A less frothy market means you can differentiate between speculation and building foundations for the future.
Polygon co-founder Antoni Martin spoke with Protocol about crypto regulation, the crash and more.
Antoni Martin, enterprise lead at Polygon, wasn’t happy about the crypto crash. But he thinks that this is the time to “differentiate between speculation and build.”
He’s done his own share of building, starting Hermez, a Layer 2 protocol that merged into Polygon in September and is now known as Polygon Hermez. As enterprise lead, he’s the primary point of contact for everyone from big banks to governments that want to learn more about the blockchain technology effort, which aims to scale up Ethereum by avoiding congestion and allowing it to process more transactions affordably.
Martin, who spent years working for Citibank and Deutsche Bank before diving into the blockchain world, spoke to Protocol about what Polygon could be used for, how the crypto crash has eroded trust and how he’s helping shape the EU’s crypto regulation.
This interview has been edited for brevity and clarity.
How important do you think crypto is to the payments industry right now?
I am speaking a lot with incumbents now, with a lot of banks and people from the financial sector. And the truth is that in this sector especially, they’re very scared. In the last 10 years, they are the focus of a lot of regulation mainly as a consequence of what happened in 2008-09, and some of the actions were questionable.
I have been working for 17 years in the financial sector. I created Hermez two years ago, and I know perfectly what happened the last 10 years in this industry. As you know, there are a lot of AML compliance departments scrutinizing every transaction.
Antoni MartinPhoto: Polygon technology
If you ask me, payment is a perfect use case for blockchain, or Polygon, or Ethereum. But at the same time, I think that it will be the last one where it will be applied. It will start as it has started now in [our partnership] with Stripe, it’s a way to do payments with USDC. But that is something very specific for Twitter, and not really the core of the payments sector, if we’re honest.
This is just the beginning. We are very happy and we have a lot of hope in this first use case; it’s opening one door. That doesn’t mean the door is already open: I think we should be very cautious, there is still a lot of work to be done. But yes, it’s a first step.
So what are the next steps to find more uses for Polygon?
Another question that is very important is you need to consolidate transactions from a lot of different actors and legal entities. And in this sense, blockchain is also perfect because it applies very well to supply chain use cases, to insurance use cases where there are different legal entities.
But then at the same time, security [matters]. I think that every minute there is a hack in one element of the financial system. But it’s also one thing where blockchain can help sort it out.
A very good example is what we are trying to do in the city of Lugano, where you will be able to pay all your fees, your fines, your taxes, even your coffee, because merchants are involved. The idea is that everything will run on top of the platform on Polygon. You will be able to pay with a stablecoin pegged to the Swiss franc, which is named luga, and another one pegged to the dollar, in this case tether. This is the future.
With the recent crypto crash, what happened with luna and the general crypto market downturn, has that affected how Polygon operates? Did you notice any difference in the trust that people have in crypto?
Yes. Honestly, I’m not happy about what’s happened to luna or other protocols, of course. But a stablecoin that was giving you a 20% yield? That’s something strange. At least around me, I don’t know anybody investing in luna, but not because they were more clever, more silly, whatever it is. But because it was strange. The same applies to other DeFi projects that were giving 90%, 80% [yield]. It’s a little bit of common sense, meaning if you see that there are these big yields, normally there is a risk involved.
Obviously, it has decreased a little bit of interest in crypto, yes, that’s for sure. At the same time, it’s also the moment where you can differentiate between speculation and build. In our case, here at Polygon, we deployed Nightfall, a privacy platform, and Supernet, a sovereign blockchain platform that is like the internet of blockchains. Now, in July, we will deploy the first zkEVM in testnet.
I think it’s a moment to be focused on building. You should still look at the price of your token or asset or whatever, because otherwise you will become crazy. But yes, I think it’s time to build up, and with time the market will differentiate.
Particularly with the EU’s Markets in Crypto-Assets bill and transfer-of-funds rules, AML checks have been a point of contention. How do you feel about crypto regulation coming up?
I was involved in some consultations with the European Parliament. I can tell you that I have spoken with more than 40 members of the European Parliament and, again, they are trying to understand. Obviously, yes, there is this component of security and AML.
I think at a certain point we should sign a trade-off that if you are the owner of the wallet as you are the owner of a bank account, you should be able to say it. Here in Switzerland, for example, I am declaring my hardware wallet. It’s part of my assets, and I pay some taxes on top of it. I understand that for some people it is very attractive to earn a lot of money and yield without paying any tax. Well, maybe we can discuss if the taxes are fair or not; that’s not the discussion.
They are trying to establish some control. We should find the right balance between the owner of the assets and total control on all transactions. There should be a midpoint.
