job functions in the economy? As I sort of look at it, certainly we’ve gone through, in human history, major economic shifts, right, from agrarian to industrial, and industrial to mechanical, and into information technology, we had massive shifts. We’ve had huge changes in how the economy functions and, yet, employment has risen, quality of life has risen in places like the United States and all across the world, not universally. I mean, I’m wondering if this is overblown, or if you think this is actually something that we’re going to have to address if these are permanent shifts in how the economy works and the number of jobs that will exist within it?

I struggled with this question quite a bit, as you can imagine. The way I try to answer this question is, are there types of jobs I can think of that, fundamentally, technology just wouldn’t be able to replace? Over there, I always end up coming out that, “No, there’s going to be automated ways to do just about everything that we do today.” Then the question is, “What are the new things that we haven’t been able to envision?”

You could see, as things like AR and VR become pervasive and your alternate reality or your virtual reality becomes just as real as the physical world, you know, people may choose to spend more time sitting on their couch with a next generation VR headset and maybe there’s jobs that get created in there that unleash human potential. I think there are lots of things you can imagine that might happen that can open up new types of jobs as the physical and sort of the more cognitive jobs do head towards automation.

I think some of it is also about… going back to the article you were referencing, how do we want to play the next 30 years as we bring these new technologies to bear? If we embed technology into society with the right mindset, I don’t think it’s going to be a problem, but that, again, goes back to the unleash human potential, build these technologies, develop these technologies to get more out of humans, as opposed to replacing them. It’s not the first time we’ve had to think about irresponsible use of technology and approaching it. Nuclear was a great example, that was a existential issue, and so we figured out how to handle nuclear disarmament, but also be able to use it as a cost-effective and safe source of power for large parts of the world.

Unfortunately, mainstream technology and software, the way we think about it is…doing that right is a little bit like a frog in a boiling pan because there’s no immediate risk, like the existential risk that nuclear presented, and as a society, you know, we’re not very good at long-term thinking. So, you know, one of my big things is, can we actually start to be better long-term thinkers in how we start to define this future role with technology?

Plus, these are huge questions. Alongside that, I would ask, what are the right institutions to help shape how we try to plan for the future, right? That is to say, is government the answer, you know, when you talk about a program with the kind of potential scale and reach as the universal basic income? I mean, presumably, the government would have to have a major role in defining and executing such a program. I wonder about your thoughts on that, or are there ways that the private sector, or other sectors, come together and help to do that longer term thinking and put some of these new structures in place to address some of these major gaps that you’re talking about?

Yeah. I think all mainstream sectors, in some ways, operate at the intersection of technology, policy, and finance so, in some ways, government is always involved. When you think about how the process of technology going mainstream over the past decade, one thing that has happened is you have seen the creation of these platforms that are very monopolistic in nature because they’ve got network effects around them, so they’re going to take our market the way it’s set up, and they’re using a lot of AI in influencing what we see as folks, what we get exposed to, you know, the whole fake news issue that recently surfaced was all around just the algorithms taking hold and sort of attenuating our biases, if you will.

I think the choice in front of the innovation sector is, as these companies become these large platforms, are they going to self regulate? Are they going to embrace algorithm accountability? If they do a good job of it, then I think you’ll have less regulation needed for this next phase. If they’re not as focused on algorithmic accountability and sort of exposing products and services to consumers on top of their platforms, then I think government’s going to step in.

My personal bias is, the more regulation there is, the less innovation happens because the focus of the business starts to be towards catering to regulators as opposed to serving their customer. In fact, that’s why I think the net promoter scores of all the major regulator industries, like utilities and schools and hospitals, you name it, none of them provide great customer service because they’re highly regulated businesses. By the way, when that happens and you can’t innovate, you often get yourselves into large problems, as well. I think climate change is a problem that got created as a result of that. You know, we blame the utilities and anthropogenic sources of carbon for climate change, but the reality is we created these structures where these companies just weren’t intended to adopt new technologies and create new markets.

Wow.

