California to close data breach notification loopholes under new law

California, which has some of the strongest data breach notification laws in the U.S., thinks it can do even better.

The golden state’s attorney general Xavier Becerra announced a new bill Thursday that aims to close loopholes in its existing data breach notification laws by expanding the requirements for companies to notify users or customers if their passport and government ID numbers, along with biometric data, such as fingerprints, and iris and facial recognition scans, have been stolen.

The updated draft legislation lands a few months after the Starwood hack, which Becerra and Democratic state assembly member Marc Levine, who introduced the bill, said prompted the law change.

Marriott-owned hotel chain Starwood said data on fewer than 383 million unique guests was stolen in the data breach, revealed in September, including guest names, postal addresses, phone numbers, dates of birth, genders, email addresses, some encrypted payment card data and other reservation information. Starwood also disclosed that five million passport numbers were stolen.

Although Starwood came clean and revealed the data breach, companies are not currently legally obligated to disclose that passport numbers or biometric data have been stolen. Under California state law, only Social Security numbers, driver’s license numbers, banking information, passwords, medical and health insurance information and data collected through automatic license plate recognition systems must be reported.

That’s set to change, under the new California assembly bill 1130, the state attorney general said.

“We have an opportunity today to make our data breach law stronger and that’s why we’re moving today to make it more difficult for hackers and cybercriminals to get your private information,” said Becerra at a press conference in San Francisco. “AB 1130 closes a gap in California law and ensures that our state remains the nation’s leader in data privacy and protection,” he said.

Several other states, like Alabama, Florida and Oregon, already require data breach notifications in the event of passport number breaches, and also biometric data in the case of Iowa and Nebraska, among others.

California remains, however, one of only a handful of states that require the provision of credit monitoring or identity theft protection after certain kinds of breaches.

Thursday’s bill comes less than a year after state lawmakers passed the California Privacy Act into law, greatly expanding privacy rights for consumers — similar to provisions provided to Europeans under the newly instituted General Data Protection Regulation. The state privacy law, passed in June and set to go into effect in 2020, was met with hostility by tech companies headquartered in the state, prompting a lobbying effort to push for a superseding but weaker federal privacy law.

Trump calls for 6G cellular technology, because why the heck not

We’ve been covering the battle for 5G between the U.S. and China for some time. The White House has made 5G technology a national security priority, and industry leaders have followed up that charge with additional investment in the fledgling technology.

What 5G exactly is though remains mostly a mystery. Is it new bandwidth? Edge computing? Decentralized cloud processing technology? Autonomous vehicles? Something else? I get pitched a dozen stories a day about the “5G revolution” and no one can tell me exactly what’s in it for me other than long presentations in hotel ballrooms about bandwidth (ironically, often without any cell reception).

So imagine my surprise this morning when Trump tweeted that U.S. companies need to work harder and faster on building out the tech behind 5G, but also in the process called for …. 6G technology.

I want to just say that no, 6G isn’t a thing. I have only received one PR pitch for 6G in the last few months, which said: “Waveguide over copper runs at millimeter frequencies(about30 GHz to 1 THz) and is synergistic with 5G/6G wireless. A type of vectoring is applied to effective separate the many modes that can propagate within a telephone cable.” No, not a thing.

But it could be a thing. Maybe the government is secretly pioneering the next generation of the next generation of telecom technology. Or maybe, just maybe, our president, branding expert that he is, realized that if you are going to sell 5G, you might as well inflate the number to 6G and really get people’s taste buds salivating.

No comment from cleaning supplies company Seventh Generation, but if I were them, I’d be getting worried.

Why can’t we build anything?

Last week, California governor Gavin Newsom announced that he was intending to aggressively scale back plans for the state’s high-speed rail system, which in its most ambitious routing would have connected Sacramento to San Diego. The immediate cause was ballooning costs, which have risen from $33 billion to $77 billion and looked likely to exceed 1.6 Zuckerbergs within a couple of years (the local CA currency, otherwise known as $100 billion).

Unlike other megaprojects, Newsom — and California — were fortunate on the timing. The costs of the project skyrocketed so much and so early, that Newsom still had the credibility and political capital to kill the project. And while a short route from Bakersfield to Merced remains on the table, I don’t expect even that route to be ultimately constructed, since no one knows where either of those cities are.

Why can’t we (i.e. America) build anything? High-speed rail isn’t Silicon Valley whizbang magic technology, it’s definitely not Hyperloop. It’s pretty standard in a bunch of industrialized nations around the world. Clearly that question was on the minds of reporters, because we have been inundated with autopsies on HSR. Yet, the hot takes don’t seem to be adding up to anything meaningful (surprise).

