Can Anyone Fix the DMV?—Data Sheet

In 2014, when he was lieutenant governor of California, Gavin Newsom wrote a pretty good book called Citizenville: How to Take the Town Square Digital and Reinvent Government. It was chock-full of helpful suggestions on how to bring tech-industry innovations like Yelp reviews and DARPA prizes to the government sector.

One of Newsom’s passions in the book was the Department of Motor Vehicles, that hated but necessary agency that makes folks waste their day waiting to get a driver’s license. Newsom pined for the day when different DMV offices could compete with each other for higher user ratings in the hope that the friendly rivalry would raise everyone’s game. “All of this would be incredibly easy and cheap to set up, so whatever improvements it brought would be well worth the relatively small investment,” he wrote.

Newsom is the governor of California now, and he still has Silicon Valley innovation on the brain. This week he announced the hiring of a former Cisco executive, Steve Gordon, to run the state’s DMV. It turns out California’s DMV is a mess, and what’s needed is a hardware fix-it person, not a bunch of user-friendly gimmicks. (Newsom was understandably impressed with how the state found Gordon: “He just randomly went on the website and applied for this,” the governor said at a press conference. “I love that.”)

There’s nothing about repairing California’s DMV that is easy or cheap. Wait times are horrendous. The agency botched voter registrations for 23,000 motorists last year, according to The San Francisco Chronicle. In response, Newsom organized a “strike force” and hired consultants at McKinsey.
Technology people think they can solve every problem. Gavin Newsom has turned to Silicon Valley to fix his state’s broken DMV. It’s just not the solution he once envisioned.

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Two fine reads about the technology industry appear on Fortune.com today, both on subjects that have appeared in Data Sheet. Phil Wahba breaks down the impressive turnaround at Etsy under CEO Josh Silverman. And investment guy Adam Seessel explicates the risks of buying shares of Chinese Internet juggernaut Tencent. I recommend both articles.

Adam Lashinsky

On Twitter: @adamlashinsky

Email: adam_lashinsky@fortune.com

NEWSWORTHY

Back from the drawing board. The Fold is back–the Samsung Galaxy Fold, that is. The company says it worked out the problems that forced a delay in the sale of the Fold back in April and now expects to offer the high-tech, high-priced device in September.

Working my way back to you. On Wall Street, Facebook faced the music and Tesla flat out bombed. After news of the $5 billion hit from the Federal Trade Commission, Facebook said its second quarter revenue rose 28% to $16.9 billion and average daily users increased 8% to 1.6 billion. Shares of the social network, already up 56% in 2019, climbed 2% in premarket trading on Thursday. At Tesla, revenue rose 59% to $6.3 billion but an adjusted net loss per share of $1.12, while down 63%, was far worse than analysts expected. Shares of Tesla, already down 20%, lost another 12% on Thursday morning. PayPal's revenue was up 12% to $4.3 billion as total payment volume grew 24% to $172 billion. But the company said it would only grow 14% to 15% this year instead of 16% to 17% and PayPal's stock, previously up 44%, lost 4%. Phew, that's a lot of numbers.

The bon mot network. The Trump administration has some more puts and takes for the tech industry after announcing its big Justice Department antitrust probe. Treasury Secretary Steven Mnuchin went on CNBC on Wednesday to blast Amazon because it "destroyed the retail industry across the United States." He declined to blast Google over its work for China, however, saying he'd found nothing that "raises concerns."

We are the dreamers of dreams. Chinese ride service Didi Chuxingcreated a new joint venture with Toyota that will use the automaker's "Mobility Services Platform" connected car offering for maintenance, insurance, financing, and other features. Toyota is also investing $600 million in Didi. Meanwhile, U.S. ride service Uber lost two board members. Arianna Huffington and Matt Cohler are stepping down, the company said on Wednesday.

That's not what's supposed to happen. A planned, short test of SpaceX's big, silver rocket, the Starhopper, had to be aborted on Wednesday when the craft failed to lift off its pad in Boca Chica Beach, Texas. Flames were seen shooting out of the top of the rocket, which is a prototype of a craft to eventually carry humans to Mars.

FOOD FOR THOUGHT

The explosion of machine learning advances in recent years has led to all manner of artificial intelligence apps, like the image recognition software that powers photo programs to identify kids at different ages. But as Harvard Law professor Jonathan Zittrain points out in an essay in The New Yorker, we often have no idea how and why the machine learning-fueled apps work. The mystery, which he calls an intellectual debt, could lead to major problems, Zittrain warns:

As knowledge generated by machine-learning systems is put to use, these kinds of gaps may prove consequential. Health-care A.I.s have been successfully trained to classify skin lesions as benign or malignant. And yet—as a team of researchers from Harvard Medical School and M.I.T. showed, in a paper published this year—they can also be tricked into making inaccurate judgments using the same techniques that turn cats into guacamole. (Among other things, attackers might use these vulnerabilities to commit insurance fraud.) Seduced by the predictive power of such systems, we may stand down the human judges whom they promise to replace. But they will remain susceptible to hijacking—and we will have no easy process for validating the answers they continue to produce.

IN CASE YOU MISSED IT

Tinder’s New Safety Feature Helps LGBTQ Travelers Stay Safe in Unfriendly CountriesBy Alyssa Newcomb

Smartphone Maker Xiaomi Celebrates Its Global 500 Debut By Awarding Employees $24 Million In SharesBy Eamon Barrett

HBO Max Will Offer Live News and Sports—EventuallyBy Chris Morris

How OpenAI, Founded to Keep Powerful A.I. Out of Corporate Hands, Got Into Bed With MicrosoftBy Jeremy Kahn

Apple Has New MacBooks Planned for the Fall. Here Are 5 Things They Should HaveBy Don Reisinger

Exclusive: Comcast-Championed Home Insurer Hippo Hits $1 Billion ‘Unicorn’ ValuationBy Robert Hackett

BEFORE YOU GO

The annual Tour de France bike race has been particularly unpredictable and fun to watch this year. With just a few stages left, albeit mostly in the high Alps, Frenchman Julian Alaphilippe remains in the lead. No home country hero has won the race since Bernard Hinault captured the maillot jaune in 1985. After writing up Data Sheet, I'll be tuning in to today's competition, which includes three big peaks, to see if Alaphilippe can hang on.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.