Tag: EC Column

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Ask Sophie: How much time and money will we need for a H-1B transfer?

Sophie Alcorn Contributor
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.
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Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

My startup is hiring and many excellent engineers need H-1B transfers, but I haven’t done one yet.

Approximately how much time and money will we need to set aside for the process? Are there alternatives?

— Careful Co-Founder

Dear Careful,

Congrats on making it to the next stage: hiring!

Working with an experienced immigration attorney can help you save time and money in the process so you can onboard your new hires rapidly and continue to build. It’s important that your attorney understands your startup’s vision and goals.

Transferring a H-1B

To start, it’s important to take the required steps to qualify your startup for sponsoring the H-1B visa before proceeding with the transfer. If you’re transferring the H-1B of an individual who was recently laid off and is still in the U.S., it’s important to take these steps quickly since that person’s 60-day grace period has already started counting down.

Your attorney will help you determine the best strategy and assist your company with petitioning for the new hire.

Most immigration attorneys charge flat fees for their services, but those fees can vary substantially, so consider your options. According to a National Foundation for American Policy report issued a few years ago, the government filing fees and attorney legal fees for preparing and filing an H-1B transfer range in the market from $5,000 to $30,000 (rare but apparently possible!).

An H-1B specialty occupation visa transfer for a startup can typically be accomplished in a month or so, and usually for less than $10,000 all in — often much less than a recruiter. Check out this podcast episode on how to save money in the immigration process.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

How the process works

For a brand-new startup, your attorney will first get your startup’s Federal Employer Identification Number (FEIN) verified by the U.S. Department of Labor’s Office of Foreign Labor Certification, which takes about a week.

Next, your attorney needs to file a Labor Condition Application (LCA) with the Labor Department to basically verify your startup will pay the H-1B transfer candidate the prevailing wage based on the job and geographical location of the job and that no qualified American worker is available to fill it.

The LCA has a dual purpose of protecting both American and foreign workers. There are posting requirements of various documents which can be accomplished digitally and/or physically depending on if you have a remote or physical office. The Labor Department normally processes LCAs in less than two weeks.

Ask Sophie: How much time and money will we need for a H-1B transfer? by Walter Thompson originally published on TechCrunch

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Paid acquisition: The #1 way to find product-market fit

Jonathan Martinez Contributor
Jonathan Martinez is a former YouTuber, UC Berkeley alum and growth marketing nerd who's helped scale Uber, Postmates, Chime and various startups.
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Launching a startup usually means obsessing about whether product-market-fit (PMF) has been achieved in its early days. More broadly, PMF is a term we use to describe a product or service that has generated enough organic demand from consumers. This demand is both sustainable and economically worthwhile for a startup to continue offering said product.

How can you find PMF in the most efficient and frictionless way possible? I argue that the answer to this question is paid acquisition. This article will help you select the best paid channel depending on your startup idea, deploy a battle-tested waitlist strategy, optimize messaging tests, and more.

Which paid channel to select?

Typically, I recommend Meta as the first paid channel to explore for a multitude of reasons: targeting capability, relatively cheap traffic, and a visual format for testing both graphics and copy.

How can you find PMF in the most efficient and frictionless way possible? I argue that the answer is paid acquisition.

By contrast, Google and paid search traffic is preferable if your offering is of high search-intent volume or in a complex B2B segment. For example, advertising a supply-chain AI startup targeting freight companies on Meta would be too complex and unlikely to find the right audience.

The easiest method for determining which paid acquisition channel is right for your startup is with the following three questions:

  1. Is my offering highly visual (clothing, product-based, etc.)?
  2. Does my product/service require an immediate solution to an event (moving homes, doctor’s visit for cold, etc.)?
  3. How complex is my offering?

If you answered that your product/service is highly visual, you’d be leaning towards a paid social channel such as Facebook or TikTok. However, if you answered that your offering is either immediate-solution oriented, location-based, or complex, you should pivot towards a paid search channel, effectively Google.

Example channels that startups could have selected to find PMF.