So, we are going to explore this question over the coming weeks, as one of our newest obsessions here at Extra Crunch.

This weekend, I read a book called “Politics across the Hudson: The Tappan Zee Megaproject.” In the book, Philip Mark Plotch chronicles the forty years of planning that led to the reconstruction of the Tappan Zee bridge, which connects Rockland and Westchester Counties north of New York City over the Hudson River. If you want to read about the weeds of government dysfunction around infrastructure, this is your book. It’s a telling tale of patterns we see repeatedly when trying to build great things in the United States:

  • No one wants to talk about finance: Politicians love selling the value of a megaproject without actually discussing the ways they are going to have to pay for it. Yet, paying for it is the project, since it will ultimately affect how citizens enjoy the infrastructure.In the Tappan Zee case, politicians wanted to avoid talking finances because finances meant tolls, and increasing tolls meant losing elections. New York’s current governor Andrew Cuomo ends up avoiding this conversation through luck, as the state received huge indemnities from Wall Street banks related to Iranian money laundering and sanctions that helped fund the bridge (which one planner called “manna from god”).That avoidance has led to the “Willie Brown” model of infrastructure, named for the former San Francisco mayor who wrote about how to get infrastructure projects done:

News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone.

We always knew the initial estimate was way under the real cost. Just like we never had a real cost for the Central Subway or the Bay Bridge or any other massive construction project. So get off it.

In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved.

The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.

Of course, that model can lead to situations like Boston’s Big Dig, where the final ticket price for a project is so high, that it effectively bankrupts an entire city and its transportation system for years to come.

Infrastructure finance may not be a sexy topic, but it is absolutely critical to getting a project done. It’s hard to tuck tens of billions of dollars in a line item in the state’s budget, and it is hard to get the different funding levers of government involved when a project’s finances aren’t clear.

  • Lack of direction / lack of leadership: Building infrastructure is hard. It’s even harder in the U.S., where a patchwork of regulatory bodies and all levels of government are involved in infrastructure decision-making. In the Tappan Zee bridge case, there were nearly two dozen agencies involved, all with their own agendas and fiefdoms. A dedicated bus lane on the bridge was cut to avoid bringing in the Federal Transit Administration. The Tappan Zee is built at one of the widest points of the Hudson River rather than the narrowest since planners wanted to avoid the jurisdiction of the Port Authority.Here’s the thing though: there were real differences of opinion about the project and what it should accomplish. Some people wanted a rail line, some wanted bus rapid transit, some wanted carpool lanes, and still others wanted more lanes of vehicular traffic. Nothing got done because there was absolutely no consensus either from the communities involved or from their elected leaders.

    One might call a 40-year planning process dysfunctional, but another view would say that this is exactly government working as intended. Things don’t get built if there is no consensus, and that’s the value — and price — of democracy.The challenge though is that you can end up in these counter-veto game theoretic morasses (the book uses “wicked problems”), where no progress will truly ever get made because everyone has an incentive to block a project to get their vision included. Here is where leadership makes such a difference. A leader in these contexts can find points of compromise, build coalitions, set agendas and a vision, and create the momentum required to get these projects moving. Unfortunately, finding leaders in American politics is excruciatingly difficult.

  • Impossibly high expectations / feature creep: Every tech product manager knows the challenges of feature creep. Another person swings by, and they have a choice feature they want added that is going to take time and resources, and has limited benefit to the rest of the user base of the product. Unfortunately, infrastructure projects face many of the same challenges.

    When a megaproject looks like it has built up momentum, everyone tries to glom on to it, adding their pet project. What starts as a bridge replacement project soon morphs into a bridge replacement with a new 30-mile railroad, multiple train stations, a new bus rapid transit system, and a complete zoning overhaul for multiple counties. Yet, those extra “features” also add additional veto points and complications to the original project. They are effectively barnacles on the hull of an already slow-moving ship.

    Big projects galvanize our imaginations, but they shrink under the weight of their own mass. Better to down scale these projects into more bite-sized chunks with clear goals and deliverables rather than being all things to all people.


One thing I was surprised reading about the Tappan Zee bridge is that the actual construction phase was relatively uneventful. The bridge was built mostly on time and on budget, mostly due to extreme attention from the NY governors’s office to not allow deviations (except to stop construction on July 4th so that construction wouldn’t mar riverfront BBQs).