I’m sort of saying all this to say, I do think the right thing would be for the innovation sector, the entrepreneurs, investors alike, is to think about responsible innovation and for the large technology platforms to handle their power with care and with transparency in the algorithmic accountability. Otherwise, you do start to head towards a regulation-led economy, and I don’t think that’s a good place for any of us.

I hear what you’re saying; although, I didn’t quite hear the how, in the sense that, you know, on one hand, what would be the motivation of these businesses to adopt a more thoughtful approach, consider public interest, do that sort of self-regulation, as you’re saying. It seems that what we’ve seen traditionally, and now we’ve elected a new president, I think, in part, on themes of, “We’ve got to get government out of the way. Government is overreaching, it’s an inhibitor to business performance and quality,” as you’ve just sort of suggested with some of the heavily regulated business. It seems that the response would be from tech, “We’ll just do what we’re doing to maximize our profitability, and we’ll just fight regulation, as opposed to trying to embrace it.”

Yeah, but that doesn’t end well in the end. If you look at a tech sector, look at AT&T or look at Microsoft, regulation catches up to you and starves you of innovation eventually. I ponder this question a lot. Gosh, when the Baby Bells were broken up, they were broken up geographically …when AT&T was broken up, I’m sorry… and when you look at utilities in the power sector, they were sort of regulated based on geographies, as well. I’m not even sure how you would sort of regulate the monopolistic behavior in companies that fundamentally thrive on being a monopoly. What would it mean to even regulate a company like Facebook when the entire reason that Facebook works really well is because everybody’s on it.

I do think there’s sort of an interesting set of questions ahead, but rather than go down the path where these issues become significant and there’s constant fight with the regulations and eventually you do get the sector to be over-regulated, it’s better to just be more responsible now. I think you’re seeing indications of that a little bit, but I do, for sure, want to see a lot more done in terms of transparency and in terms of making sure the tech business doesn’t also start to act like big business, where you’ve got four or five companies that have all the data and, therefore, they’ll have all the sophisticated advantages that come from artificial intelligence, and they abuse their power.

I’d rather see a world where new innovations can continue to develop, and you do have a free market, where the small business also has a level playing field, as well. I mean, in fact, this is one of the things that I do think about with the new administration, which seems highly pro-business, but it’s more highly pro-big business than highly pro-business, in general, in, at least, the early moves that I’m seeing. We certainly want to make sure we don’t forget the little guy.

Yeah. It’s a great transition. I wanted to talk a little bit about that, as well, because when you think about innovation and technology, certainly the Silicon Valley, both literally and as a metaphor, for tech, in general, these were things that started off as highly entrepreneurial, and these were famous lead businesses that were started in garages by a couple of people. Then they grew into tremendous enterprises, but, at their nature, they were small businesses that got there.

Again, it was about entrepreneurship, and it was about attracting talent, where folks were educated at a level that they could plug into these thriving tech ecosystems. I wonder, now, is that really where we are? Is that what, today, Silicon Valley looks like? Is it as entrepreneurial? Is it as open of a system to allow new, small businesses an entrance into the market, or do you see it becoming more of a closed system, quite honestly, you know, financially and otherwise?

I think it’s a complex question. I have this thesis that I call “The Economies of Unscale,” and is the driver of a lot of the innovation that’s happened in the last 10 years. The basic thesis is that entrepreneurs that have interesting products and minds, products and services that are great for consumers, can build these companies on little capital, can build these companies using a lot of these platforms that we just referenced, and essentially, rent, scale, and become large fast, and that pervasive behavior happens to be a unbundling scale, if you will.

If you think about why there’s all these companies that are making these…in large numbers, new brands are coming up, building consumer products, apparel, consumer package goods, et cetera. You think about new entrant companies popping up. You think about sort of how a lot of the incumbency that couldn’t be challenged before with entrepreneurial efforts as successful competition from new entrants. It’s all because these platforms have made it easy to acquire or reach customers. It’s made it easy to make things using companies, like electronics, that have popped up in globalization. It’s easy to use logistics platforms. It’s easy to sort of just rent computing from Amazon. You got all these platforms. In some ways, these platforms have actually accelerated the creation of new companies. The fact that these companies can serve small niches that would’ve been otherwise sub-scaled to serve, that has accelerated the creation of the small companies.