When we speak with regulators, with governments, they are not against blockchain [technology]. For example, they are very interested in the field of traceability that blockchain can bring and can be really helpful for AML or KYC. Obviously, here also there is the privacy topic, because otherwise they can trace all your transactions, and we don’t want that to be a very Orwellian world. But here zero-knowledge can help a lot to provide this privacy. Here the question is: How can we manage these technologies that are adding privacy and scalability? But regulators and governments are very interested to understand how they can apply these in real life.
Climate tech startups are embracing the public benefit corporation, a formerly niche way of incorporating, as a way of holding themselves accountable.
An increasing number of mission-driven companies are incorporating as PBCs.
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Nearly every company today claims to be mission-driven. But the quest for profits and shareholder demands can often get in the way of more altruistic goals.
A new wave of climate-focused startups is trying to mitigate those competing interests using a wonky and somewhat dry piece of business incorporation status that’s existed for more than a decade: the public benefit corporation. Ultimately, PBCs are just one attempt — albeit a still untested one — to better align the capitalist system with combatting the climate crisis.
“Can you solve the problem with the same system that created the problem? It just seems so silly to look that question in the eye and say categorically, ‘Yes,’” Chris Tolles, the co-founder and CEO of Yard Stick, said. For him and other climate startup founders, going the PBC route is one way to get closer to that “yes.”
Yard Stick, a startup that measures soil carbon, incorporated in 2020 as a PBC. Going the PBC route has helped Tolles stay true to the company’s mission of improving soil carbon sequestration efforts via its measurement technologies while taking the venture investment required for growth. “I think, on a long enough time scale, most of capitalism is at odds with the right climate solutions,” Tolles told Protocol.
An increasing number of mission-driven companies are incorporating as PBCs, with 19 even listed on American stock exchanges, including Planet Labs and AppHarvest.
There’s one major distinction between PBCs and traditional corporations: PBCs are just as accountable to their corporate mission or “public benefit” as they are to their fiduciary duty to shareholders. In other words, unlike traditional companies (in which a mission such as doing no harm to the planet is a nice marketing slogan), PBCs have a legal obligation they must take as seriously as maximizing quarterly returns.
Being a PBC was important to Maddie Hall, co-founder and CEO of synbio-focused carbon capture and storage startup Living Carbon, because she knew there were instances where she’d want to give the company’s genetically modified trees away for free, whether in developing countries, nature outreach programs or some other instance. “I wanted to be able to preserve my ability to do that contractually,” she said.
Another advantage, according to Hall, is being able to say no to potentially lucrative carbon removal projects. Within the carbon removal space, land ownership is a particularly contentious issue with regards to environmental justice. Hall doesn’t want to work on projects on land belonging to Indigenous communities or work on land owned by the oil and gas industry.
If Living Carbon were a traditional C corporation, shareholders could theoretically sue the company in those scenarios for not maximizing returns (and likely win). But because it’s a PBC, giving away trees or saying no to ethically dubious projects is protected by the company’s charter. (To be clear, the risk of investor lawsuits is much more likely against large corporations than smaller startups.)
A founder that thinks that they’ll always be in control, that their investors will always agree with them and share their values, is a fool.
For Wren co-founder and CEO Landon Brand, being a PBC helps hold the carbon offset startup accountable to itself, investors and the public.
One of the articles in the company’s charter is that Wren will be radically transparent, including publishing financial and operating metrics. (That also includes making its charter available online.) A competitor could look at Wren’s financial reports and how much it’s spending on YouTube creator marketing and potentially offer those creators a better deal. But Brand is OK with that, because helping competitors “is really just helping move our mission forward in having as much impact as we can on the climate crisis,” he said.
Susan Mac Cormac, a partner at Morrison & Foerster and chair of the firm’s energy and social enterprise and impact investing practices, said she’s recently witnessed a “sea change” in mainstream corporate awareness and acceptance of PBCs. Benefit legislation was first passed in 2010 in Maryland, followed closely by Vermont. Today, 36 states plus the District of Columbia offer companies the chance to incorporate as PBCs. (That includes Delaware, where a majority of publicly traded companies are incorporated.),
PBCs are one form of corporate structure or “scaffolding around a business” that can shield against greenwashing and “bad behavior,” she said. Founders have started embracing the PBC designation over the past few years, Mac Cormac said. That’s partly because of amendments in the Delaware PBC statute made in 2020 that makes it easier for businesses to convert, and partly because the option to become a PBC has simply become better known.
Public pressure has also played a part in the rise of PBCs. Corporate interest in PBCs has been rising due to the increasing popularity of ESG and impact investing, as well as due to a greater consumer focus on “corporate purpose,” according to a 2020 Ropes & Gray memorandum. Founders are also increasingly talking about the potential upsides with each other.
In Mac Cormac’s view, the biggest advantage of being a PBC is when a sale comes into play: The company’s board wouldn’t be allowed to approve a sale to the highest bidder if the acquiring company wouldn’t maintain the public benefit. She used Twitter as an example; if the company had been a PBC, it could have potentially rejected Elon Musk’s bid out of hand.