Four years and billions of dollars to rebuild a bridge might be ridiculous, but so were the 36 years of planning that proceeded the reconstruction. Maybe that pattern isn’t true for every project, but the lesson of Politics across the Hudson is that once the government had a plan and timing on its side, it was (relatively) smooth-sailing to the finish line.

Lawyers!

Classen Rafael / EyeEm via Getty Images

Startups need attorneys to succeed, and today, Extra Crunch is pleased to start helping you find the most helpful ones in the industry.

Extra Crunch managing editor Eric Eldon has published his deep-dive package into startup law and startup attorneys today. The package will include profiles of leading attorneys who have been identified by founders as the most helpful to their startups (today’s profile focuses on Cynthia Hess). We also have attorney Daniel McKenzie writing about “How and why you should work with a startup lawyer.” Finally, Eric and his team created a comprehensive overview of all the legal issues that come with building a startup that they compiled into a handy A-to-Z guide.

Our hope is that some of the thornier issues of building a startup can be made just a bit easier if you are armed with the right, vetted information. Let us know your thoughts.

“Mo Money, Mo Problems” for SoftBank

KAZUHIRO NOGI/AFP/Getty Images

Written by Arman Tabatabai

SoftBank’s voracious spending habits might be starting to catch up to the company. According to the Wall Street Journal, the Vision Fund’s two largest investors — the Public Investment Fund of Saudi Arabia (PIF) and Abu Dhabi’s Mubadala Investment Company — are growing increasingly frustrated with the fund’s investment process, governance structure, and the exorbitant valuations and prices paid.

Apparently, dishing out billion dollar checks like Halloween candy doesn’t make you popular with the people who give you those billions of dollars.

This isn’t the first time we’ve heard angry whispers from Vision Fund investors, with previous reports suggesting SoftBank significantly pared down previous investments in WeWork and other portfolio companies after facing serious LP pushback on the check size.

Part of the LP concern over SoftBank’s laissez-faire attitude towards check writing comes down to issues of governance. As we’ve previously discussed in our attempts to unravel SoftBank’s beast of a corporate structure, SoftBank often invests in companies at the SoftBank holding company level before selling the ownership to the Vision Fund at a later date. In the follow-on transactions, the Vision Fund often ends up paying more — in some cases billions of dollars more — than the initial investment. Now, LPs are concerned that they’re getting fleeced for billions on the back end as SoftBank drives up those investment valuations.

The ownership transfer process is just one aspect of the reportedly more general investor concerns around an opaque, complex, and disorganized investment process where SoftBank figurehead Masayoshi Son can overrule any investment decision with a “Gladiatoresque thumbs-up, thumbs-down”. According to the WSJ:

Concerns about valuation of the fund’s investments are closely linked to concerns about its investment process, in particular the power wielded by Mr. Son. In recent weeks, Mr. Son overruled objections from partners within SoftBank to a Vision Fund investment valued at as much as $1.5 billion into Chehaoduo Group, a Chinese online car-trading platform, according to people familiar with the matter. Chehaoduo was accused of fraud in recent weeks by a competitor.

And as LPs are growing concerned on how money is flowing out of the Vision Fund, SoftBank is also facing pressure from regulators on the money it is bringing in. While we’ve touched on SoftBank’s “love for leverage” before, credit agencies are once again expressing concern over the Vision Fund and SoftBank’s frothy debt levels, even noting that the company’s already junk-rated credit ratings have a better chance of getting downgraded further rather than improving.

All this goes to say that while sexy headlines and frequent nine-figure-plus deals make it easy to think SoftBank has a blank check to dish out to any unicorn they please, the clock may be striking midnight for SoftBank as they face the reality of their enormous spending, which may not bode well for their hopes for a second Vision Fund.

The Overlooked Element of the Amazon HQ2 Battle

Written by Arman Tabatabai

Amazon’s decision last week to halt plans to bring a second headquarters to New York City’s Long Island City neighborhood brought passionate responses from two completely schools of thought.

Some celebrated the breakup as a defeat of unjust corporate tax breaks, subsidies, and gentrification, while others threw up their hands in outrage over the disappearance of tens of thousands of jobs and future economic value that an Amazon presence would bring.

While these two arguments have been beaten to death, the remaining half of Amazon’s HQ2 development in Northern Virginia highlights an aspect of the controversial process that often gets overlooked.

Over the weekend, the Washington Post highlighted how Amazon’s pending arrival in Crystal City has helped accelerate large infrastructure projects that have long been in limbo, including public transport expansions, roadway expansions, and the construction of a new bridge to the Airport.

