Convene uses landlord partnership model to outclass WeWork

Recent reports that Softbank may take a majority stake in WeWork has added fuel to the already hot market for start-ups in the workspace and property tech sectors. One of the more compelling companies that stands to benefit from this trend is New York-based Convene. Started by co-founders Ryan Simonetti (CEO) and Chris Kelly (President), 500-person strong Convene has distinguished itself as a top-tier provider of meeting, event and flexible workspace offerings in its 21 locations. But unlike freelance-heavy WeWork and other co-working companies who cater to 1-10 person companies, Convene puts owners of Class A office buildings at the center of its business model. The goal is to help these landlords provide tenants with the high-end of amenities of, say a unicorn tech startup.

On the back of the company’s recent $152 million Series D, Simonetti and Kelly were eager to discuss new initiatives including a co-branded turnkey workplace and amenity solution and their plans to launch additional Convene locations, including London. They also elaborate on how they plan to benefit during the next recession and open up on their differences with category giant WeWork. Finally, they explain why paintings by renowned artists including Picasso and Calder are tucked into corners of the company’s first, soon-to-be-opened members club at Rockefeller Center.

Gregg Schoenberg: Ryan and Chris. It’s great to see you both. To kick things off, I want to establish that Convene is not a typical startup in that you’ve been around for about nine years.

Ryan Simonetti: Yes, is that called being washed-up in the start-up world?

GS: Not necessarily. Tell me about where the idea for Convene came from?

RS: Chris and I met during our freshman year orientation at Villanova University, ended-up pledging the same fraternity and spent a lot of time getting to know each other. From the beginning, we were probably two of the more entrepreneurial guys at Villanova. We sold used textbooks, spring break trips, parties into Philadelphia. If there was a way to monetize something in college, we were the two guys that were trying do it.

GS: Two scrappy guys from Villanova.

RS: Yes, we’ve always joked that we were probably the only kids at Villanova who didn’t have our parents’ credit cards.

GS: So years later, what was that catalyzing moment where you said, “Okay, here’s the idea for Convene”?

Chris Kelly: I remember two phone calls from Ryan that represent the earliest seeds of Convene. The first phone call was in the middle of the financial collapse, and in that phone call, Ryan said, “We’re about to witness the largest shift of wealth that the world has ever seen and we have to figure out how to be on the winning end of that.” Then a few weeks later, Ryan called me up and introduced the crazy idea for Convene.

GS: And what was that specific pitch?

CS: He walked me through the Grand Hyatt in Midtown Manhattan and said, “Look at the way these guys are doing business. This is a $60 million a year catering and meetings operation that was in essence being outsourced to hotels.”

“Just like Airbnb would tell you that their primary stakeholder is the homeowner, or OpenTable would tell you the primary stakeholder is a restaurateur, we view the building owner as our primary stakeholder.”

GS: And you’re saying hotels weren’t doing a great job?

CS: Hotels simply didn’t have the sensibility about what people really need in a business environment. They treated a shareholder meeting like a wedding with a projector. And we saw a huge opportunity to create spaces that met enterprise workplace requirements.

GS: So fast forward to today and tell me exactly what Convene is, because I think sometimes people struggle and just say, “Well you’re a WeWork competitor on the premium end.”

RS: We partner with Class A building owners to design places where people can meet, work and be inspired. It’s not any more complicated than that.

CS: To build on that, you could say that we’re essentially allowing landlords to offer Googleplex-style workplace experiences.

RS: That’s a big challenge for even large organizations. Look at Google, Facebook or JP Morgan. These companies can deliver an amazing experience at their corporate headquarters location. But in their smaller offices, it’s really tough to deliver a corporate HQ experience if you only have five, ten, or 15,000 square feet. You can’t build the kitchen infrastructure, or the gym, or all of those other things. So to Chris’s point, we’re democratizing access to that experience, and doing it with the landlord as the key partner.

GS: So the landlords are the core client?

RS: Just like Airbnb would tell you that their primary stakeholder is the homeowner, or OpenTable would tell you the primary stakeholder is a restaurateur, we view the building owner as our primary stakeholder. And what we’re helping them do is respond to the changing demands of today’s tenant, who want increased flexibility and better agility to adapt to change.

GS: I take it marrying technology infrastructure to the physical spaces is key to that, which is why you recently bought Beco. What exactly do they do?

RS: Beco is a workplace analytics platform that’s using sensor-based technology to help us, our landlord partners and our corporate clients better understand the way that people are actually interacting with space and services.

“But what really differentiates us strategically is that we’re not trying to build our own supply chain or our own inventories.”

GS: As you contemplated that acquisition, were you worried that it might be perceived to some of your traditional clients as Big Brothery?

RS: Look, everyone today is concerned about data privacy, and rightfully so. The way that the technology actually operates is that the actual users are anonymous to us.

GS: So is that data anonymous, or anonymous anonymous?

RS: Anonymous anonymous, meaning all we’re capturing is a random ID assigned to a phone, and that ties back to the sensor and data analytics platform.

GS: Do you have to opt in?