Right.

On the other hand, because all the data, all the information, goes to these platforms, as to what’s happening with these companies, the larger incumbents, these platforms do have a lot of power in understanding what’s working, what’s not working, and being able to use that to their own benefit, as opposed to being truly open. The issue is, those decisions are made in software, and it’s not really transparent as to what’s really going on. When that transparency isn’t really there, that’s where I think these troubles start to emerge in terms of, “Hey, are there monopolistic tendencies manifesting themselves, or are we really seeing the little companies getting a fair shot or not?” I think that dynamic is what I’m talking about when I see a sort of responsible innovation by these platforms. I do think if these big tech companies don’t do that, they will face regulation, and I don’t think that’d be good for the entire sector.

Yeah, it’s such a complex point that you’re making. When I try to relate it to, you know, thinking about politics, again, for just a moment, and you look at what happened in the last election, certainly, a part of it, if not a majority of it, was defined by this notion that the economy of the United States just is not working for a large majority of the American public. They look at tech centers like the Silicon Valley, or Austin, or Boston, and they see a small number of people getting extraordinarily wealthy and being in control of a significant part of our nation’s economy and wealth, but they don’t see any pathway for that prosperity and those gains to extend to them in places like the Rust Belt or, frankly, even places like Fresno, California. What do you think about that characterization? Do you agree that that’s essentially the shape of our economy today-

Yeah. Yeah.

or was it oversimplified?

Look, I think those are real issues. First of all, the tech center is bringing a lot of prosperity to our nation as a whole. The fact that Uber gets 15 cents, or 20 cents, of every dollar of the taxi ride in France, or Germany, or anywhere in the world and brings that value back to our economy, when was the last time that was possible? What we’ve been able to do with technology and data …this is why sort of technology or data in the age-old sort of phrase that is going around is quite accurate in my mind, that I actually think we’re able to capture a lot of value from the way these tech companies have been built here in the United States and they’re global and making our economy stronger.

The issue is around job creation, right, and the fact that a lot of this work gets done by not a lot of people, and that’s where the concentration of wealth happens to the few, especially careening this tech sector, if you will. I do think that’s a real issue. I think we have to solve it. I think this new administration needs to focus on that. It needs to focus on that in a way that doesn’t slow down the capability of our technology companies to continue to maintain global dominance that they have been because, honestly, the way the platforms are set up today, if we don’t do that here, other countries will, and that’ll be a huge loss for us. That market leadership, we do not want to lose that.

What do we do about making sure that we do have new, forward-looking jobs created in the US? I do think there are areas where there is a lot of opportunity to migrate out infrastructure to the new-new. When you think about energy, you don’t have to believe in climate change, but you can think of the advanced energy opportunity as a massive job creation opportunity. We should upgrade our infrastructure, our utilities, our gas stations and the charging stations, or putting solar on our roof so that our power infrastructure is migrating to the new-new.

Sure.

That’s a lot more secure and independent and sort of takes advantage of our own resources. I think there is a lot of that that can be done and be invested in to propel us into continued leadership and new job creation in the country. I wish the new administration sort of does things that expands on those kinds of jobs and doesn’t retard the progress the technology sector is making in truly making the US the technical powerhouse that it is with the global platforms.

Yeah, it makes so much sense. We actually had a piece, right now, in TechCrunch, talking about the president elect’s suggestion of doing a massive infrastructure program as one of the key initiatives of his new administration. We urged that if that’s true, to think about how that could work together with technology to innovate and modernize all kinds of aspects of our public infrastructure. You touched on energy. Transportation is obviously another enormous area of opportunity, water, you know, you could go down the line, but it does seem that there’s a big chance to take some of our technological capability and apply them to these basic systems that could have lots of benefits, not the least of which could be the creation of a lot of new jobs.

Exactly, and that is probably a two-decade opportunity in terms of the kinds of jobs and how long, you know, it’ll take to actually migrate our power infrastructure and urbanization to a city infrastructure, and so on, to the next generation technologies, if you will. I do think that could be a huge opportunity for us.