On top of financial investments into these projects from Amazon, the operational dates for the new HQ2 creates a timeline and has forced urgency to actually finalize plans and get these projects completed.

A huge but often overlooked political benefit of Amazon’s HQ2 process is this ability to catalyze action around public projects that otherwise may face the purgatory of public infrastructure development. While many have criticized Amazon for its auction-style selection process, many mayors and representatives from other cities that participated in the HQ2 process actually viewed the process in a positive light because they were able to unlock economic value and incentives for the city that would have been much tougher to realize otherwise.

Obsessions

  • More discussion of megaprojects, infrastructure, and “why can’t we build things”
  • We are going to be talking India here, focused around the book “Billonnaire Raj” by James Crabtree
  • We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
  • Societal resilience and geoengineering are still top-of-mind
  • Some more on metrics design and quantification

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to [email protected].

This newsletter is written with the assistance of Arman Tabatabai from New York

India’s state gas company leaks millions of Aadhaar numbers

Another security lapse has exposed millions of Aadhaar numbers.

This time, India’s state-owned gas company Indane left exposed a part of its website for dealers and distributors, even though it’s only supposed to be accessible with a valid username and password. But the part of the site was indexed in Google, allowing anyone to bypass the login page altogether and gain unfettered access to the dealer database.

The data was found by a security researcher who asked to remain anonymous for fear of retribution from the Indian authorities. Aadhaar’s regulator, the Unique Identification Authority of India (UIDAI), is known to quickly dismiss reports of data breaches or exposures, calling critical news articles “fake news,” and threatening legal action and filing police complaints against journalists.

Baptiste Robert, a French security researcher who goes by the online handle Elliot Alderson and has prior experience investigating Aadhaar exposures, investigated the exposure and provided the results to TechCrunch. Using a custom-built script to scrape the database, he found customer data for 11,000 dealers, including names and addresses of customers, as well as the customers’ confidential Aadhaar number hidden in the link of each record.

Robert, who explained more about his findings in a blog post, found 5.8 million Indane customer records before his script was blocked. In all, Robert estimated the total number affected could surpass 6.7 million customers.

We verified a sample of Aadhaar numbers from the site using UIDAI’s own web-based verification tool. Each record came back as a positive match.

A screenshot showing the unauthenticated access to Indane’s dealer portal, which included sensitive information on millions of Indian citizens. This was one dealer who had 4,034 customers. (Image: TechCrunch)

It’s the latest security lapse involving Aadhaar data, and the second lapse to embroil Indane. Last year, the gas and energy company was found leaking data from an endpoint with a direct connection to Aadhaar’s database. This time, however, the leak is believed to be limited to its own data.

Indane is said to have more than 90 million customers across India.

The exposure comes just weeks after an Indian state leaked the personal information of more than 160,000 government workers, including their Aadhaar numbers.

Aadhaar numbers aren’t secret, but are treated as confidential and private information similar to Social Security numbers. More than 90 percent of India’s population, some 1.23 billion citizens, are enrolled in Aadhaar, which the government and some private enterprises use to verify identities. The government uses Aadhaar to enroll citizens in state services, like voting, or applying for welfare or financial assistance. Some companies also pushed customers to enroll their bank accounts or phone service to their Aadhaar identity, but this was recently struck down by the country’s Supreme Court. Many say linking their Aadhaar identities to their bank accounts has led to fraud.

The exposure is likely to reignite fresh concerns that the Aadhaar system is not as secure as UIDAI has claimed. Although few of the security incidents have involved a direct breach of Aadhaar’s central database, the weakest link remains the companies or government departments that rely on the data.

We contacted both Indane and UIDAI, but did not hear back.

What an American artificial intelligence initiative really needs

At a high level, the American AI Initiative seems to be headed in the right direction. We absolutely need a holistic approach that considers all the various areas that are critical to building innovative AI solutions. This seems to be an underlying concept of the Initiative, as the executive order places priority on making data available across government agencies, allocating cloud computing resources to support AI R&D and training the workforce. Commitment to AI innovation is critical to maintaining our leadership position in technology with the increasing level of global AI competition.

We know that China, France and the U.K. have invested and committed billions already to their own AI initiatives. The American AI Initiative as it stands does little to blunt the fears that America will fall behind in its technological edge. In fact, its lack of particulars sends exactly the opposite message.

If the government wants to demonstrate its support for AI, it needs to commit significant funding and investment in education to retain, attract and grow the talent necessary to support such a critical industry that has the potential to define our future and truly increase American competitiveness.