RS: It’s all opt in.

GS: Okay, I want to turn to the big gorilla in the broader flexible workspace category, because right or wrong, everyone, including Convene, gets compared to WeWork.

RS:Look, if we think about the macro trends that are shaping and changing not just the way that we work, but also the way that we live and travel, I would argue that WeWork and us have a similar view of the world and the future. But from a business model perspective, the quality of the product that we’ve built, the level of service that we deliver, the strategic nature of our partnerships with building owners, I don’t view us as directly competitive.

GS: I appreciate that WeWork ultimately caters to smaller sized end-users than Convene, so in that way you’re different. But it’s also true that even though Red Bull and Coca Cola are different drinks, you’re not going to drink a Coke and a Red Bull at the same time.

RS: From an analogy perspective, there’s a difference between Planet Fitness and Equinox, right? Would you argue that they’re competitive? Maybe. But the way I think about office real estate is Class C, Class B, Class A. Convene is a Class A partner to landlords.

GS: Right, but WeWork, with all that current and possibly future cash from Softbank, is moving upmarket.

RS: Sure, as they move more into enterprise and upmarket, of course, they’ll be competitive. But what really differentiates us strategically is that we’re not trying to build our own supply chain or our own inventories. We’re partnering with the existing supply chain to create a new category of supply that speaks to the collective demand from our customer demographic.

GS: As a service provider, I get that. But what happens when the next recession comes —

RS: — Yes, by the way, we’re excited for the next one.

GS: Because the knock on WeWork and other companies in the broader sector is that when the recession hits, the blood will hit the fan because of those short-term tenant leases.

RS: Well, right now, you see a lot of capital flowing into the sector and you have platforms that probably shouldn’t be here as well.

GS: Let’s take Brookfield. WeWork has a relationship with Brookfield. You guys have a relationship with Brookfield. But I think the difference is this: if bad things happen in the economy, they have to hope that WeWork is going to effectively manage those short-term lease obligations. From my outsider’s perspective, that looks to me like a counterparty relationship. But in Convene’s case, it looks more like an aligned partnership. After all, Brookfield, as well as Durst and RXR, are on your cap table.

RS: Every deal structure is aligned and even the leases we have are aligned. And when the recession hits, we will use it as an opportunity to deepen our landlord partnerships and take market share.

GS: With whose balance sheet?

RS: We’re using the landlord’s balance sheet to grow our business.

CS: And WeWork is using the Softbank balance sheet to grow their business.

GS: Could you elaborate?

RS: WeWork did us the greatest favor in the world, because our strategy since day one has been to make the landlord a key partner and stakeholder. Do you want to know who has the cheapest cost of capital? Cheaper than Softbank’s? It’s the landlord’s balance sheet. Their cost of equity capital is like six to eight percent.

GS: Really?

RS: Yes. If you think about the investor-anticipated yield in asset classes, real estate sits between a fixed income expectation and an equity capital markets expectation.

GS: Okay, but how does using the landlord’s balance sheet enhance your approach strategically?

CS: Because there are elements of the way we structure our deals that allow our performance to be variable. And by using the landlord’s balance sheet to grow our business, it aligns us and the landlord to be able to ride through a recession together.

“Do you want to know who has the cheapest cost of capital? Cheaper than Softbank’s? It’s the landlord’s balance sheet.”

GS: Have many of the nation’s Class A landlords have bought into your model?

RS: If you look at our current partners that we’re actively working with, I think they globally control over 250 million square feet of Class A office space. So if 10% of that moves to flexible consumption, that means Convene could have an addressable market of 25 million square feet of inventory.

GS: So given the way you’re talking, would it be fair to say that your landlord partners have recognized that the flexible workspace trend is here for the long-term?

CS: How we consume real estate is undergoing a fundamental shift. This is the same conversation that was happening in the transportation industry 15 years ago. It’s the same thing that was happening in the travel industry when Airbnb was starting. That same conversation is happening today within the existing supply chain. So, yes, It’s a buy, build, partner decision that is being made in every landlord’s office around the country today.

GS: It still sounds odd to hear the phrase, “consume real estate.” Maybe I’m old-school, but you guys are down to earth. Do you find that language odd?

CS: Actually, what we’re seeing is the consumerization of real estate. Real estate was historically very B2B, very financially driven. Today, it’s being driven by human experience, So yes, brands matter, the customer experience matters. And that consumerization of real estate actually is happening.

GS: I take it that’s why you launched this new managed workplace solution that features the services you bring, but enables a client to use its own name?

CS: What makes that platform unique is that it’s co-branded. It’s an endorsed brand model by Convene, which means that the Convene brand standards, the Convene operating model, the Convene staffing model and the Convene university training program comes with it.

GS: So Intel inside?

CK: Yes, which gives clients the best of both worlds. It gives them the brand and reach and expertise of Convene. At the same time, they can now have something that feels more authentic and unique to them as a landlord.

GS: I want to shift to the future of work, which is something you both have spoken about in pretty bold terms. We’re at this amazing Convene members club, which sort of feels like a SoHo House except we’re in midtown. And you’ve talked about how an experiential personal life will be closer to a work life. Where is all this going?