We’ve got just a couple minutes left. I wanted to touch on one other topic, and that is, as we’re talking about how to expand opportunity, create jobs, and welcome people to be able to participate in this new economy, you’ve been very outspoken about education and looking at the way public education works today and what it is, or is not, delivering against real opportunities, I assume that that’s an area that you think absolutely needs to be rethought if we’re ever to expand opportunities to folks that aren’t fully participating now?

Yeah, I do think a lot about that. I’m involved in Khan Academy and ClassDojo, which are run by two incredible entrepreneurs and sort of showing the way in terms of what the education system should be for the 21st century. My core belief is that what we have learned through entrepreneurship in Silicon Valley. We sort of have to apply it to our lives, meaning, there should be this notion of an entrepreneurial life, if you will, and that involves how to learn and take advantage of opportunities in a much more seamless and successful way throughout your life.

Today, what we end up doing is, we’ve got this Prussian-based education system. We put our kids through these factories, where everybody’s the same age, and they’re learning the same things at every hour, as opposed to, again, going back to unleashing human potential, everybody learning based on their own interest, learning at their own pace, and learning things that they want to build on, and they can be great at. Our education system today is not set up to be able to empower us to do that. I do think this is where things have to move so that everybody is, if they’re bought into this personalized learning model, it requires upgrading our classrooms, going back to the infrastructure argument that I was making earlier, upgrading how our school systems operate and moving towards this next generation learning model.

I do think when it comes to training our society and our next generation to survive and thrive in this kind of a technology era that we’re headed in, these are the kinds of skills that are a lot more important than being able to factor polynomials a little quicker than the next guy, which is what we seem to be obsessed with, when you think about the academic learning in our schools today.

Sure. Although, I would say a lot of people are candidly very fearful of the type of innovative and disruptive almost, if you will, models that your touching upon for public education, worried that if we break lose from the existing system, we create a system that becomes uneven, at least in terms of its access to everyday people. How do you respond to that concern that’s out there, that what we have today is something that’s at least trying to protect equal opportunity for people to get public education, that that value might be lost?

I think the model of 20th century was about egalitarian systems. How do we make sure everybody gets equal education? How do we make sure everybody gets good healthcare. What we’ve done in that is actually created lowest common denominators for everybody. I mean, think about education, how even is it really? You have districts that are more prosperous, that can afford to have better schools than not. This is a place a teacher in every school is trying to teach the same concepts differently, with different levels of resources.

The whole point that I’m trying to make is that you want to make this so affordable in using technology, that you do allow everybody to have access to the same set of tools and capabilities and let them traverse the education graph visual based on their own capabilities, so they can create mastery of the things ‘A,’ that are important to them and ‘B,’ in a manner that they learn the best. I think that’s really the opportunity in terms of the future of education, as opposed to saying, “How do we just make sure every school has got the budget to be able to do everything as a baseline level of education.”

It truly should be about how does every kid maximize their own potential by using the same set of tools that are powered by AI and that are sort of designed for self-paced learning and designed for harnessing their particular interest and teaching them in a way that catches their attention, as opposed to some, you know, lowest common denominator, in terms of the pedagogy.

Got it. Last question, and that is that, in your piece that we talked about at the very beginning, where you sort of raised the question about whether we’re in a place now where technology is helping us to either unleash human potential or just replace humans… it is an important question. How hopeful are you that we’re going to get that right?

As a venture capitalist, I live in hope. I do think we are going to get that right. I think there’s a lot of smart minds that are thinking through this issue that I have raised, and this is just part of an industry that’s maturing in understanding how impactful it actually is on society. Most entrepreneurs do what they do because they’ve got great sense of passion and they want to have an impact. I think if we can coalesce on a set of guiding principles around the kind of future we want to create, I do think we’ll end up creating the right future that can be created with the tools that are available to us. Yes, I’m quite optimistic.

That’s great to hear. Hemant Taneja, you’ve been a great voice and a great leader raising these very important topics and be willing to share your wisdom and time with a number of folds, including us, on A Step Ahead. We’re very grateful. Thanks for your time.