Ultimately, the bigger the company, the greater the benefits of being a PBC. According to founders who’ve incorporated their startups as PBCs, it’s a way of making sure that the mission is baked into the identity of the company, regardless of if shareholders disagree with founders, if the company is acquired or if a new CEO with a different vision takes over. “A founder that thinks that they’ll always be in control, that their investors will always agree with them and share their values, is a fool,” Tolles said.
For early-stage climate tech companies, being a PBC is mostly about projecting values and making it clear to investors and the public that they’re serious about their mission — not just talking the talk.
“I felt like it was actually a selling point to the right investors,” Hall said. Living Carbon is backed by a number of big names in the VC world, including Lowercarbon Capital and Y Combinator.
Being a PBC has likewise been helpful for Tolles in weeding out investors that might have a problem with Yard Stick “forsaking some measure of commercial upside in the future.”
Mac Cormac warned that PBCs are not a panacea for mission-driven founders. Notably, the designation isn’t permanent; a majority of shareholders could still vote to convert to a traditional corporation. If founders want to ensure that their company remains a PBC regardless of investor opposition, they have to take golden shares or a certain class of equity that makes it impossible to convert out of PBC status without the consent of that class.
Still, Hall said “there’s no real downside” to incorporating as a PBC, pointing to the fact that a number of PBCs have gone public. “For anyone that wants to assert that they’re not going to be predatory in how they conduct their business and practice the highest ethical standards, I think it’s a great option,” she said.
Tolles takes a more hardline perspective. He recommends that other climate startup founders “be a PBC or reckon deeply with why. Don’t be a coward.”
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Blockbuster hacks are no longer the norm – causing problems for companies trying to track down small-scale crime
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
Cybercrime is often thought of on a relatively large scale. Massive breaches lead to painful financial losses, bankrupting companies and causing untold embarrassment, splashed across the front pages of news websites worldwide. That’s unsurprising: cyber events typically cost businesses around $200,000, according to cybersecurity firm the Cyentia Institute. One in 10 of those victims suffer losses of more than $20 million, with some reaching $100 million or more.
That’s big money – but there’s plenty of loot out there for cybercriminals willing to aim lower. In 2021, the Internet Crime Complaint Center (IC3) received 847,376 complaints – reports by cybercrime victims – totaling losses of $6.9 billion. Averaged out, each victim lost $8,143.
Many identity thefts and online scams, however, net perpetrators even less: just a few hundred dollars. For just $25, cybercriminals can purchase a cloned VISA or Mastercard, plus its PIN. That card data opens a treasure trove for criminals, including locally purchasing gift cards, or other fencible commodities such as electronics and jewelry sold off at a discount.
“Criminals have two primary goals: making money and staying out of harm’s way,” says Nick Biasini, head of outreach at Cisco Talos. Cybercrime provides an attractive avenue for both. “The inherent risk associated with committing cybercrime-fueled fraud is far lower than selling drugs or other types of crime. Additionally, the margins are far better. A criminal can turn a small investment into big profits simply from buying stolen information and using it to commit some form of fraud. During the pandemic unemployment fraud has been a lucrative favorite of criminals. Plus by keeping the monetary values lower they are less likely to draw the attention of state and federal authorities.”
A growing problem for local law enforcement
Cyber criminals can attack virtually anyone from virtually anywhere, and cybercrime as a service, where the non-technically minded can hire tools to hack accounts without any specialist knowledge, has become commonplace. Even organized crime syndicates in Spain and Italy are getting into the game.
Federal authorities, usually alerted by IC3, put their scarce resources toward solving large-scale crimes. They work with financial institutions or corporations most impacted by specific breaches. This means the majority of crimes – with their far smaller paydays – tend to fly under the radar.
A look at the data
But some companies are tracking the rise of small-scale cybercrime. Cisco Talos analyzes data to spot trends that help its incident response team alert customers to potential cybersecurity attacks, and then respond and recover to breaches rapidly.
It has found while drug felonies over the last eight years dropped drastically, before stabilizing during the pandemic, cybercrime has shot up. From 2015 to 2021, the number of reported cybercrimes nearly tripled, and losses soared nearly fivefold.
“Criminals today have a far better technical understanding then they did five or ten years ago,” says Biasini. “Additionally, it shows how they really understand inherent risk, it’s just safer to commit fraud and cybercrime than it is to sell drugs. As an added bonus, they also have become proficient in cryptocurrencies, providing alternative avenues for purchasing illicit goods and money laundering.”
Source: New York Police Department
Source: IC3 2021 Internet Crime Report
An evolving challenge
If this trend continues, the emerging wave of cybercrime will look less like epic breaches and more like scamming citizens out of their tax return or signing them up for fraudulent unemployment benefits. Those two crimes already rank in the top five of identity theft types for 2021, with unemployment scams leading the pack.