Example channels that startups could have selected to find PMF. Image: Jonathan Martinez

The Venn diagram above illustrates which channels these established startups should have tested if they were looking to validate PMF. Certain startups, such as Forward Health or Canva, can get away with advertising on both channels because they’re visual, not complex, and have a large target market.

Most consumers can leverage a new healthcare plan or graphic creation, which is inherently very visual. Conversely, a startup such as Lugg, which helps people move homes, should leverage Google as their company offers a solution that consumers often need immediately, and at very specific times.

As an additional note, if you’re looking to advertise on Meta, BusinessofApps is reporting that the latest cost per thousand impressions (CPMs) is hovering around $15 in 2023. This means that to have an estimated 1,000 people view your offering, you’ll be paying around $15. Not bad at all!

Battle-tested waitlist method

In college, I tested countless startup ideas with friends who were as excited about starting a business as I was. Unfortunately, none of them ultimately succeeded. However, an important, long-term success came from developing a strategy that I then employed many times to assess PMF. I’ve broken it down into five easy steps:

  1. Identify paid channel
  2. Create a landing page
  3. Create ad assets

    Paid acquisition: The #1 way to find product-market fit by Walter Thompson originally published on TechCrunch

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Four venture capital personas (and how to land them)

Blair Silverberg Contributor
Blair Silverberg is co-founder and CEO of Hum Capital, a financial services company using technology to accelerate the fundraising process.
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There’s tons of advice out there about how to approach venture capitalists for startup fundraising, but in my experience as both a former VC and current founder, I’ve found there is no one-size-fits-all method.

Venture capital investors get into the industry for many different reasons and come from a wide variety of backgrounds that shape their perspectives on the companies they consider for investments.

Founders must understand which kind of VC investor they’re dealing with to have the best shot at closing a funding round. Here are the four personas of venture capital investors, and what founders can do to partner with them:

#1: The follower

It’s incredibly difficult to predict which companies will be big winners in the long run, and for early-career investors, getting your first 3-5 investment bets wrong can limit your future career prospects. That’s why investors in the follower category care that other credible brands are investing alongside them: latching onto big name interest can help de-risk high-pressure investment decisions. This is the VC version of, “you don’t get fired for buying IBM.”

These investors will never go out on a limb to fund something solely based on its thesis or early business metrics. When you dig into their portfolios, you’ll see followers rarely lead funding rounds and are investing alongside brand name investors 95% of the time. If they do lead an investment, the company is usually led by a well-known repeat founder or a close friend, or the company has already raised 2-3 financing rounds from blue chip investors, which makes leading a Series C+ feel safe.

Founders must understand which kind of VC investor they’re dealing with to have the best shot at closing a funding round.

This is the most common type of VC persona, and the trend-following approach can be quite successful. In fact, there is a whole discipline of public market quant investing called “trend following” that has made this strategy systematic. Despite its strong academic validation as an investment strategy, nobody likes to be called a “follower” and because of this, followers will almost never admit to being followers.

For founders approaching this type of investor, it’s critical to get one of the other three types of VCs on board before reaching out. With that investor’s term sheet in hand, you can then syndicate your round to one or more followers.

#2: The academic

Investors in the academic category have clear theses and do not stray from them. They deeply understand your company’s space and have the knowledge and network needed to conduct due diligence on the business. Academic investors can become extraordinarily valuable thought partners and almost feel like co-founders in how they help you build on your thesis.

Academics are leaders. At the early stage, they are often the first investors or lead rounds largely by themselves. At later stages, they are not afraid to invest at inflection points and often catalyze turnarounds. This information is more difficult to see publicly but easy to detect in conversations. If you suspect an investor may be an academic, ask them what investment theses they’re working on. If the answer sounds vague, they are a follower or a feeler. If it sounds highly specific, they’re an academic.

For example, if you hear, “we’re really interested in how AI may be applied to vertical software,” they are a follower or feeler. If, instead, you hear something that sounds highly specific and even a bit confusing like, “I’ve met every neural chip company to launch over the past seven years and am convinced that analog chips are the only way to apply AI inference at the edge,” they are an academic.

