Last week, news broke that IT services firm Wipro – which employs 250K+ people worldwide – had fired 300+ people in recent months for moonlighting for competitors. In the world of software engineering, the practice of working multiple “full-time” jobs is an open secret. While few are working more than two jobs, one engineer reported working 9 jobs for a total of $1.5M in aggregated salary. Others have switched jobs without telling their first employer, continuing to collect a paycheck until they are fired.

One survey found that 37% of remote workers have a 2nd “full-time” job – and 47% of this group are working 40 hours or less across both jobs. And it’s not just making ends meet – 45% of remote workers with two jobs are making $100K+ at each job. For every employee that is working two or more full-time jobs, there are probably even more that would like to. The r/overemployed Reddit, for instance, has 96K members and growing. There’s even a growing industry with resources to support “overemployed” workers – including tools like “mouse jigglers” (digital and mechanical), multi-device computer peripherals, and legal services.

Working more than one full-time job can be legal (assuming no employment contract or noncompete agreement barring the practice), albeit in a murky ethical area. At a time when layoffs are in the headlines every day, some workers view a second job as an insurance policy. On the other hand, employers are concerned not just about productivity but about data leakage, cybersecurity gaps, and exposure of trade secrets.

In 2021, 28M Americans – 18% of the working US population – worked primarily remotely, more than triple the norm pre-pandemic. Remote work persists in 2022 – from Apr-Aug 2022, 30% of all work days in the US were done at home, vs. 5% pre-pandemic. This was reasonably steady during the period even as the world opened up. A full transition back to 5 days a week in the office has become increasingly unlikely.

The growth of remote work has created a lot of hand-wringing and “productivity paranoia” among executives. Remote work options have become table stakes for attracting talent in certain fields like engineering. But one Microsoft survey published last week found that 85% of business leaders believe “the shift to hybrid work has made it challenging to have confidence that employees are being productive.” It reinforces an earlier Microsoft study from Sep 2021 of 61K+ employees that found that collaboration declined as a result of remote work, which was expected to impact productivity and innovation in the long run.

Some companies like Goldman Sachs, Morgan Stanley, Comcast, Apple, and the New York Times are responding by trying to get workers back into the office. Tougher policies have brought office use (based on security swipes) up to 47.5% of pre-pandemic levels as of earlier this month – a post-2020 relative high.

Today, 60% of large companies are using monitoring and surveillance tools. A growing set of vendors, including Monitask, ActivTrak, Teramind, Prodoscore, Enaible, Upwork’s Work Diary, Time Doctor, Hubstaff, Interguard, BambooHR, Controlio, Insightful, and others have emerged with monitoring solutions. In some instances, these tools can be switched on without employees’ knowledge (e.g. Insightful).

The techniques include tracking mouse and keyboard activity; text analytics on emails and chat messages; logging phone calls and web history; tracking meetings on calendars; monitoring time spent in different software applications; location tracking; analyzing data on engineering teams’ activity; team and individual productivity scores; video analytics of facial expressions during meetings; and even periodically taking screenshots/video of faces or screens. Some of the most intrusive tools even allow managers to read employee emails, see what they are typing, watch them on-camera and listen through the microphone.

Employers can run into legal issues with “maximalist” approaches to monitoring. Some states like New York, Connecticut, Delaware and Texas have passed laws requiring that employers disclose monitoring. The EU bars excessive workplace monitoring even with employee consent. In California, the exemptions in the state’s privacy acts for employee personal data are set to expire in Jan 2023. The FTC, which has put priority on privacy, is lately targeting “commercial surveillance” – which includes workplace monitoring – for rule-making.

How employee-monitoring data is used can also introduce other kinds of legal risk. Some employers are paying staff based on monitoring data (which may not capture offline or thinking work), resulting in labor lawsuits. Automated biometric tools can be biased, resulting in discrimination against certain demographics.

On the other side, remote workers – 87% of whom report being productive at home – are concerned about their boss’s perception of them. In a survey released this week, 68% of US workers were worried that their managers view in-office workers as high-performing and remote workers as lazy. Many are engaging in “productivity theater” that causes them to spend an extra 5+ hours per week just to highlight their online presence and showcase activity – ironically making them less productive and more burnt out.

There is a general agreement that both employers and remote workers stand to benefit if there are solutions that can walk the fine line between optimizing for productivity while affording workers flexibility and quality of life. Ultimately it comes down to trust – that both sides are acting in accordance with the employer-employee compact, even when no one is watching. Given that trust – and distrust – tend to be self-fulfilling, the real answer may be in building trust through offline interactions first. It turns out that people generally only want to come into the office to see each other anyway.