How, then, can we expect local law enforcement to possibly keep up? After all, they’re already busy policing and prosecuting what most people consider ‘real world’ crimes. Cybercrime is an entirely different problem. It requires pouring over data both from the criminal themselves and the victims they target with their fraud, trying to somehow build a solid, forensically sound case.
“Cisco Talos has always worked closely with local, state, and federal law enforcement organizations to help them succeed in their tasks,” says Biasini. “We are always willing and able partners to help take cybercriminals off the streets. We provide law enforcement with information we uncover during our investigations and oftentimes lend our people, processes, and technologies to help investigations already underway.”
One solution is for local law enforcement to identify staffers in their ranks with an aptitude for online sleuthing. Cybercrime units are perfect for people who have a research bent, because digital detective work is a big part of the job.
Another alternative forces are pursuing is recruiting young people from computer science programs, or tasking high schools with helping train up a new generation of defenders with the mentality and skills to turn what today is a sideline for police into a mainline function. It’s already happening worldwide: in the UK, a $7 million government program led to the creation of cybercrime units in every police force in England and Wales.
And we’re seeing it here too in the United States. Several organizations have stepped up as resources for law enforcement. Every state has at least one agency devoted to helping police fight cybercrime. And the National Computer Forensics Institute offers courses, both in-person and virtual, to train basic and advanced examiners, first responders, and prosecutors and judges.
It’s all in the aim of trying to crack down on small time cybercrime, preventing the small leaks that turn into a torrent of losses that we know about from thousands of years of history.
People have been swindled since before man created monetary systems. These aren’t new crimes; just new ways to commit them. But as cybercrime increasingly goes small-time, those on the front lines will need new and more effective ways to fight it.
Read the detailed blog on the shifting trends in small time cybercrime in Nick’s blog here. Click here to get to know Cisco Talos, the industry-leading threat intelligence group fighting the good fight.
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
Charging infrastructure is getting held up by local bureaucracy, creating a conundrum for would-be EV drivers.
Lengthy administrative processes are causing significant delays as EV charging companies and local businesses seek to provide access to charging.
Kwasi (kway-see) is a fellow at Protocol with an interest in tech policy and climate. Previously, he covered global religion news at the Associated Press in New York. Before that, he was a freelance journalist based out of Accra, Ghana, covering social justice, health, and environment stories. His reporting has been published in The New York Times, Quartz, CNN, The Guardian, and Public Radio International. He can be reached at kasiedu@protocol.com.
Building out charging infrastructure as quickly as possible has never been more critical to getting people in electric vehicles.
Yet as states and the federal government embark on ambitious plans to transition from gas-powered to electric vehicles, local government bureaucracies often stand in the way. From acquiring multiple permits to zoning requirements, lengthy administrative processes are causing significant delays as EV charging companies and local businesses seek to provide access to charging. That could slow down EV adoption at a time when the climate crisis depends on getting more of them on the road.
“Internal combustion engines, in California, cannot be sold after 2035. The same [is true] for Massachusetts and New York, so we have a necessity to speed it up,” said Brendan Jones, president of EV charging company Blink Charging.
While some permitting delays are of legitimate concern, such as ensuring that charging stations comply with the Americans with Disabilities Act, others can be due to multiple municipal agencies reviewing permit applications sequentially instead of simultaneously, the absence of a permitting checklist detailing the process and even stalling approvals that have used electronic signatures instead of ink.
According to a forecast from Boston Consulting Group, up to 68% of new vehicles sold in the U.S. could be battery-electric by 2035. That forecast was made before the Inflation Reduction Act passed the House and Senate, which would extend EV tax credits for new vehicles and introduce ones for used vehicles. Policies aimed at expanding EV charging are also tipping the scales.
The Biden administration is set to dole out $7.5 billion in funding for states to build out charging infrastructure as part of the bipartisan infrastructure law. The administration has also set a goal for EVs to make up 50% of new vehicle sales and to have 500,000 chargers in the ground by 2030.
There are various types of charging infrastructure, each with its own level of complexity. A Level 1 charger — that is, the slowest type of charger — can be installed in about an hour in someone’s home without requiring complex permitting applications. Relatively faster Level 2 chargers often found at office complexes, parking garages and condo complexes generally take up to four weeks to gain approval before construction begins.
But the lengthiest wait times are for permitting direct current fast charging infrastructure, such as Tesla’s Superchargers. It can take several months before local officials give construction the green light. Those also often require a separate administrative process to be cleared with a local utility company because a transformer might be required. After that, it is a multiweek process to get that infrastructure in the ground.