Four venture capital personas (and how to land them) by Walter Thompson originally published on TechCrunch

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How well are SaaS, e-commerce, fintech and health tech startups doing in 2023?

Healy Jones Contributor
Healy Jones runs financial planning and analysis for Kruze Consulting.
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The startup ecosystem has gone through some substantial changes over the last few months, and founders need to understand current conditions to properly plan for the future.

I serve the accounting and financial planning needs of more than 750 startups, which provides me with a unique position to help founders stay informed about the different factors that affect funding, valuations, spending, startup management and other trends in the startup economy.

The data in this report is not from a survey — it’s created directly from anonymized accounting data from more than 700 of our clients. As such, it’s not subject to any optimistic thinking bias that so many startup founder surveys have.

Capital is tightening, forcing startups to react

Low interest rates over the last decade have fueled growth and boosted startup valuations across every industry. But in June 2022, the rate of inflation peaked at 9.1%. In response, the Federal Reserve dramatically increased interest rates, bringing easy access to cheap money to an end.

Startups included in this dataset raised more than $4 billion in 2021 but only in the high $2 billion range in 2022 — a dramatic drop.

The end of easy money is forcing founders to react. Startups that might have easily gotten venture funding in the past are going to have to get creative to extend their cash runway. The charts below contrast startup revenue, spending and runway in 2021 and 2022 in four sectors: software/SaaS, e-commerce, healthcare and fintech.

Startups are extending their runways

In general, the cash position of most startups remains solid, with some important nuances.

We watch the cash position and runway of our startup clients very closely, as their investors (and savvy founders) deeply care about this metric.

The data in this report is not from a survey — it’s created directly from anonymized accounting data from 700+ of our clients.

 

At the beginning of 2019, the average startup had 19.6 months of runway. As of Jan. 1, 2023, the average has increased to 23.4 months of runway. This directly reflects the expense reductions seen in 2022, plus the record amounts of funding raised by startups over the past two years.

However, the average can hide some important nuances.

There are other implications to this careful cash management as well — startups may not be in a position to hire, for example. Another expense that startups are aggressively reducing is rent, choosing to embrace remote work — our clients spent about 7% of their expenses on rent pre-COVID, but we’ve seen that expense drop to just over 3% at the beginning of 2023.

Average/median months of runway remaining.

Average/median months of runway remaining. Image Credits: Kruze Consulting

Early-stage companies are cutting back

While almost all early-stage companies have reduced their burn rates in 2022, fintech shows the greatest cuts to spending, reflecting the downturn in revenues at the end of 2022. Facing an uncertain economic environment and potential fundraising challenges, startups are clearly looking to extend their runways by reducing expenses.

Founders will need to shift from a “growth at all costs” mentality to focus on sustainable growth. That’s going to require careful cash management and cautious spending.

2021 startup revenue

2021 startup revenue. Image Credits: Kruze Consulting

How well are SaaS, e-commerce, fintech and health tech startups doing in 2023? by Walter Thompson originally published on TechCrunch

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Five fundamentals for creating an effective OKR process

Karl Alomar Contributor
Karl Alomar is managing partner at M13. Karl was previously the COO of DigitalOcean, where he helped scale the business from first product over six years and prepared it for its eventual IPO (NYSE: DOCN). During his 20-year operating career, Karl also co-founded and ultimately exited two other technology companies as CEO.
Julia Daniel Contributor
Julia Daniel is operations program manager at M13. Previously, she was an account manager at Condé Nast and an executive assistant at Compass.

Running a business is a lot like piloting a ship; above all, you need to know where you’re going and how you’re getting there. What’s more, you need a crew that knows how to back you up when you need it most.

Objectives and key results, or OKRs for short, are a time-tested methodology for ensuring that you and your company have the smoothest sailing possible. They make it easy to set and track company goals so that your entire team knows what needs to be done, how to do it, and why it matters in the larger vision of your business.