Jun 24 2022 (3 Shifts): The FTC, now with its Democratic majority, is kicking off a busy summer

Nov 12 2021 (3 Shifts): Remote work is reshuffling urban populations

On Tuesday, Cathie Wood’s ARK Investment Management announced the launch of the ARK Venture Fund. For ARK – known for its technology ETFs (exchange-traded funds) – the venture fund will be its first toe-dip into private investments. The fund will invest in the equity securities of 25-50 companies, focusing on AI, autonomous vehicles, fintech, DNA sequencing, robotics, and 3D printing. It will target 70% private, 30% public companies, and 0-25% early-stage, 50-80% late-stage investments. As a public-private crossover fund, ARK Venture Fund will be able to hold onto investments even after their IPO. Current portfolio holdings include Flexport, Epic Games, Freenome, Chipper Cash, and MosaicML.

Notably, ARK Venture Fund will be accessible to individual investors – including through their traditional and Roth IRAs (individual retirement accounts). (Venture capital funds are typically accessible only to wealthy accredited investors and qualified purchasers.) Individual investors with a minimum of $500 will be able to invest in ARK’s new fund through a16z-backed startup Titan’s retail investment management platform.

As an evergreen closed-end interval fund, ARK Venture Fund will only allow investors to withdraw funds on a quarterly basis and capped at 5% of net assets – though this is still more liquid than traditional venture capital, which locks up funds for years. ARK will charge a 2.75% flat management fee, with total estimated expense ratio of 4.22%. (Typically, interval funds charge an average of 1.4% and venture funds charge 2%.) Unlike a traditional venture fund, ARK Venture Fund will not charge the normal 20% carry on generated profits.

The launch follows a flurry of recent news about investment giants launching funds accessible to individual investors. This past month saw Titan partnering with Apollo Global Management to launch a real-estate fund (1.5% annual fee) and Carlyle Group to launch a private-credit fund (1% annual fee, plus 15% incentive fee once 6% hurdle is reached) – both open to individual investors. (Titan also charges on top a 1% annual fee for $10K+ deposits or $5/month for <$10K deposits.) Titan – which offers its own products as well as products from “top-tier” managers on its mobile-first platform – plans to introduce more asset classes/funds in partnership with other investment managers “in the coming months.”

KKR is also offering a slice of its $4B Health Care Strategic Growth Fund II (HCSG II) to individual investors – albeit very-high-net-worth qualified purchasers with $5M+ – on the Avalanche public blockchain. It has partnered with digital-assets investment platform Securitize to launch a tokenized feeder fund with an interest in HCSG II. It is the first time that KKR has made an alternative-investment strategy available as a digital asset in the US. Through this tokenization, individuals will be able to invest smaller amounts than what is typically required in such a fund. Investors will need to hold the investment for a year, after which they can sell to others on the Securitize-managed secondary market.

It’s part of a broader trend of investment giants opening up alternative investments to individual investors who are comfortable with higher fees and non-daily liquidity structures. According to Steffen Pauls, CEO of PE platform Moonfare, “All the big players are working on strategies to hit the retail market. In five or 10 years, private equity will be for most people as common and as accessible as public markets.” KKR, for instance, expects 30-50% of its annual funds raised to come from high-net-worth individuals. Apollo is aiming for $15B annually raised from individual investors by 2026. Blackstone is on its 4th fund targeted at individual investors – its first 3 funds currently attract $4B-$5B of inflows per month. Ares Management is on its 2nd fund, and Carlyle Group is raising 10-15% of its capital from individuals.

The individual-investor segment represents $80T+ in investible assets that can keep the private-equity class growing – and only 1-2% of that is invested in alternative investments today. One of the draws of the segment is that investment firms can offer evergreen funds where the capital is never fully returned to investors. These “semi-liquid” funds allow investors to withdraw more readily than a typical private equity fund but cap how much an investor can withdraw within a given period. In the meantime, the investment manager can enjoy ongoing and growing management fees.

There are a growing number of platforms oriented towards allowing individual investors access to alternative investments such as venture capital and private equity. In addition to Titan (55K investors, $750M+ in assets), there’s Moonfare (3,000+ investors, $2B in assets); Wealth Club (9,600 investors, $1B+ in assets); YieldStreet (400K+ investors, $3B+ in assets); Alto (20K investors, $1B in assets), and Allocate (200+ investors, $125M in assets). There are also new venture firms like Sweater Ventures that are trying to pool individual-investor capital into their own evergreen funds.

Over the past couple years, individual investors have taken losses in almost every way losses can be taken – on investment-grade bonds, SPACs (special-purpose acquisition companies), cryptocurrencies, options, ETFs, and meme stocks, to name a few. While individual investing isn’t going away, the downturn over the past year may result in a renewed respect for branded expertise alongside the flight from risk. Unfortunately for democratization, however, many (though not all) of the large alternative-investment giants largely have their eye on high-net-worth individuals – not mom-and-pop investors.

Sep 24 2021 (3 Shifts): Commission-free trading’s primary business model could be on the chopping block

Dec 18 2020 (3 Shifts): Are Robinhood and the Fed propping up bubbles?

