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‘Crypto Winter’ and the Future of Sports Sponsorships
Steve Huff
Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
Between 2020 and 2021, a cryptocurrency boom led several crypto-oriented companies to ink deals with athletic organizations like the NBA and UFC. One of the bigger deals was blockchain giant Crypto.com signing a $700 million deal with the Staples Center—one of the world's largest sports and entertainment venues—in Los Angeles. The Singapore-based company also signed agreements with the UFC and Formula 1 for promotion at various sports venues and on athletic equipment.
Crypto.com wasn't the only crypto company to extend its reach into sports or entertainment. In exchange for naming rights to the Miami Heat's arena for 19 years, FTX, a cryptocurrency derivatives exchange, paid $135 million. And in an exclusive deal, Coinbase became the exclusive cryptocurrency exchange for the WNBA, NBA, and NBA G League.
Rolling into 2022, there was little warning that crypto winter was coming.
Winter Is Here
In May, the major stablecoin TerraUSD lost its peg to the US dollar. In one day alone, TerraUSD lost $60 billion in value. After that, major crypto lender Celsius suspended withdrawals, citing liquidity problems. The company followed up by filing for bankruptcy.
They were just among the first dominos to topple in the crypto world, and many others soon fell. As a National Research Group (NRG) report about the state of the cryptocurrency industry noted, the market has gone "down over 70% from the highs it reached towards the end of 2021, and many of the most popular coins are trading at less than half of where they were at the beginning of the year."
As the NRG report also notes, the crypto market has undergone "dramatic" corrections before. Is the current crypto winter that different? And more importantly, will crypto winter freeze the budding love affair between entertainment, pro sports and cryptocurrency?
According to NRG, "crypto winter" has affected the public view of cryptocurrency in various ways.
For example, NRG reports that "70% of consumers feel they have at least a 'moderate' understanding of cryptocurrencies." If accurate, that’s a notable change from a YouGov survey conducted in June 2021 which found that 69% of Americans agreed with the statement, “I don’t really understand cryptocurrency.”
On the other hand, at least 61% of people surveyed said they were aware of the "crypto crash" or "crypto winter." It seems the heavy and negative news coverage of crypto winter over the last three months has considerably boosted consumer awareness—of the crashing market.
NRG notes, "This isn't a technological novelty anymore; increasingly, having some knowledge of crypto and how it works is seen as an element of baseline financial literacy."
Even though consumers have been exposed to a large number of crypto news stories, however, NRG reports that few bother to do deeper research. Bitcoin remains the most well-known name, and consumer awareness of other coins like ETH, Dogecoin or even popular meme coin Shiba Inu hasn't increased much since the beginning of 2022. Even with the media's attention to TerraUSD de-pegging from the dollar (arguably one of crypto's most significant events in recent memory), only 7% of consumers are familiar with the term "stablecoin."
Crypto Sponsorships Continue… Mostly
Crypto.com’s Al D’Agostino gave a succinct response to dot.LA when we reached out for further comment on the company's association with the Staples Center: "Crypto.com remains fully committed to its sports sponsorships. We are well financed and these are multiyear contracts, which will continue to play a crucial role in our mission to accelerate the world's transition to cryptocurrency."
While the New York Post reported in late June that FTX had backed out of sponsorship negotiations with the Los Angeles Angels, the crypto exchange has taken on new sponsorship obligations with a $210 million naming deal for pro esports team TSM, aka Team SoloMid.
But as recently as August 2, the Voyager cryptocurrency exchange backed out of a multi-year sponsorship deal with the U.S. National Women's Soccer League (NWSL). In addition, the exchange is facing bankruptcy after its CEO made millions at the 2021 peak of the cryptocurrency boom.
In comments accompanying its crypto winter report, NRG's Global Head of Insights, Marlon Cumberbatch, said "that the crypto crash hasn't done much to dampen Americans' enthusiasm toward cryptocurrencies – for investors, the recent crash is just the latest in a long series of ups and downs, rather than the start of a terminal decline."