Tesla cars line up to wait for an open charging bay in Nephi, Utah. Photo: George Frey/Getty Images
“Typically with a DC fast charger, if you get one done in six months, from site identification to installation, you’re doing a good job. It is typically about nine months and sometimes 12 months, if you have delays in permitting,” said Jones. “You have some jurisdictions that are just diabolically long in permitting, and you have to deal with it. California, New Jersey, parts of Florida, it takes a really long time to get permitting through them.”
DC fast charging is essential to combatting range anxiety, a top factor keeping people from taking the EV plunge. The Biden administration has touted DC fast charging — which can add 100 miles of range in an hour — as one of the keys to ensuring drivers can get from coast to coast without having to worry about being stranded.
An executive at a leading EV charging company told Protocol that a charging station project in a Virginia town was still languishing in permitting “for over a year with 13 or 14 rounds of comments, each one after the other and each coming up after a new office has had to review and give their stamp.” The executive did not want to reveal the name of the town because the company was still doing business in the area. “Each jurisdiction has their own rules and interprets national rules and codes their own way so we just have to kind of go with it,” they said.
States such as California have taken some steps to cut red tape and reduce delays. In 2021, the state legislature passed a new law to ensure that “local agencies [do] not adopt ordinances that create unreasonable barriers to the installation of electric vehicle charging stations.”
The new law requires local authorities to vet applications for sites where 25 or fewer charging plugs are to be built within five business days. Applications are deemed complete if there are no responses in that timeframe and the project is considered approved if local officials do not communicate any concerns to applicants within 20 business days.
Some cities are also racing to address permitting issues. A new bill under consideration in New York City would require all new parking lots and garages to have at least 60% of their spaces be capable of charging an EV. That would provide regulatory certainty for new garages and speed the build out of charging infrastructure there.
Ramping up permitting speed for chargers is critical to bringing about mass EV adoption. While the first generation of EV owners were relatively wealthy, could charge at home and were willing to endure inconveniences that came with owning a novelty car, the next wave of EV buyers will be looking for convenience. And without it, switching from vehicles powered by gas to ones powered by electricity would be a “more difficult sell,” said Marcy Bauer, senior vice president at EVgo.
“We have to have chargers where people need and want to be,” Bauer said. “We have to have them there just before they need them. Otherwise, they are not going to purchase the car or lease the car at all.”
The EV transition hinges on clearing up administrative kinks to infrastructure installed where it’s needed. “We have the tools we need to accomplish it, but we don’t have time,” Bauer said.
Kwasi (kway-see) is a fellow at Protocol with an interest in tech policy and climate. Previously, he covered global religion news at the Associated Press in New York. Before that, he was a freelance journalist based out of Accra, Ghana, covering social justice, health, and environment stories. His reporting has been published in The New York Times, Quartz, CNN, The Guardian, and Public Radio International. He can be reached at kasiedu@protocol.com.
Going back to the office isn’t the answer, but better virtual meetings could be.
“As simple as that sounds, creating that sense of place and purpose with a digital workspace and branding, those are the key things that we do internally and that we’ve productized for our customers.”
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.
Jim Szafranski, CEO of presentation software company Prezi, started developing video meeting and presentation software Prezi Video as a “hobby project” toward the end of 2019. Then the pandemic hit.
“What was typically thought of as a presentation company suddenly was involved in the virtual work world,” Szafranski said.
Now, Prezi Video accounts for a third of the company’s business, with millions of users and more than 200,000 organizations as customers. Though Prezi was able to shift its focus, Szafranski wanted to get a better understanding of the biggest issues with remote and hybrid work, and what companies could do to fix them.
In a survey of more than 1,100 enterprise workers across the companies it serves, Prezi found that 66% said proximity bias exists in their company culture, favoring the colleagues that make it into the office regularly. But only 8% reported having all of their meetings entirely in person.
“Based on what we observe with our customers, you’re still going to have somebody not in the room at most meetings,” Szafranski said. “You’re going to continue to need to be cognizant of a remote workforce.”
Szafranski sat down with Protocol to talk about how to beat proximity bias, how working works at Prezi and how to encourage workers to keep cameras on during meetings.
This interview has been edited for brevity and clarity.
What made you want to explore the idea of proximity bias?
What we’re trying to do at Prezi is figure out how to make screens work better for people, because this is where work is happening. When the return-to-work conversation started to happen is when proximity bias came into our view as an important thing. People were starting to think, “Video meetings stink,” “I feel disengaged at work,” “I often multitask.” Video meetings weren’t working well. We started seeing the potential that businesses were going to use return-to-office as an excuse to not improve video meetings. If you don’t make virtual meetings better, clearly people are going to be disengaged and disadvantaged.
Tell me about Prezi’s remote work policy and how you’ve worked in the past couple years.