CALinnovates Welcomes Call For Fresh Look at Online Consumer Privacy Rules

By Tim Sparapani

Innovators and startups welcome the news that policymakers are taking a fresh look at how to protect consumers’ privacy online.  While the headlines may try to spin this as just another partisan food fight, in truth it’s an incredibly important opportunity to restore balance and clarity to consumer privacy rules in the online ecosystem.

As we’ve said from the start, the privacy rules adopted late last year by the Wheeler FCC were clearly flawed and the ongoing jurisdictional tussle over privacy needs to be resolved for the benefit of consumers and companies alike. The Wheeler rules created an inconsistent, confusing patchwork, in which consumers’ private information on the internet would be protected differently depending on which servers and routers their data happened to be crossing. Yes, the exact same data would arbitrarily enjoy different levels of protection. 94% of consumers believe that all companies collecting their information online should face the same set of rules – and they’re right. The Wheeler rules break from the bipartisan FTC privacy framework that has seen the internet thrive and grow in other ways, introducing new friction and erecting confusing and unjustified new obstacles to even the most mundane uses of data any consumer would see as non-sensitive.  This kind of regulation is bad for consumers, bad for entrepreneurs, and bad for innovation.

In addition, a little known consequence of the Wheeler rules was that they jeopardized the United States’ privacy agreement with the European Union. The Privacy Shield is predicated in part on the United States having a single, lead consumer privacy agency, and the dilution of the FTC’s authority puts this agreement at risk.

We’re glad that policymakers at the FCC and in Congress will have an opportunity to review the rules again and, hopefully, correct these flaws.  A return to the FTC’s role as the lead privacy enforcer would allow innovators to do what they do best: innovate. In addition, a consistent set of rules would do well to assuage consumer advocates’ concern that gaps in enforcement would delay critical privacy actions when companies are ignoring or outright abusing their data responsibilities to their customers.

CALinnovates Lauds President Trump’s Appointment of Ajit Pai as New FCC Chairman

SAN FRANCISCO, January 23, 2017

“In our hyper-partisan country, we still need to be able to get things done. Ajit Pai understands this. He called it like he saw it during his previous term, and I look forward to him continuing to push the envelope as Chairman. To sum it up: Ajit is a hardworking ass kicker who understands the economic and policy concerns of the broad tech sector with an opportunity to unite the FCC in a bipartisan fashion after four years of sharply partisan rulemakings.” – Mike Montgomery, Executive Director

“Chairman Pai’s creativity and business expertise promise to help find a third way to solving our most pressing communication issues. CALinnovates congratulates Chairman Pai and looks forward to working with he and his team.” – Tim Sparapani, Senior Policy Fellow

Staying In A D.C. Hotel For Inauguration Weekend? Prepare To Be Gouged

By Mike Montgomery

This weekend will be a historically busy one for Washington D.C. Today, Donald Trump was sworn in as the 45th president of the United States in front of the U.S. Capitol, where his fans were out en masse to watch. Saturday, hundreds of thousands will flood the streets of the city to protest his presidency.

No matter which side of the fence they’re on, every D.C. visitor staying in a hotel had one thing in common: They all paid an insane amount for lodging.

We did some research into rooms this coming weekend and found that hotels are jacking up their prices by more than 800%. Book a room at the Fairmont in Georgetown earlier in January and you would have paid $190 per night for a room with a king bed. The weekend of the inauguration? That same room will cost you $1,600 per night (and you’ll have to book for at least three nights.)

Prices won’t be any better in Dupont Circle. A room at the Kimpton Carlyle Hotel, which would typically go for $99 per night, will cost you $899 per night the weekend of the inauguration.

It is a shame that these absurd rates put hotel rooms out of reach for most Americans who might want to either see democracy in action or protest the people who are soon to be running the country.

But it’s not a huge surprise. Hotels make a practice of price gouging whenever they can, only they call it “compression” pricing, a made-up term hotel owners use to gloss over the nasty but time-honored practice of fleecing consumers during high-traffic events. Hotels rely on the old supply versus demand argument to justify their behavior of charging unreasonable rates in the name of big corporations lining their coffers.