Cumberbatch also offered advice on how companies as big as pro sports teams and small as local businesses might strategize to survive crypto winter. "Start engaging openly and constructively with policymakers," Cumberbatch said, "continue to invest in educating consumers about the technology and promote practical use cases for crypto…"
Cumberbatch also encouraged better cryptocurrency education for everyone. From the C-suite to the penny crypto investor in the street, people need to understand better what they're getting into. "Recent media coverage has done a lot to increase consumer awareness of crypto," he said, "it's not the same as increasing understanding. It's critical that consumers know enough about the technology to be able to make informed decisions and protect themselves from unnecessary risk."
Cumberbatch did not respond immediately after dot.LA reached out for specific comments about crypto company sponsorships such as the Crypto.com and Staples Center deal.
Where Do We Go From Here?
The NRG report on the general state of crypto did not predict doom and gloom but noted that the crypto landscape "is vast, complex, and constantly in flux."
"More than anything else," the report continued, "recent events in the crypto market have made it clear that there's a need to educate potential investors. Before they buy-in, it's vital that consumers understand the technology on more than just a surface level—and that they know enough about crypto to be able to make informed decisions and protect themselves from unnecessary risk. And today's leading crypto firms will have a pivotal role to play in facilitating that educational journey."
Cryptocurrency exchanges have benefited more from their sponsorships than the sponsored organizations, and at minimum, the crypto winter has put a dent in more multimillion-dollar deals for now. But if the National Research Group's report proves prescient, this may be a temporary lull in cryptocurrency-oriented companies paying big money for widespread name recognition. Crypto.com arena is here to stay…for now. If crypto winter gives way to a crypto spring, we could see more Coinbase stadiums and Bored Ape Yacht Club restaurants soon.
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Steve Huff
Steve Huff is an Editor and Reporter at dot.LA. Steve was previously managing editor for The Metaverse Post and before that deputy digital editor for Maxim magazine. He has written for Inside Hook, Observer and New York Mag. Steve is the author of two official tie-ins books for AMC’s hit “Breaking Bad” prequel, “Better Call Saul.” He’s also a classically-trained tenor and has performed with opera companies and orchestras all over the Eastern U.S. He lives in the greater Boston metro area with his wife, educator Dr. Dana Huff.
steve@dot.la
'Our Customer Is Not the Police Department': Ring’s CTO Pushes Back On Privacy Concerns
12:10 PM | June 28, 2021
It's been a busy year for Ring, the home security giant best known for its video doorbells. In January, Ring rolled out the Ring Video Doorbell Wired, its smallest and least expensive doorbell yet. The Santa Monica-based company also unveiled an end-to-end encryption feature that adds an additional layer of protection to videos captured by a user's device. And Ring is now working on additional features, including a pet tracking system and a roving camera that can be remotely activated by customers to investigate disturbances.
But as Ring expands its user base, it is also drawing increased scrutiny from privacy and social justice advocates who are concerned about the Amazon-owned subsidiary's partnerships with law enforcement agencies and reports of racial profiling by users of Ring's Neighbors app.
Ring Chief Technology Officer Josh Roth spoke to dot.la about Ring's product development process and how his company approaches privacy and neighborhood safety.
Since the Amazon acquisition, Ring has developed some integrations with the Alexa system and other Amazon products. Are there ways this relationship may become even closer in the future?
Ring Chief Technology Officer Josh Roth
At the end of the day it comes down to what we call a "better together" story. From our side, we can create better solutions and systems that aggregate devices in your home and give you a better way of leveraging those devices together—whether that's interactions between an alarm system and a light, or your Alexa acting as a sensor for other things. There's a tremendous amount of work to continue to iterate and improve on that. No doubt about it, there will be future integrations that continue to enhance that experience.