What we operate under is a virtual-first model and we made the shift to that immediately [after the pandemic started]. Employees were allowed to choose where to work from, and virtual-first means we shifted every workflow, every operation to work virtually. Hiring, onboarding … all the way through to how we run product stand-ups and all-hands meetings. We prioritized the virtual scenario for every operation. We still have office hubs available for when people do want to get together in some locations … But if you look at it across the company, under 20% of the workforce is going in a day or two a week.
Other than Prezi Video, what tools do you use to make those virtual workflows better?
Our tool kit has largely stayed the same: Slack for instant messaging, Zoom for video calls, Jira and Atlassian products for record keeping. The more interesting thing I’d say is the use of them has changed. We put a pretty big emphasis on increasing transparency throughout the organization. We were always a highly transparent organization, but as everyone went home, trying to make sure everyone had the context so that they could make the best decisions for themselves and feel empowered. That’s why we went to a weekly all-hands meeting for the company.
We also created a lot of different [Slack] channels. For example, even though it’s a virtual-first operation, we still encourage people to get together, but doing so in a way where people don’t necessarily feel left out. We have a channel where anytime anyone gets together, they use a channel called “#stay-connected,” where we snap a photo, send it there so everyone knows we met, and we give a little update on what we did.
Demo of a Prezi meeting.Image: Prezi
How do you level the playing field for remote workers at Prezi?
There are two key things that we’re doing to try to make sure we’re not just aware that there could be bias, but have things in place to minimize it. I think one of the first key things is really to make sure there’s a high level of participation [in video meetings]. What we really tried to do is to not have cameras off. If you have cameras off, there’s no participation. That’s somebody talking at people. I know it sounds so simple, but camera-on was such a key part of reducing bias. We also enable and encourage people to be able to bring content onto the screen.
Another key thing for us is to try to create a sense of place and purpose. Another big problem people have is “I have my camera off because I’m at home, and I don’t want people to see my home.” So we allow people to make the virtual workplace feel like virtual work with backgrounds. So as simple as that sounds, creating that sense of place and purpose with a digital workspace and branding, those are the key things that we do internally and that we’ve productized for our customers.
What does the future of work look like, at Prezi and generally?
The view I have is essentially a more and more globally distributed workforce, tapping talent pools beyond what was originally our four office locations. I think that’s going to help all companies. Companies like ours are always in a fight for talent and the more you can be globally distributed, the more you can attract it. And obviously, that also gives you the opportunity to increase diversity. That’s the future work for us: as a bigger team, spread out, more diverse, but still connected using our tools and some of our operations.
As we do virtual meetings from different locations, what we’ve done is we’ve shifted the place we’re working, but I think as we look into the future, we’ll also be shifting the time we’re working too, through asynchronous work. With more messaging, more recorded videos, I think there’s a lot more asynchronous work in our future.
What does the future look like for Prezi Video? Do you expect that to grow?
It’s become over about a third of our business at this point, with pretty robust deployment globally. The way we’re thinking about the future of the Prezi Video is that it can start actually becoming a guide for how to run meetings. We can have templates for, say, having a brainstorming kind of session. If you’re doing a project update meeting, here’s how to do a project update meeting. It’ll become more of a visual-templated guide to help organizations do better meetings, track agendas, tasks or action items. I think that’s a key part of the future.
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.
Microsoft’s biggest challenge with Call of Duty has nothing to do with Sony. It’s about modernizing the franchise for a cross-platform and subscription future.
Call of Duty: Modern Warfare II premiered the biggest entertainment advertisement ever at the port of Los Angeles in May 2022.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Microsoft and Sony have been waging an increasingly bitter battle over Call of Duty. Over the past two weeks, the feud has spilled out into the public through regulatory filings in countries like Brazil and New Zealand, which, unlike the U.S., publish such documents for all to see.
Microsoft’s goal is to convince regulators worldwide that its landmark acquisition of Call of Duty parent Activision Blizzard for close to $70 billion should get the greenlight. Sony’s goal, on the other hand, is to raise the alarm about its primary gaming rival owning one of its biggest cash cows, and whether the PlayStation playbook of platform exclusivity might be turned against Sony if Microsoft decides to make Call of Duty exclusive in some way to Xbox or its Game Pass subscription service.
Microsoft’s potential ownership of the series presents a particularly thorny set of problems for Sony, which has for the last decade been the primary platform on which players have purchased and played Call of Duty games. As of this year, Sony has sold 117 million PS4s, making it one of the most successful consoles and by extension most successful Call of Duty distribution platforms ever. Sony has said in its regulatory filings that Call of Duty is an unrivaled and even “essential” video game “so popular that it influences users’ choice of console.”
But the debate over Call of Duty is about much more than whether the game will be an Xbox exclusive. It’s about whether Call of Duty as we know it — as one of the oldest, most resilient and also conservative blockbuster game franchises — will change with the times.