And while supply and demand is the guiding force of our economic system, it’s worth taking a deeper look at what the hotels are doing and question whether their extreme prices really make economic sense for the workers and the communities where those hotels operate. The people who work in those hotels (most of whom don’t even earn a living wage because the hotels and their lobbyists fight against even modest minimum wage increases) don’t bring in extra money when the hotel is booked to capacity with people paying $1,000 per night or more for a room. The surrounding community doesn’t get an economic boost outside of transit and occupancy taxes that don’t directly benefit local residents. Our research has found that 60 cents out of every dollar spent by people staying at hotels goes back to the corporate owners no matter how much the rooms cost.

While hotel owners might prefer their customers not think about those high prices in terms of price gouging, they’re happy to talk to their investors about the benefits of jacking up prices whenever possible. According to an article in The Wall Street Journal, Pebblebrook Hotel Trust CEO Jon Bortz was quoted as complaining to investors that home sharing platforms, like Home Away and VRBO, are making things hard for hotels.

The company’s ability to “price at maybe what the customer would describe as sort of gouging rates,” has diminished with the growth of home sharing, he told investors. “We’ve lost a lot of that ability at this point within the major markets where these events take place.”

There’s a lesson in that, though inauguration hotel rates show that the rise of home sharing hasn’t fully removed price gouging from the hotels owners’ quivers quite yet.

But the more home sharing there is in a city, the harder it is for hotels to justify price gouging. According to UBS leisure and lodging analyst Robin Farley, more home share listings has a direct effect on limiting the frequency of compression pricing at area hotels.

A bill in front of the D.C. City Council last year would have imposed new regulations on home sharing in the district but the bill died in committee. Hopefully this year the City Council will take a more informed view on home sharing and consider how, especially during large events like the ones coming at the end of this week, it would make sense for the nation’s capital to allow more visitors in instead of keeping them out due to price gouging.

While we may not know exactly what is in store over the next four years, it’s safe to assume that Washington, D.C. will remain a tourist magnet. The city should open its doors as wide as possible.

In Cancer Fight, Artificial Intelligence Is A Smart Move For Everyone

By Mike Montgomery

Cancer, unfortunately, touches almost everyone. Like far too many, I’ve lost friends to this horrific disease. Luckily, there are a number of exciting technologies on the horizon that might help save lives.

For instance, right now, women depend on monthly home exams and annual mammograms to detect breast cancer. Soon, though, they may have another option. Cyrcadia Health, a cancer therapy startup, has developed a sensor-filled patch that can be inserted comfortably under a bra for daily wear. Connecting through the woman’s smartphone or PC, the patch uses machine-learning algorithms to track the woman’s breast tissue temperatures and analyze this data at the Cyrcadia lab. If it detects a change in pattern, the technology will quickly alert the woman — and her health-care provider — to schedule a follow-up with her doctor.

“This technology is fully automated in the cloud,” says Rob Royea, CEO of Cyrcadia. The patch, whose predicate is FDA cleared, is expected to hit the market next year and had a greater than 80% historical trial success rate in detecting tumors, even in dense breasts (which are typically tough to read in a mammogram).

Cancer therapy startups that use artificial intelligence (AI) algorithms are proliferating. While some parts of the tech industry are coming under fire for creating products and services that only help the wealthy (most people don’t really need things like on-demand liquor delivery), this is one area where technology is being used to help everyone.

Read the full article here.

After The Election, A Reckoning For Silicon Valley

By Kish Rajan

As the dust settles after the recent presidential election, many are asking themselves some hard questions. Will Donald Trump follow through on even his most terrifying campaign promises? What can we do to help the most vulnerable over the next four years? And why were voters so angry that they were willing to take a risk on a tweet-happy businessman with no record of helping anyone but himself?

The tech industry needs to add a question to this list: What role, if any, did we play and what can we do about it now?

Like it or not, technology played a big role in the election. Social media created two competing echo chambers that got louder and louder as we got closer to election day. Fake news stories spread faster than the real thing and both sides told themselves that they were about to win. Only one side was right and that side didn’t include the vast majority of people in tech.