The OKR framework has helped countless businesses synchronize their teams and realize ambitious goals, launching their companies to new heights.

This guide will walk you through the process of implementing OKRs in your own company, making them a value-driving component of your operating system.

In this guide, we’ll cover the five parts of an effective OKR process, including:

  1. The OKR framework.
  2. Setting annual objectives.
  3. Creating an annualized roadmap.
  4. Quarterly planning.
  5. How to establish a rinse-and-repeat cadence.

Every step in this generalized guide will apply to the majority of startups, but some will benefit from additional frameworks that aren’t included. To get started, make a copy of the OKR framework and template. You may want to refer to the overview on slides 3 and 4 of the deck.

Framework and ownership

OKR framework

OKRs have a very specific framework that is integral to the success of the methodology. There are several key components of an OKR process, which will each be explored more deeply later. They are:

  • Annual objectives. These are the big picture items for your business. They’re your ultimate goals, your guiding light. Serving to unite a company’s vision and inspire teams, strong annual objectives are key to a successful OKR framework.
  • Key results are goals that drive progress towards your annual objectives. They are more data-focused, including quantifiable metrics that prove your company is on the right course.
  • Initiatives are the projects and tasks that ladder up towards your key results. In other words, Initiatives are the things that need to happen in order to achieve your key results.

    Annualized road map concept

    If your company is a spaceship, your annual objectives are the destination. Image Credits: M13

If your company is a spaceship, your annual objectives are the destination. The key results are the dials on the console that show your speed and indicate whether you’re on course, and the Initiatives are the actions of the crew and pilot that keep the course steady and the engines burning.

It’s important to understand the differences between each piece of the OKR framework, as it can be easy to confuse them in the beginning. Without a strong distinction between each component, it will be much harder to implement your OKR process successfully.

 

OKRs make it easy to set and track goals so that your entire team knows what to do, how to do it, and why it matters.

 

Establishing ownership

A clear ownership structure is vitally important to the OKR framework. Without a dedicated captain, you’ll find yourself wasting resources and letting details fall through the cracks.

We recommend establishing a point person to take top-down control of the OKR process as early as possible.

This person should interact closely with leadership and understand the big picture of your business. Operations Managers and Chiefs of Staff are typically good choices for this role.

Annual objectives

Annual objectives are the big picture items for your business. They’re ambitious, large-scale goals that you and your team can look to as a reminder of your company’s purpose and direction.

When setting your objectives, ask yourself what will move your company forward and create meaningful change in your business. Which company goals are most pressing? What would you like to see happen in the next year? What core tenants of your model can you expand upon and improve?

What makes a good objective?

Creating a good annual objective may seem simple at first glance, but it takes a bit of practice to get right. Annual objectives must have a specific format to function properly in the OKR framework.

Objectives are:

  • Big-picture goals that relate directly to the most important aspects of your business. They should be doable, but ambitious. There’s nothing wrong with falling a little short – in fact, failing some of your objectives is a sign you’re using them correctly. In a given year, around two-thirds of your annual objectives should be completed.
  • Clear and concise. An annual objective that is more than one sentence long is uncommon. You want a simple, punchy statement that your team will be able to remember easily.
  • Strategic and specific to your business. They should set a destination for your company, the path to which will be plotted by other elements of the OKR framework.

As a counterexample, let’s take a look at what you should avoid when creating your objectives.

Objectives are NOT:

  • One-off tasks that can be completed quickly. They should be ambitious, relevant for the entire year, and push the limits of what you think your business is capable of achieving.
  • KPIs. While objectives can occasionally contain a measurable output, you should steer away from simply stating a metric as your objective. The goal of your objectives is to define the greater purpose of your work without focusing too heavily on data-based measurements.
  • Boring. When you set an annual objective, it should tell a compelling story. The best objectives use language that is inspiring and action-based.

Four is the magic number

Five fundamentals for creating an effective OKR process by Walter Thompson originally published on TechCrunch

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Ask Sophie: Why is there no movement in the June Visa Bulletin for India EB-3?