We have started to see momentum from some institutions that have already announced funding initiatives for AI research and advanced computer science education, such as MIT’s $1 billion commitment to AI, but we need government agencies and other private institutions to follow suit in order to effectively change the landscape. Such investments and focus on advanced technology development must become the baseline expectation for competition in our country.

We also need continuous and robust investments from VCs for AI startups across industries and markets, as there exists ample opportunity for backing transformative AI startups. Now is the time for the government and private capital to come together and jointly put our monies where our mouths are.

Beyond funding, the government must take a hard look at the global AI talent pool and accelerate the incoming flow of talent to our country, whether through academia or industry. According to NVCA (National Venture Capital Association), an estimated 51 percent of domestic private companies valued at $1 billion or more had one or more founders who were born outside of the U.S.

Overall, 31 percent of venture-backed founders are immigrants. A large number of these are leading technology companies at the forefront of developing new American products and services, many of which will leverage some form of AI in the next few years if they aren’t already. Attracting and retaining fresh talent, educators and data scientists must be a part of our national agenda, as the talent pool necessary to take a leadership position in AI is currently cannibalizing itself.

With respect to the American AI Initiative, success comes down to the details and specific plans, which will be determined over the course of the next three to six months. Each of the milestones outlined in the executive order are important advancements, but the Initiative will only truly succeed if it is built holistically.

Access (and the necessary protections) to data, access to cloud computing and a commitment to computer science must be embraced by the government as an integral part of our technology-driven businesses and personal lifestyles. These cannot be viewed as separate components in disparate silos.

If the government can champion a frontier technology and data-centric approach, the American AI Initiative has the potential to both reduce barriers to entry for AI startups and elevate the entire tech, business and innovation landscape. But it starts with a commitment to academic education, training for the workforce and a deliberate and concerted focus on ensuring public trust in AI. While no small feat, this is what is required to guarantee the intelligent future of America, and its leadership role in global innovation.

OpenAI built a text generator so good, it’s considered too dangerous to release

A storm is brewing over a new language model, built by non-profit artificial intelligence research company OpenAI, which it says is so good at generating convincing, well-written text that it’s worried about potential abuse.

That’s angered some in the community, who have accused the company of reneging on a promise not to close off its research.

OpenAI said its new natural language model, GPT-2, was trained to predict the next word in a sample of 40 gigabytes of internet text. The end result was the system generating text that “adapts to the style and content of the conditioning text,” allowing the user to “generate realistic and coherent continuations about a topic of their choosing.” The model is a vast improvement on the first version by producing longer text with greater coherence.

But with every good application of the system, such as bots capable of better dialog and better speech recognition, the non-profit found several more, like generating fake news, impersonating people, or automating abusive or spam comments on social media.

To wit: when GPT-2 was tasked with writing a response to the prompt, “Recycling is good for the world,” which nearly everyone agrees with, the machine spat back:

“Recycling is NOT good for the world. It is bad for the environment, it is bad for our health, and it is bad for our economy. I’m not kidding. Recycling is not good for the environment. It is destructive to the earth and it is a major contributor to global warming. Recycling is not good for our health. It contributes to obesity and diseases like heart disease and cancer. Recycling is bad for our economy. It increases the cost of a product, and in turn, the price of everything that is made with that product. Recycling is not good for our nation. We pay a tremendous price for the privilege of having the world’s most advanced and efficient recycling system. Recycling is a huge, colossal waste of time, energy, money, and resources.”

No wonder OpenAI was worried about releasing it.

For that reason, OpenAI said, it’s only releasing a smaller version of the language model, citing its charter, which noted that the organizations expects that “safety and security concerns will reduce our traditional publishing in the future.” Admittedly, the organization said that it wasn’t sure of the decision, “we believe that the AI community will eventually need to tackle the issue of publication norms in a thoughtful way in certain research areas.”

Not everyone took that well. OpenAI’s tweet announcing GPT-2 was met with anger and frustration, accusing the company of “closing off” its research, and doing the “opposite of open,” seizing on the company’s name.

Others were more forgiving, calling the move a “new bar for ethics” for thinking ahead of possible abuses.

Jack Clark, policy director at OpenAI, said the organization’s priority is “not enabling malicious or abusive uses of the technology,” calling it a “very tough balancing act for us.”

Elon Musk, one of the initial funders of OpenAI, was roped into the controversy, confirming in a tweet that he has not been involved with the company “for over a year,” and that he and the company parted “on good terms.”