The day after the election was full of online hang wringing and self-flagellation among the technorati. Venture capitalist Dave McClure got a standing ovation at the Web Summit conference when he angrily compared social media to talk radio calling it a “propaganda medium” and demanding tech entrepreneurs take action to make sure this does not happen again.

There’s no question that the people who created and run the biggest social media networks in the world have to do better. If fake news has the same appearance as real news that’s no longer giving people unfettered access to information — it’s making them susceptible to propaganda. When trolls are allowed to attack and harass people on Twitter, that’s no longer facilitating the free flow of opinions — it’s sitting by while vulnerable people are made to feel unsafe.

But the soul searching has to go even deeper than that. Technology has ushered in an era of incredible efficiency but there’s no value in pretending that efficiency doesn’t cost people their jobs.

While many on the coasts are finding their lives greatly improved through smartphones, apps and the platform economy, people at the lower end of the economic scale are seeing the wonders of technology pass them by, just out of their reach.

But here’s the thing — if there are any people in this country who can help make things better, it’s the people who call the tech industry home. I have no doubt that we can innovate our way out of a lot of problems we are now facing.

We need the next wave of technologists to start working on algorithmic accountability. On Facebook, for example, it shouldn’t be enough that a story is popular to get it more widely distributed. There has to be something in the algorithm that evaluates the source of that story.

On Twitter, algorithms should be able to quiet bullies before they become harassers.

Entrepreneurs need to think about how many jobs their company will create instead of simply about market cap or a founder’s net worth. As new companies grow they can open offices in places like Michigan and Iowa and spread job growth beyond hubs like San Francisco, New York and Austin.

Tech leaders need to find their way to the table to work with the new government. Donald Trump has said he will spend $1.5 trillion on infrastructure. That’s great. How can tech help and make that new infrastructure as modern as possible to provide highly-skilled jobs across this whole country? How do we train more people to be able to do these jobs? How can we make sure that the country’s digital infrastructure is being upgraded as well?

Finally, tech can work to promote and protect vulnerable populations by making better hiring decisions. The industry needs to look beyond white male Stanford grads and hire people who better reflect the diversity of America. Such a commitment will show that this community values and celebrates diversity and openness.

Companies can also continue to push for policies and priorities that the next administration might not share. Just because Trump may pull out of the Paris Accords doesn’t mean corporations should reduce their commitment to ending climate change. If Trump does end Obamacare companies should do everything they can to ensure that all of their employees (even contractors) are getting medical coverage. Actions like these can speak louder than words.

This is a difficult time but also an opportunity. As tech takes a hard look at where it’s been, I know we have the opportunity to do everything we can to make sure there’s a brighter future for everyone.

Tech Leaders Need To Push Trump On These Three Major Issues

By Kish Rajan

In the wake of the presidential election, Silicon Valley is in a deeply awkward position. Almost the entire tech industry backed Hillary Clinton, but Donald Trump is the one who is about to enter the Oval Office.

This may sting but tech leaders can’t just dismiss the new administration. For one thing, the federal government is a giant technology customer. In 2015 Hewlett-Packard, IBM and Dell brought in a combined $14 billion in revenue from government contracts.

The federal government also has the regulatory power to make the lives of tech executives easier or much, much harder. Many fear that we’re in for the latter. Trump has hinted at starting a trade war with China, which is both a cheap manufacturer and a giant customer for tech companies. Clamping down on immigration could stem the tide of bright foreign entrepreneurs who have helped build some of the biggest companies in Silicon Valley. And Trump has called net neutrality a “top-down power grab” so Title II may be reversed.

But there are still places where tech leaders might be able to influence the President-elect and his transition team in order to help the tech industry. Here are three things executives should push for in the upcoming meeting:

Universal Broadband

One of Trump’s biggest selling points was his promise to bring jobs back to the many communities that have been hurt by the slow death of manufacturing in this country. But short of a miracle, he’s not going to be able to bring back manufacturing jobs.

Instead, he should focus on bringing those communities into the modern age with increased access to fast, reliable broadband. By making sure that everyone has access to the internet, he’ll help people advance their education, apply for jobs online and even build new businesses. In this digital age, living without broadband is a serious hardship for anyone who wants to do better for themselves.