Sophie Alcorn Contributor
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.
More posts by this contributor

Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

Why is there no movement in the June 2023 Visa Bulletin for India EB-3?

Can’t the Department of State/USCIS track the interfiled applications between EB-2 and EB-3 and move the dates accordingly?

— Curious in Chennai

Dear Interested,

Thanks for your questions! The Visa Bulletin has been very volatile of late and I totally understand your frustration with retrogressions and lack of movement in the employment-based green card categories.

My dream is that any child born anywhere in the world has the opportunity to follow their heart to do things that will make the world a better place – and to that end I’m doing what I can to educate folks about immigration options and strategies to live and work legally in the United States!

Toward that end, let me provide a bit of context about downgrading from an EB-2 advanced degree or exceptional ability green card to EB-3 professionals and workers green card, the process of interfiling, and movement in the Visa Bulletin. Check out this Ask Sophie column in which I talk about the availability of employment-based green cards and the Visa Bulletin.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

Downgrading and interfiling

Downgrading is when an employer files a new Form I-140 green card petition for an employee in a lower employment-based preference category to take advantage of a more favorable priority date in that lower category, which may lead to a green card number becoming available sooner. Most often, downgrading occurs when an employee born in India or China has an approved I-140 EB-2 green card application and is waiting for a green card number to become available. (If the employer, job, location and pay have not changed from the original PERM application, a new PERM application is not required.)

When the downgraded I-140 is approved, the employer can file an I-485 application to register permanent residence or adjust status for the employee as long as the employee’s priority date is current in the downgraded category. The priority date is the date that the U.S. Department of Labor received the PERM labor certification application for the EB-2 or EB-3 green card or the date that U.S. Citizenship and Immigration Services received the EB-1 or EB-2 NIW (National Interest Waiver) I-140 green card application, which do not require PERM.

Ask Sophie: Why is there no movement in the June Visa Bulletin for India EB-3? by Walter Thompson originally published on TechCrunch

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How to approach customer discovery as an early-stage startup (and beyond)

Yousuf Khan Contributor
Yousuf Khan is a partner at Ridge Ventures.
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Throughout my various stints as a CIO, I’ve had a number of opportunities to assist sales teams as they worked to land or close significant deals. But even more frequently, I was brought in to help with discovery — essentially determining whether a prospective customer was a good fit for our product.

In my experience, the sales teams that are most successful have a complete and well-established discovery playbook that allows them to determine whether or not a potential customer is the right customer for the organization to have at its current stage.

For fledgling startups, this is especially critical. New technologies are inherently fluid, and they require customers willing to make a long-term bet. Startups also have to move quickly and efficiently. The discovery process can’t be long and protracted, so its foundations must be sound.

Whether you’re pursuing customer number five, 50, or 500, the process of determining if there’s a fit remains largely the same. Here are some tips for approaching discovery in the early days and as your organization scales.

Start with key questions to determine fit

Determining whether or not your solution or technology is right for a prospective customer is critical. But it’s just as important to know whether or not that customer is a good fit for you. Questions to ask yourself might include:

Whether you’re pursuing customer number five, 50, or 500, the process of determining if there’s a fit remains largely the same.

  • Is your tech displacing an existing product? If so, there’s at least a logical fit from a solutions standpoint.
  • When was the last time they purchased new technology? As a startup, you don’t want to spend months going back and forth before deployment. You want your product in use and generating feedback.
  • Are they forward-looking? Some customers truly want to invest in cutting-edge technologies. Some are just going through the motions because it’s what their bosses expect. Others are just trying to learn, or plan for the future. Figure this out early on.
  • Do they care enough about getting it right to spend the time and money required? New technologies necessitate ongoing investment and two-way participation to improve and evolve over time. Get a sense of how effective they would be as collaborators.
  • Have they been burned in the past? Some companies have a tremendous appetite for new technologies but have simply tried too many that haven’t worked. Find out what other technologies they’ve tested, what worked and what didn’t.
  • Are they the type of customer you’d want other prospects speaking to as a reference? If not, they’re not the ideal early customer.