OpenAI said it’s not settled on a final decision about GPT-2’s release, and that it will revisit in six months. In the meantime, the company said that governments “should consider expanding or commencing initiatives to more systematically monitor the societal impact and diffusion of AI technologies, and to measure the progression in the capabilities of such systems.”

Just this week, President Trump signed an executive order on artificial intelligence. It comes months after the U.S. intelligence community warned that artificial intelligence was one of the many “emerging threats” to U.S. national security, along with quantum computing and autonomous unmanned vehicles.

Urban unicorn renewal

Three cities, three dead urban unicorn renewal projects.

In just the past few days, we’ve had Foxconn renege on Wisconsin, Amazon renege on NYC and GE renege on Boston. Each followed the Anna Karenina principle that every unhappy economic development deal is unhappy in its own way: for Foxconn, it was trade tariffs and slowing iPhone sales; for Amazon, it was populist protests plus the usual NYC corruption; for GE, it was the reality of looking at a mirror and finding that you’re staring at a dumpster fire.

Yet, there are eerie similarities, other than the fact that I have practically lived next door to every single one of these projects (if you call Wisconsin next door to the better-looking state of Minnesota).

In each case, there was the perfect alchemy of the modern urban unicorn renewal plan. A well-known but sordid tech company paints a picture of revolutionizing a city’s economic base. They splash huge numbers on the board, or at least a coveted status symbol. Seeing their legacies secured, politicians latch on to these projects, negotiating with alacrity and without due process because — wow — the company with suicide nets or the company where employees pee in bottles (undercover!) is coming to town.

I get it. And look, if these projects panned out, they would indeed be great for their home cities. As I wrote about Amazon HQ2 a few weeks ago:

These spillover effects are at the heart of agglomeration economies. With Amazon’s arrival, more software engineers will locate to NYC. They will start companies, join other tech firms and expand the vitality of the community. As Edward Glaeser argues convincingly in his book The Triumph of the City, density of talent matters enormously for the success of the city. Amazon thickens the market for tech talent, and that is a huge win for both NYC and DC.

Yet, these projects rarely work out, and behind this all is the plague of Silicon Everywhere. As I wrote four years ago:

There are many commentators who argue that there is a bubble in Silicon Valley today. They may or may not be right, but there is certainly a bubble in places named after the preeminent global tech ecosystem.

Silicon Border. Silicon Hills. Silicon Steppe. Silicon Prairie. Silicon Roundabout. Silicon Gulf. Silicon Avenue. Silicon Canal. Silicon Alley. Silicon Beach. Silicon Forest. Philadelphia has a groaner of a region with Philicon Valley (whoever invented this should be banished from marketing for five years or forced to market Path).

And so we got “Wisconn Valley,” which actually is a brilliant fusion of Foxconn, Silicon and Wisconsin that now has its very own government homepage. GE was going to restart Boston’s tech scene, except the 800 jobs in its headquarters office were predominantly accountants and lawyers, which of course is where the real innovation of any company takes place.

These silicon dreams need to be crushed, beaten, stamped out and destroyed. So should these mega-project economic development deals, which always seem to go through a cycle from euphoria to lassitude.

In their wake, tech leaders should be encouraging a culture of bottoms-up economic development. Mayors should partner with local startups to encourage the growth of small companies and then coordinate pathways to help them succeed. Economic development money should turn into seed capital, boot camp credits, university research transfer grants and a whole lot more options for small-scale — human-scale — interventions. The unicorn urban renewal project is dead, but it always has been.

Welcome to the Extra Crunch Daily

Image via Flickr by Prayitno used under Creative Commons

Assuming you haven’t unsubscribed yet, welcome to the new Extra Crunch Daily newsletter, which is stochastically delivered to you “daily” depending on the misery index of my morning commute courtesy of NY Governor Andrew Cuomo.

We have been A/B-ing this format a bit over the past few months, and have talked about the future of geoengineering, power politics of GPS, societal resilience startups, the disappearing Form D filing, Softbank’s debt obsession, the internet’s transformation into a nation state and why TechCrunch’s parent company is … well, I shouldn’t say that, lest I kick that damn hornet’s nest again.

This newsletter is about context, big ideas and arguments. It’s also about touching on any of the 35-odd spaces that I seem to cover in a given day, so it’s basically professional ADHD in written format. I write when I am in that liminal space between curiosity and anger, that “Why??” which follows “What!!!”