“The notion of a console war or rivalry for Microsoft and Sony as a polarized dichotomy is outdated,” said Joost van Dreunen, a former game analyst and professor at New York University who studies the game market. Instead, it’s all about pointing the series in the right direction for the future. “As gaming gets mainstream, these classic franchises like Call of Duty hit these midlife crises and try to figure out how to reinvent themselves and stay fresh and have pull with audiences,” he said.
Could Microsoft help Call of Duty meet the current moment of the game industry as it undergoes major changes to its primary business models and digital distribution strategies? If Microsoft succeeds, it wouldn’t matter which platform you use to play Call of Duty, because Call of Duty would be available everywhere: on phones, web browsers and, yes, even still on PlayStation.
Call of Duty has become, for better and worse, the epitome of the hardcore military gun game. It started on its modern trajectory with the aptly titled launch of 2007’s Modern Warfare, which marked a gradual drift away from gritty wartime realism and began fusing the franchise with blockbuster action movie bombast. As the bestselling shooter of all time, Call of Duty has become the benchmark against which the industry’s old guard judges success — culturally and financially. That’s also made it a coveted bargaining chip in the console market.
In the U.S., where console gaming reigns supreme, “through the end of 2021, Call of Duty has been the bestselling video game franchise in premium game sales … for 13 consecutive years,” NPD game director Mat Piscatella told Protocol. Every fall, a new entry of Call of Duty is released like clockwork, helping boost holiday console sales.
“It’s one of the kids that sits in between this custody battle between Xbox and Sony,” van Dreunen said. “Call of Duty is one of the key franchises that is closely associated with the console market, and for a lot of observers it serves as a proxy for the overall health of the ecosystem.”
While Call of Duty has never before been exclusive to one console platform, Microsoft and Sony have for many years engaged in a bidding war with Activision to secure coveted marketing deals and other exclusives, from the right to show the PlayStation or Xbox logo during a televised trailer to specific in-game benefits like early access to beta releases. “There’s a history of Microsoft and Sony fencing with ownership and exclusivity rights around the Call of Duty franchise,” van Dreunen said.
In many ways, the debate around Call of Duty exclusivity, and the franchise’s power to drive console choice and retail sales, is rooted in a perception of the game industry that’s fast becoming an anachronism. The assumption is that Microsoft and Sony are primarily motivated by rewarding their fans for their loyalty while also harming rivals, and by extension players of those competing ecosystems.
But that clashes with the direction of the modern game industry and the strategic vision Microsoft has laid out for the future of the Xbox business. The last few years have resulted in the erosion of major barriers to cross-platform play, cloud streaming and subscription bundling. Many gamers today enjoy premium, console-quality games on a variety of devices, including smartphones, and the most popular games — like Fortnite, Roblox and Genshin Impact — tend to be free-to-play live service titles that are updated regularly over the course of many years. Game Pass, because it lets consumers take their games across platforms and even stream them from the cloud, is central to Microsoft’s success in such a world.
Call of Duty, on the other hand, exists with one foot firmly planted in the past and another attempting to drag the franchise forward. The game is still released annually as a premium product costing between $60 and $70. When one entry flops, as last year’s Vanguard did (for a variety of reasons), it sinks the whole business as sales plunge and players flock to other games in droves. Activision Blizzard’s abysmal second-quarter earnings announcement earlier this month showed a $271 million year-over-year decline in profit and 33 million fewer monthly active players compared to last year. Company executives point to Vanguard’s lackluster performance as the culprit.
Activision has been working to diversify the Call of Duty business so that it’s not so dependent on the success of each year’s fall release. Call of Duty Mobile, a standalone smartphone version of the game developed by Tencent’s TiMi Studio Group, has earned more than $1.5 billion as of February of this year. In May, the game clocked more than 650 million downloads.
The free-to-play Call of Duty: Warzone battle royale, released in 2020, has been a hit as well, amassing more than 125 million players and helping the franchise as a whole surpass $30 billion in lifetime revenue through a microtransaction-heavy business model inspired by Fortnite. But Activision is still reliant each year on releasing a new entry in the franchise, and the success of Warzone is intrinsically tied to each new mainline Call of Duty entry because the games have a unified pool of cosmetics, unlockable guns and a shared look and feel.
When Vanguard flopped, Warzone suffered, too, as players felt less compelled to spend money on in-game cosmetics. The problem grew so dire — compounded by ballooning file sizes and bloat from juggling multiple games’ worth of content — that Activision announced a full reboot of Warzone to launch alongside this fall’s new Call of Duty entry.
This blending of business models may have seemed forward-thinking a few years ago, but it’s quickly become a double-edged sword for Call of Duty as Activision struggles to innovate without disrupting its primary revenue source and alienating fans. “[Activision] haven’t really done much with it. They’ve been very conservative in terms of adapting to new market circumstances,” van Dreunen said. “I think long term that’s going to erode their financial capabilities. They’re going to have to do something about a service model that is more focused on where the market is headed. [Call of Duty] needs an overhaul.”