By creating incentives for private investment by broadband service providers to expand the footprint of their offerings, speed their networks and reach a point of saturation, the president-elect would go a long way in not only modernizing America, but also creating jobs in the process. The appetite for investment, backed by incentives to increase capex, would send a strong signal to America that communications and tech inclusivity is the path toward prosperity.

Infrastructure Improvement

During the campaign, Trump proposed a $1 trillion infrastructure-improvement plan to put people to work fixing the nation’s highways, bridges, tunnels and airports. Assuming he continues to cite this as a priority for his new administration, the tech industry should push to have a seat at this table. Instead of simply building roads and patching decaying infrastructure, we should build smart roads that have built-in sensors to track everything from traffic to whether a road needs immediate maintenance. Insights from big data can help improve traffic flow and adjust speed limits to ease congestion and increase safety.

And the digital infrastructure that is mostly invisible should be a part of that plan. Consumers favor modern networks that fuel their smartphones and mobile devices, as the reliance on the antiquated landline telephone networks diminishes by record amounts every quarter. By incentivizing private deployment and decreasing barriers to buildout, we also create a digital superhighway that will promote many new businesses not just in California, but in every part of the country. The administration should also champion the idea of “dig once” which would mandate that pipes for fiber optic cables be laid down any time there is a federally-funded highway project. This will eliminate the need for teams to dig and re-dig streets every time wires need to be upgraded, which is costly and inconvenient for drivers. It’s time to revive this dormant policy opportunity.

Develop the Workforce

If this country is going to get serious about creating more jobs, it needs to start at the education level. Too many people are entering the workforce without the skills they need to succeed in the digital age and a rapidly changing economy. Improving our education system by increasing the emphasis on STEM education would be a good start.

But Trump also needs to acknowledge that immigrants are building some of our biggest tech companies, which are also creating jobs. Elon Musk, whose Tesla cars and batteries are made in America, is from South Africa. Google employs 62,000 people in the U.S. alone. That company’s co-founder, Sergey Brin, was born in Russia, and its CEO, Sundar Pichai, was born in India. The startups founded by immigrants should remain U.S.-based. Curtailing immigration is a short-sighted solution, and the hope is that the tech industry can underscore this thought in a powerful way. Comprehensive immigration reform may be off the table, but that doesn’t mean that improvements cannot be made to the current system in order to continue the flow of bright engineers and innovators to the America.

While tech leaders are likely to have many concerns about the new administration, they need to pick their battles. By focusing on these three areas, they can appeal to Trump’s campaign promises, especially around creating new jobs, while helping to maintain the health of the whole tech industry.

Silicon Valley Rejected Trump. How Will The Industry Work With The New Administration?

Steve Westly moves easily between the worlds of technology and politics. The venture capitalist, who was an early investor in Tesla, served as state controller and chief financial officer of California between 2003 and 2007.

Now, like many in Silicon Valley, he is watching cautiously as President-elect Donald Trump forms his cabinet and starts to signal what his priorities will be over the next four years.

Despite Trump’s rhetoric during the campaign, when he railed against immigrants, called climate change a hoax and threatened to start a trade war with China, Westly believes that when it comes down to making real policy, Trump will back down on some of his most damaging rhetoric.

“I think Silicon Valley will fare just fine,” Westly told CALinnovates Chief Evangelist Kish Rajan. “Silicon Valley is getting bigger, not smaller. It is the tech center of the world, and I don’t think Trump wants to slow that growth for any reason.”

Immigrants have proven to be the secret sauce of Silicon Valley helping build companies that have created thousands of jobs. Renewable energy is quickly getting more affordable than coal and natural gas, and almost every economist agrees that a trade war with China would be a disaster.

But that doesn’t mean the Valley should be complacent. The economic dislocation that swept Trump into office is a growing problem.

“The 800-pound gorilla in the room is that new technology is coming,” says Westly. “But we have to get smarter about re-educating the American workforce. We have not done that nearly well enough in the past.”

Listen to the full interview here:

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