I’m joined on this project by Arman Tabatabai, our intrepid research consultant from New York. He’s always willing to learn a completely new subject because I had a dream last night (Monday morning at 8am: “so what do you know about geoengineering?”), and for that he’s amazing and this newsletter couldn’t go on without him.

Patreon EC-1 and the challenge of private companies

We debuted Extra Crunch this week with the launch of Patreon’s EC-1. I was inspired by the S-1 that companies file with the SEC when going public and thought: “why don’t we do that, but for private companies.”

A couple of hundred hours later, and that’s basically what we got with this first edition. With Patreon, TechCrunch’s media columnist Eric Peckham wrote a bonanza of analysis on the company’s founding story, product, business, thesis and competition, and he even threw in a reading guide so you can read everyone else’s coverage of the company. There are pretty generous pours of these articles in front of the paywall too, so do share them with colleagues.

The hope is that these projects can spark the imagination, give ideas around strategies and tactics that might work in a startup context and, of course, help evaluate the future of the company we are holding under the microscope.

We have three other companies in the hopper right now coming up in this series. Have ones you want to see covered? Think there could be an interesting deep dive we are missing? Hit reply and tell me — right now — or send me an email at [email protected].

Obsessions

This is an open agenda that I use to track what the hell I am writing about on a regular basis.

  • We are going to be talking India here, focused around the book “Billionaire Raj” by James Crabtree.
  • We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
  • Societal resilience and geoengineering are still top-of-mind.
  • Some more on metrics design and quantification.

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people and companies. If I can ever be of assistance, hit reply, or send an email to [email protected].

This newsletter is written with the assistance of Arman Tabatabai from New York.

DOJ charges former US Air Force officer with spying for Iran

Prosecutors have brought charges against a former Air Force officer for allegedly spying for Iran, the Justice Department confirmed Wednesday.

Monica Witt, a former Air Force counter-intelligence officer, is accused of defecting to Iran in 2013, after leaving the military in 2008 after more than a decade’s service and later working as a defense contractor.

Prosecutors said the officer, who had the highest level of top secret clearance, disclosed the details of a highly classified intelligence-gathering program and the true identity of a U.S. intelligence officer to the Iranian Revolutionary Guard, which conducts the country’s cyber-operation, after she stopped working for the U.S. government.

Witt, a former Texas resident, first traveled to Iran in 2012 to attend a conference, which is where prosecutors allege she was recruited.

Jay Tabb, FBI executive assistant director for national security, said the indictments follow “years of investigative work,” adding that her alleged actions “could cause serious damage to national security.”

An arrest warrant was issued for Witt, who is still believed to be in Iran.

Prosecutors also charged four other Iranian nationals accused of working for the Revolutionary Guard — Mojtaba Masoumpour, Behzad Mesri, Hossein Parvar and Mohamad Paryar — with cyber-offenses relating to targeting U.S. government agents who once worked with Witt.

Prosecutors said the “skilled cyber actors” targeted Witt’s former colleagues with malware, which allowed the hackers to spy on the victims’ webcams and keystrokes.

Officials said that the hackers “tested its malware and gathered information from target computers or networks, and sent spearphishing messages to its targets.” In one case, prosecutors said the hackers created a fake Facebook account of a former colleague of Witt’s, which resulted in several of the targets to accept the fake account’s friend requests.

The government also issued sanctions against two companies, including New Horizon, which sets up the annual conference which Witt attended, for providing financial and technical support to the Revolutionary Guard. Treasury Secretary Steven Mnuchin said it took the action “against malicious Iranian cyber actors and covert operations that have targeted Americans at home and overseas as part of our ongoing efforts to counter the Iranian regime’s cyber attacks,” specifically attempts to install malware to compromise the computers of U.S. personnel.

More soon…

Russia plans to test a kill switch that disconnects the country from the internet

As a cyber-defensive measure, the Russian government will reportedly perform a trial run of a measure that would effectively cut the country off from the rest of the world’s web.

Last year, Russia introduced its Digital Economy National Program, a plan that would require Russian internet providers to remain functional in the event the country was cut off from worldwide internet. Under this plan, Russian ISPs would redirect web traffic to routing points within the country and rely on its own copy of the Domain Name System (DNS), the directory of domains and addresses that underpins the global internet.

The test run could be useful to the country for a few reasons. Primarily, Russia aims to simulate the drastic measures it would take in the case of some kind of cyber threat to its national security. But for a country notorious for its restrictive environment for individual and press freedom, the test may also be a useful way to see how the country could wield a more closely held internet to control its own people and guard against foreign interests.