    How to approach customer discovery as an early-stage startup (and beyond) by Walter Thompson originally published on TechCrunch

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You need to add some friction to your growth funnel

Jonathan Martinez Contributor
Jonathan Martinez is a former YouTuber, UC Berkeley alum and growth marketing nerd who's helped scale Uber, Postmates, Chime and various startups.
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A bit of friction in your growth funnel is a good thing. In fact, I will go even further and declare that some amount of friction in this area is great!

One of the biggest misconceptions when it comes to user experience is that we must eliminate as many questions and barriers as possible to be the gold standard. That is a false conclusion. In fact, without even realizing it, most of today’s hottest startups have added friction to their onboarding flows to improve their users’ end-experiences.

Most startups seek to avoid friction and look to pump their “vanity metrics,” especially signups. It is only later that firms learn that to retain users, the user experience must be personalized to induce their signups to keep jumping back in.

This is no different with B2B products, service-based industries, or any other type of startup. Some friction is great and I’m here to show you the types of friction to consider, how to straddle the fine line between frictionless onboarding and excessively-time-consuming onboarding, and the propensity metrics you will need to track.

One of the biggest misconceptions when it comes to user experience is that we must eliminate as many questions and barriers as possible.

Types of friction

There isn’t a manual that will show you where to add friction to your onboarding flow and growth funnel. Instead, this process involves exhaustive testing to perfect. To start, there are a few major types of friction to consider implementing:

  • Question-based
  • Setup-based
  • Waitlist-based

Below are some examples of how both startups and mature companies leverage friction to improve their users’ experience and north star metric.

Question-based friction

Canva, a graphic design platform that’s experienced explosive growth over the last few years, asks questions about why a user is signing up. Are they a student? A corporation?

This data allows Canva to pre-load the right templates that a student would find useful (presentations, study templates, etc.) versus what a corporation would need (posters, social media, etc.). What at first appears to be a simple onboarding question likely took multiple rounds of growth tests to perfect.

Outside of the onboarding experience, added friction in the form of questions can help startups with growth pillars such as lifecycle and retargeting. Keeping with the same example, now that Canva understands that user X is a student, they can retarget that user with ads centered around improving their grades and performance in school with Canva. Similarly, Canva can send out emails tailored specifically to this user who intends to use the product in their role as a student.

Question-based friction is especially vital for B2B startups who are seeking to narrow in on their ideal customers early on. Are they businesses of five employees in the marketing vertical or perhaps a business of 100 employees in the logistics vertical? These types of findings are expedited and can be tracked in the form of revenue per contract and lifetime value for each business vertical that signs.

Without these questions that add slight friction, it becomes increasingly challenging to double down on segments that can accelerate business growth.

Setup-based friction

LinkedIn has done a phenomenal job with setup-based friction, where they have users add a variety of details about themselves to create their profile. This creates a feeling of satisfaction and users will then desire to add their colleagues to show it off.

You need to add some friction to your growth funnel by Walter Thompson originally published on TechCrunch

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FedNow instant payments are about to unlock fintech investment opportunities

TX Zhuo Contributor
TX Zhuo is the managing partner of Fika Ventures, focusing on fintech, enterprise software and marketplace opportunities.
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The payments industry is on the cusp of a revolution.

Thanks to the Federal Reserve’s new instant payments initiative FedNow, transactions will soon be faster, more secure, and more cost-effective than ever before. This initiative promises to benefit consumers, small businesses, and banks of all sizes. As such, given its potential to completely overhaul the way we make payments in the years to come, many opportunities, as well as challenges, are likely to arise.

Say hello to the tax man

The IRS estimates that nearly two-thirds of income goes unreported due to a lack of third-party reporting. A significant portion of small and mid-size businesses (SMBs), which are highly dependent on hourly workers, typically handle payments via cash and, similarly, consumers do the same with many of their everyday service providers (i.e., gardeners, dog walkers, etc.). The key factor contributing to this is independent contractors’ reliance on instantaneous payments.