How much do you see Ring as a smart home company vs. a home security company? Are there ways you might use the tech stack you've developed in ways that move away from the home security focus you've had thus far?
Our mission is to make neighborhoods safer. I don't see that mission changing. We are a safety and security company. With that being said, things you may not think of as safety and security at the end of the day can become part of a safety and security system. An example of that would be anything that can give awareness about the state of a home. Your thermostat has home and away modes so that it can turn itself hotter or cooler depending on whether someone is at home. If you can integrate that into an IoT system to leverage that awareness and tie it to your alarm system, there's tremendous benefit for your safety and security. There's not always this cut-and-dry IoT space and safety and security space. The reality is that if you do things correctly, they actually merge into one.
And of course as more of these functions become automated, there's going to be growing concern about security. There have been some horror stories about hackers being able to spy on families through their Ring systems. How are you alleviating concerns that someone might gain access to a customer's footage?
Privacy and security are really foundational to everything we build. We start with a security and privacy-first mindset and then we try to introduce those features to our customers, and we try to do it in the quickest fashion possible. If you take a look back historically, Ring was the first in the safety and security space to require two-step verification; we were the first to introduce end-to-end encryption. Ring has never been breached, but we put things in place constantly to improve on security. Where we have to, we put in tighter controls. But when we do it, we make it extremely transparent to the customer. From my perspective, security is of the utmost importance, and I think everyone at Ring and Amazon would tell you the same thing.
You rolled out the end-to-end encryption feature earlier this year, but it's turned off by default. Why make it an opt-in setting rather than an opt-out?
End-to-end encryption implies that there's a key that can only be used by a very specific system or user. It requires us to actually turn off some features that our users actually like to have, because those keys can't be shared in all situations. For example, with the iteration of end-to-end encryption out there today you can't have a shared user. The reason for that is key management and how you would actually hand those keys off that shared user for a temporary or permanent amount of time, and which videos you would give access to. We opted to give something that was the most stringent control we could at launch, and to give the users asking for that the ability to turn it on—with the intent of iterating over time and adding more features like shared users.
There's a handful of items like that. Another use case would be a third-party integration. If you use Alexa, for example, to do video recall or to see who's at the front door, they don't have the keys because we don't have a method to pass the keys from a user's phone to Alexa devices. It would break our user promise around encryption and privacy. We really wanted to focus on the beginning experience of end-to-end encryption being as tight as we could, and then adding to it over time based on customer feedback.
How do you balance privacy concerns with the desire to give customers access to new features?
The baseline default experience that a user gets is the highest level of security that can be provided, and we constantly iterate and improve on that. I look at end-to-end encryption as an advanced security feature. I use the analogy of a hotel room. You have the top lock and you lock the door and you put the sign on the door. You may find you don't necessarily need all that, but it gives you peace of mind. So we want to offer that to our users. But the default standard encryption we provide still provides encryption in transit and encryption at rest. And we always examine it to see if we can improve on that. There is a tradeoff between end-to-end encryption and some of the features we know our users like. But I can tell you as a promise from Ring: We will always push toward providing more security and more options for our users with increased transparency. Any time we add something new they are going to have awareness of it. Any time we give them something around security, we're going to give them a choice to enable those items or not.
You mentioned that Ring's goal is to make neighborhoods safer. Is there an evaluation process as you add features to ensure that you are meeting this goal?
We believe in the power of the community and the power of the neighborhood. We also believe in the privacy of the neighborhood. In addition to privacy shutters on our cameras, we also have privacy zones. When you set up a motion zone, you can block out certain areas to respect the privacy of your neighbors if you choose to do so. Again, it's all put in the hands of customers for customer choice.
We also work with public safety agencies. We've been a great resource for COVID-19 information. We work with local fire and police departments. What that means is they have the ability to request videos (through the Neighbors app). They provide requests in a public way so that everyone is completely aware and it's transparent to the entire community what's being asked of them.