The extreme measure, if successful, would allow Russia to effectively operate its own state-controlled internet and cut itself off from the world as it sees fit. While the test date is not yet known, it’s expected to happen before April 1 of this year, the last day for lawmakers to propose amendments to the Digital Economy National Program.

Sean Parker’s govtech Brigade breaks up, Pinterest acqhires engineers

Facebook co-founder Sean Parker bankrolled Brigade to get out the vote and stimulate civic debate, but after five years and little progress the startup is splitting up, multiple sources confirm to TechCrunch. We’ve learned that Pinterest has acqhired roughly 20 members of the Brigade engineering team. The rest of Brigade is looking for a potential buyer or partner in the political space to take on the rest of the team plus its tech and product. Brigade CEO Matt Mahan confirmed the fate of the startup to TechCrunch.

While Brigade only formally raised $9.3 million in one round back in 2014, the company had quietly expanded that Series A round with more funding. A former employee said it had burned tens of millions of additional dollars over the years. Brigade had also acquired Causes, Sean Parker’s previous community action and charity organization tool.

After Brigade launched as an app for debating positions on heated political issues but failed to gain traction, it pivoted into what Causes had tried to be — a place for showing support for social movements. More recently, it’s focused on a Rep Tracker for following the stances and votes of elected officials. Yet the 2016 campaign and 2018 midterms seem to fly over Brigade’s head. It never managed to become a hub of activism, significantly impact voter turnout, or really even be part of the conversation.

After several election cycles, I hear the Brigade team felt like there had to be better ways to influence democracy or at least create a sustainable business. One former employee quipped that Brigade could have made a greater impact by just funneling its funding into voter turnout billboards instead of expensive San Francisco office space and talent.

The company’s mission to spark civic engagement was inadvertently accomplished by Donald Trump’s election polarizing the country and making many on both sides suddenly get involved. It did succeed in predicting Trump’s victory, after its polls of users found many democrats planned to vote against their party. But while Facebook and Twitter weren’t necessarily the most organized or rational places for discourse, it started to seem unnecessary to try to build a new hub for it from scratch.

Brigade accepted that its best bet was to refocus on govtech infrastructure like its voter identification and elected official accountability tools, rather than a being a consumer destination. Its expensive, high-class engineering team was too big to fit into a potential political technology acquirer or partner. Many of those staffers had joined to build consumer-facing products, not govtech scaffolding.

Mahan, Brigade’s co-founder and CEO as well as the former Causes CEO, confirms the breakup and Pinterest deal, telling us “We ended up organizing the acqhire with Pinterest first because we wanted to make sure we took care of as many people on the team as possible. We were incredibly happy to find that through the process, 19 members of our engineering team earned offers and ended up going over to Pinterest. That’s about two-thirds of our engineering team. They were really excited about staying in consumer product and saw career opportunities at Pinterest.” We’re still waiting on a comment from Pinterest.

Brigade had interest from multiple potential acqhirers and allowed the engineering team’s leadership to decide to go with Pinterest. Several of Brigade’s engineers and its former VP of Engineering Trish Gray already list on LinkedIn that they’ve moved to Pinterest in the past few months. “We had a bunch of employees that took a risk on a very ambitious plan to improve our democracy and we didn’t want to leave them out to dry” Mahan stresses. “We spent more time and more money and more effort in taking care of employees over the last few months than most companies do and I think that’s a testament to Sean and his values.”

Mahan is currently in talks with several potential hosts for the next phase of Brigade, and hopes to have a transition plan in place in the next month. “We’ve in parallel been exploring where we take the technology and the user base next. We want to be sure that it lives on and can further the mission the we set out to achieve even if it doesn’t look like the way it does today.” Though the company’s output is tough to measure, Mahan tells me that “Brigade built a lot of foundational technology such as high quality voter matching algorithms and an entire model for districting people to their elected representatives. My hope for our legacy is that we were able to solve some of these problems that other people can build on.” Given Parker’s previous work with Marijuana legalization campaign Prop 64 in California and his new Opportunity Zones tax break effort, Brigade’s end won’t be Parker’s exit from politics.

Brigade’s breakup could still cast an ominous shadow over the govtech ecosystem, though. Alongside recent layoffs at grassroots campaign text message tool Hustle, it’s proven difficult for some startups in politics to become sustainable businesses. Exceptions like Palantir succeed by arming governments with data science that can be weaponized against citizens. Yet with the 2020 elections around the corner, fake news and election propaganda still a threat, and technology being applied for new nefarious political purposes, society could benefit from more tools built to amplify social justice and a fair democratic process.