The Fed’s initiative has opened up a window for innovation, the effects of which could be realized as early as next year.

With the advent of FedNow, contractors can now get paid immediately, specifically via ACH, which will result in many transactions moving away from cash as the primary medium of payment. Yet, while this is cause for celebration among independent contractors, increased transaction traceability brings with it increased tax reporting requirements and liabilities.

Moving forward, we foresee a heightened focus on assisting independent contractors with tax management navigation, as well as financial planning.

Main Street can now compete with Wall Street

Smaller financial institutions like community banks can now offer the same level of service as larger banks or modern fintech companies, and support further migration to online banking. In effect, this could reduce the need for physical locations, due to the reduction of check flow and improve the margin profile for these smaller financial institutions that have historically shouldered the cost of a large retail footprint.

Given the absence of risk in overdrawing one’s bank account or paying overdraft fees (as banks verify fund levels before initiating instant payments), this will greatly diminish the costs that banks currently incur for settlement fees and fund verification.

FedNow instant payments are about to unlock fintech investment opportunities by Walter Thompson originally published on TechCrunch

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Competition concerns in the age of AI

Henry Hauser Contributor
Henry Hauser is counsel in Perkins Coie’s antitrust and litigation practice groups and has significant experience working on matters related to antitrust investigations and litigation under Sections 1 and 2 of the Sherman Act and Section 7 of the Clayton Act.

Antitrust is the engine of free enterprise: it shapes countless lines of commerce, from tech to toilets, beer to baseball, and healthcare to hardware. Antitrust drives price, quality, variety, innovation, and opportunity.

Today, artificial intelligence is rapidly changing how businesses sense, reason, and adapt in the market. Across every industry, companies are leveraging machine learning to derive valuable insights without extensive employee involvement. But these groundbreaking capabilities are creating an upheaval in how companies engage with competitors and consumers.

Experienced competition and consumer protection lawyers can help companies capitalize on the opportunities AI presents while navigating the terra nova of regulatory and litigation risk. Although it is incorrect to approach AI as a black box, the complexity of AI systems can make reasoning opaque. This means linkages between AI outputs and rational business justifications risk being obscured or even lost entirely.

Yet regulators are unlikely to excuse consumer and competitive concerns merely because an organization cannot explain why certain actions were taken and others were not. Legal exposure exists under the Sherman Antitrust Act, Federal Trade Commission Act (FTC), Robinson-Patman Act, as well as state antitrust and consumer protection laws. By implementing policies and processes that preserve human control and accountability, organizations can minimize legal exposure and avoid unintended consequences.

A proactive and customized approach is critical. AI affects competition and consumers in countless ways, including when used for core business functions.

Pricing

AI helps companies make pricing decisions by responding quickly to instantaneous changes in demand, inventory, and input costs. By synthesizing and summarizing vast amounts of complex data, it can be a significant aid in building and adapting pricing policies. But the outcomes that AI-assisted pricing generates can also be seen as facilitating per se unlawful collusion, such as price-fixing or bid-rigging. According to FTC Chair Lina Khan, AI “can facilitate collusive behavior that unfairly inflates prices.”

These concerns may arise directly or indirectly from using AI to perform a diverse array of activities such as benchmarking, disaggregating information, signaling, exchanging information, or analyzing pricing trends. Pricing algorithms, for example, may raise antitrust issues when competitors use them to enforce an advance agreement, algorithm vendors initiate or organize an agreement, companies apply algorithms to dramatically raise prices, or even when competitors independently employ algorithms that subsequently engage in collusive conduct.

The U.S. Department of Justice’s Antitrust Division highlights that “the rise of data aggregation, machine learning, and pricing algorithms . . . can increase the competitive value of historical data” and warrants “revisiting how we think about the exchange of competitively-sensitive information.”

Purchasing

Competition concerns in the age of AI by Walter Thompson originally published on TechCrunch