The closest analog in the console gaming space is Electronic Arts’ FIFA, which also gets a new entry year after year. Yet unlike Activision, which struggles to keep Call of Duty fresh by changing up each game’s setting and creating convoluted narratives that span multiple entries, EA releases a largely identical version of its soccer game with updated rosters, while a live service component called Ultimate Team makes the bulk of the money and persists from one entry to the next.
“FIFA is the closest comparison,” van Dreunen said. “It’s not doubling its user base year after year, but it manages to monetize more aggressively on the back end. The question for Call of Duty is: How do you transition away from [boxed] products and toward live service, and what is the Ultimate Team answer for Call of Duty?”
Microsoft’s potential ownership of Call of Duty presents a particularly thorny set of problems for Sony. Photo: Dave Hogan/Getty Images
Microsoft has gone to great lengths to dispel the notion that it might do something anti-consumer with Call of Duty. The company said in January it would honor its existing Call of Duty agreements with Sony if the deal went through, and that includes publishing the next three major entries for PlayStation. Microsoft president Brad Smith said a month later that Microsoft had “committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future.”
In a filing with Brazil’s regulatory body published this past week, Microsoft flat out said Call of Duty exclusivity would harm its business. “The reality is that the strategy of retaining Activision Blizzard’s games by not distributing them in rival console shops would simply not be profitable for Microsoft,” the company wrote. Many of Activision’s titles are multiplayer games with cross-platform support, meaning revoking access to large swaths of the player base would be nothing short of a disaster.
“They would shoot themselves in the foot making it an exclusive. We’re past that point,” van Dreunen said. “Microsoft’s tenet here is, ‘We need to be cross-platform,’” he added. “They’re not going to cut out 100 million console players — that would be the dumbest thing they could do.”
“Microsoft isn’t as interested in the battle of the console boxes. It believes the future of games is going to be through streaming and subscriptions,” argued GamesIndustry.biz editor Christopher Dring in a recent opinion piece. “Call of Duty isn’t so much a reason to buy an Xbox console, but a reason to subscribe to the Game Pass subscription service.”
Still, Microsoft has tough choices to make about how it incorporates Call of Duty into its increasingly complex gaming ecosystem. Microsoft now releases its first-party games directly onto Game Pass on release day to help boost subscriptions and keep players signed up. But it may not make sense for a new premium Call of Duty to be on Game Pass unless Microsoft decides to split it into pieces: for instance, separating the campaign mode from the multiplayer.
“You have to come up with a logical tier model,” van Dreunen said. “The way Microsoft treated Halo, they did make their success much larger by saying, ‘Hey, we’re going to give the multiplayer component for free and then we’ll sell you the premium one.’ That’s a more layered approach.”
Part of the concern for Call of Duty is that any such bold experimentation or catering to a broader, more mainstream audience — the likes of which Microsoft hopes to reach with Game Pass — might dilute the franchise’s identity. That in turn might drive away the fans who show up every year with money in hand expecting a hardcore shooter that caters to their tastes.
“You can’t really make drastic changes without eating your profits and revenues. The moment they give it away for free, sure, they’ll attract lots of new free players. At the same time, the existing user base will be far less interested,” van Dreunen said. “They like that it’s premium.”
Part of this debate is already playing out inside of Warzone. “Call of Duty is one of those franchises that is relentlessly focused on hardcore games in a classic sense. As it tries to become more like Fortnite, it’s kind of selling out,” van Dreunen said. “Epic, in the same way Apple does for consumer electronics, has set the aesthetic tone; you see it suddenly show up everywhere else. Everything is really brightly colored, pink camouflage pants and yellow rifles. Call of Duty followed this trend.”
But it’s not always well received — just look at the recent uproar over a bright purple assault rifle skin to get a sense of the current fandom squabbling. The fear — and in this case, that fear seems rather founded — is that Call of Duty looks like the “guy in a midlife crisis buying a red convertible,” van Dreunen said.
There are signs Activision is already preparing for a potential future under Microsoft that could involve major shakeups. Bloomberg reported earlier this year that next year’s planned Call of Duty game had been delayed to 2024, creating the first yearly gap in the franchise’s publishing history since 2005. That could give this year’s entry more breathing room and give Activision and Microsoft time to create a clear, concise strategy for updating Call of Duty for a true cross-platform, subscription future.
“It’s a common and timeless question: How do we continue to innovate and adapt to new technologies and audiences without alienating your hardcore player base? Same for film as it is for sports as it is for video games,” van Dreunen said. The same question applies to the game industry’s ever-changing money-making mechanisms: “How do you transition a franchise that is born in a product-based business model into a service-based marketplace? Can you do that well? How do you do that well?”
If the acquisition is approved, Activision will be turning to Microsoft for those answers.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
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