Cryptocurrency-based crime reached a record high in 2021. That year, $14B+ in cryptocurrency were sent to crypto addresses associated with illegal activities – including stolen funds, scams, ransomware, malware, terrorism financing, and darknet purchases. As of early 2022, illicit addresses held an estimated $10B+ in cryptocurrency, most in wallets associated with theft.

With the growth in crypto-associated crime, there has come increased enforcement by regulators. In 2021, the IRS’ Cyber Crime Unit (CCU) seized $3.5B from crypto addresses associated with nontax-related illegal activity. 2021 also saw the US Department of Justice (DOJ) seize $56M in the BitConnect Ponzi scheme investigation, and recover $2.3M of the $4.4M paid to the DarkSide ransomware group that attacked the Colonial Pipeline. In Feb 2022, the DOJ seized $3.6B in cryptocurrency linked to the $4.5B hack of virtual-currency exchange Bitfinex in 2016. And earlier this month, Chainalysis reported that the US government had recovered $30M+ from the North Korean Lazarus Group’s $625M Axie Infinity hack.

Up until recently, criminals were often able to rely on services that helped them conduct transactions anonymously. Instead of using popular centralized crypto exchanges such as Coinbase, Binance, and Gemini that comply with anti-money laundering (AML) and “know your customer” (KYC) laws, criminals are using decentralized exchanges/bridges (e.g. Uniswap, PancakeSwap, dYdX, Kyber) for peer-to-peer transactions that dodge AML/KYC compliance. They also use crypto-mixing services like Tornado Cash, Blender.io, and Wasabi Wallet to mask the source of the crypto – Tornado Cash alone has been connected to over 7 major hacks and billions of dollars laundered. Privacy-focused cryptocurrencies such as Monero, Grin, Zcash, Lightning Network, and Polkadot are also popular for criminal activities because they obscure IP addresses and encrypt transactions.

A typical crypto-laundering scheme might route the stolen or illicit cryptocurrency to intermediary wallets; then “mix” the cryptocurrency in batches using a crypto-mixing service; swap the currency for bitcoin; mix the bitcoin in batches using a crypto-mixing service, and finally deposit the laundered bitcoin in a crypto-to-fiat service to be cashed out. While the transactions themselves are often transparent and traceable on public blockchains, it can be challenging to map them to real-world entities. The laundering of funds from a single hack might use 12K+ crypto addresses.

Vendors with technology solutions have emerged to help governments and corporations trace illegal crypto transactions. Chainalysis is one of the best-known. It has mapped 1B+ crypto addresses taken from public blockchains and its network of 700+ customers (including public-sector entities, crypto exchanges, and banks) to 16K real-world entities. Using machine learning and other analytical processes, Chainalysis maps and clusters wallets to enable real-time monitoring of crypto transaction flows using its “Know Your Transaction” (KYT) tool.

Chainalysis monitored $10T+ in transactions in 2022 and, using its Reactor forensics tool, has helped government agencies recover $9B+ in funds from crypto hacks, scams, and other illegal activities. Its tool can “de-mix” transactions and identify patterns in privacy coins like Monero. According to Chainalysis, it’s been involved in the investigations of nearly every crypto crime of significance. With a Chainalysis map in hand, law enforcement can seek de-anonymized records on known illicit accounts (e.g. consolidation addresses) from compliant centralized exchanges or freeze the funds. Chainalysis raised $170M in May 2022 at a $8.6B valuation, and says it is “basically doubling” its revenue every year.

We can expect to see continued push-and-pull as criminals seeking new ways to veil their transactions while agencies, institutions and vendors seek to unmask them. Chainalysis is the market leader but isn’t the only KYT vendor out there – there’s also CipherTrace (acquired by MasterCard in Sep 2021), Elliptic, TRM Labs (backed by Amex, Visa, Citi, Block, and PayPal), Clain, and ComplyAdvantage.

“Follow the money” takes on new meaning in the world of crypto but similar principles apply. Where we’re heading is that crypto transactions will have real-world consequences beyond just seizure of the funds. Earlier this year, the Russian FSB raided the operations of the REVil ransomware gang, following arrests in Poland and Romania. One Canadian involved in crypto-supported ransomware attacks was extradited to the US. The US Treasury has sanctioned crypto-mixing services Tornado Cash and Blender.io, as well as multiple Russian crypto exchanges and hundreds of crypto addresses. Where individual actors are outside US jurisdiction, the US government has “named and shamed” them – as in the case of a Venezuelan doctor and ransomware mastermind this year.

We can expect a continued ramp-up in enforcement. Earlier this year in the US, the FBI launched a new unit focused on crypto-supported crimes. More recently, the Justice Department formed a network of 150+ federal prosecutors as part of its growing focus on crypto-supported crime. Despite all the headlines, illicit transactions’ percent share of all crypto transactions has actually been declining – which is good news for almost everyone with a stake in crypto.

Aug 19 2022 (3 Shifts): The vulnerability of cross-chain bridges

Jun 17 2022 (3 Shifts): Healthcare providers are now the leading target for cyberattacks