Those partnerships with law enforcement have been controversial. Are there ways you approach product development to ensure devices aren't being used as tools for mass surveillance?
Everything we do is customer first. Our customers are the neighbors who live in those neighborhoods. Our customer is not the police department. It's not the fire department. Our customer is the user who has a home, who's putting a Ring doorbell on their house. We start with that premise, and we build everything around that from a privacy and security perspective. Any time that there's anything involving a public safety agency, users have a choice and it's entirely up to them when and if they share information, when and if they share videos, when and if they work with those agencies. We've seen nothing but positive things come out of that. Kidnappings have been solved because of people working with neighborhood agencies. Neighbor advocates are helping track down things like package theft. We're big believers in people working together. We're big believers in customer choice.
Is there a limit to customer choice? Ring has said in the past it won't use facial recognition technology. What if customers want it? And are there other features that may be off the table?
It's a hard question to answer because I can't predict the future of what I haven't built yet. What I can tell you is we don't use facial recognition on any of our devices or services and we will never sell facial recognition technology to law enforcement. Privacy is so important to us. Anything we build will include these strong privacy protections for our neighbors.
We go through privacy reviews, legal reviews, customer reviews, and internal discussions. We make decisions as to whether we think the items we want to build meet the mission to make neighborhoods safer. Is it in the customer's best interest? Is it providing additional privacy, security, and transparency to the customer? If we can say yes to all of those things, I think we are able to build them. If we have question marks, we don't build them.
This interview has been edited for length and clarity.
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Watch: Exploring Relativity Space With Tim Ellis and Spencer Rascoff
05:00 PM | April 28, 2020
dot.LA Co-founder and Executive Chairman Spencer Rascoff speaks with Relativity Space Co-Founder and CEO Tim Ellis about 3D printing in manufacturing, going to Mars, and the future of the new space race in the latest Strategy Session.
Strategy Session: Exploring Relativity Space With Tim Ellis and Spencer Rascoffwww.youtube.com
Tim Ellis
Tim Ellis is the co-founder and CEO of Relativity, the first autonomous factory and launch service for rockets. Relativity recently created the largest robotic metal 3D printer in the world and has tested our entirely 3D printed Aeon rocket engine over 180 times. Previously responsible for bringing metal 3D printing into Jeff Bezos' Blue Origin, and a propulsion development engineer on Crew Capsule RCS thrusters, BE-4, and New Glenn. Alumni of USC and played a leadership role in launching the first student designed and built rocket into near space. Testified to the US Senate on commercial space policy and is the youngest member on the National Space Council UAG by nearly 2 decades, and directly advises the United States White House on all space policy. Has spoken at numerous conferences including CBInsights Aha! and TEDx. Relativity is backed by Playground Global, Social Capital, Y Combinator, Mark Cuban, USC, and Stanford.
Spencer Rascoff
Spencer Rascoff is an entrepreneur and company leader who co-founded Zillow, Hotwire and dot.LA, and who served as Zillow's CEO for a decade. He is currently executive chairman of dot.LA and a board member at TripAdvisor. In the fall of 2019 Spencer was a Visiting Executive Professor at Harvard Business School where he co-taught the "Managing Tech Ventures" course. In 2015, Spencer co-wrote and published his first book, the New York Times' Best Seller "Zillow Talk: Rewriting the Rules of Real Estate." Spencer is the host of "Office Hours," a monthly podcast on dot.LA featuring candid conversations between prominent executives on leadership, diversity and inclusion, and startups.
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Annie Burford
Annie Burford is dot.LA's director of events. She's an event marketing pro with over ten years of experience producing innovative corporate events, activations and summits for tech startups to Fortune 500 companies. Annie has produced over 200 programs in Los Angeles, San Francisco and New York City working most recently for a China-based investment bank heading the CEC Capital Tech & Media Summit, formally the Siemer Summit.
http://www.linkedin.com/in/annieburford
annie@dot.la
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