RS: From a trend perspective, we believe fundamentally in what we call work/life integration. It used to be that you go to work and at the end of the day that stops and then you move to the rest of your life. That’s not really the way it works anymore. And when we think about some of the services that we’ve launched over the last couple years, it’s been with that idea in mind.

GS: Are you creating future offerings in-house or partnering?

RS: Actually, we’re about to announce a partnership on the wellness side, where we’re taking some of the wellness elements and starting to incorporate them into the broader Convene ecosystem.

GS: Do either of you guys have children?

RS: Yes, we both do.

GS: Because if you want to talk about quality of life and the war for talent, it seems like a natural extension to see if your plan to help the workforce addresses the challenges of working while raising young kids. Are such extensions on your whiteboard?

RS: Yes, they’re definitely on the whiteboard and some of those things are already in process. The difference is partnership. When I think about the way that we’re building our platform and the way that WeWork is building theirs, I think about us as being an open-source platform, Do you think you need to do everything yourself because you’re the best in the world at everything, or do you want to work with best-in-class partners?

GS: So for something like childcare, you’d bring in a partner?

RS: If we decide, which I’m not saying we are, to get into childcare, we’re going to do that with a proven partner that has a track record of delivering that experience and doing it really well.

GS: How does Convene fare in a world where remote work becomes an even bigger trend?

CS: Actually, there’s a difference between remote work and mobility. Remote work is the traditional concept of working from home, and we’re actually seeing some backlash now of companies who are really trying to drive culture, and want more face-to-face interaction.

GS: Does that show up in the design of your spaces?

CK: Yes, the built environments of our offices are changing from looking like cubicle farms where everybody reports to their desk and their computer to operating a lot more like a digitally-enabled campus. And the decoupling of people and their work from their desk is opening up an opportunity to build what’s called an activity-based workplace, where there are different types of spaces that are specialized and built for specific uses.

GS: You guys don’t even have offices, right?

CK: Right. None of us have offices.

RS: Also, people used to talk about remote work in magical terms. They’d say, I’m not going to need an office. We don’t believe that this is the case. We think that there a few things that will continue to matter to organizations. One is brand, two is culture, three is collaboration. And until technology can somehow magically replicate that experience, we think that the best ideas will come from face-to-face interaction.

GS: I have two important last topics to cover. First-off, why on earth, nestled into a semi-remote corner of this club, do you have a Picasso painting hanging on the wall? Because in my experience, usually people like to show off the Picasso if they have one.

RS: Ha, well, the Picasso, as well as all of the other amazing art that you’ve seen at Club 75, is part of the partnership here with the landlord.

GS: Well, it speaks to the confidence they have in you.

RS: Yes, but it also speaks to the experience we’re creating. We think about space as the body language of an organization. Space has the ability to move people and we think that art is a big part of that.

CK: It also demonstrates the extent to which landlords are committed to delivering a great experience.

RS: Right. Having a coffee next to a Calder or a Picasso can put you in a totally different headspace.

“There’s no amount of money in the world that can buy you a partnership with Brookfield or a half a dozen landlords that we’ll be powering next year.”

GS: Well, I’m glad you didn’t use shareholder money to buy these works, which brings me to my last topic. At this point, are you concerned about profitability?

CS: Yes, we are and that’s another one of the differences between us and others. In fact, we’ve been cashflow positive since Day one. And as an organization, profitability has always been something that we think is very important.

GS: It’s because you don’t have enough VCs on your cap table. Speaking of which, you’re obviously aware of the fact that Softbank and other megafunds may helicopter drop a lot more money into this space, which could change the competitive dynamics.

RS: First of all, the last time I checked, we were the second most capitalized platform in the category, by dollars raised. And if you look at our partnership-driven approach, where the landlord’s balance sheet is funding a lot of our growth, the actual capital that’s being invested in the platform is multiples of the $260 million we’ve raised.

But to your point, our concern isn’t so much about the capital that’s flooding in, There’s no amount of money in the world that can buy you a partnership with Brookfield or a half a dozen landlords that we’ll be powering next year. And money, whether its from Softbank or anyone else, can’t give an organization its corporate culture. And I think one of the reasons we’ve been selected as the partner to some of the most discerning customers in the world is because of the fact that everyday, we deliver consistently against a premium experience.

GS: Well, on that note, Chris and Ryan, I’d like to thank you for your kind hospitality.

RS: It’s been our pleasure and thank you.


Source: Tech Crunch

Domio just raised $12 million in Series A funding to build “apart hotels” across the U.S.

Hotels can be pricey, and and travelers are often forced to leave their rooms for basic things, like food that doesn’t come from the minibar. Yet Airbnb accommodations, which have become the go-to alternative for travelers, can be highly inconsistent.

Domio, a two-year-old, New York-based outfit, thinks there’s a third way: apartment hotels, or “apart hotels,” as the company is calling them.

The idea is to build a brand that travelers recognize as upscale yet affordable, more tech friendly than boutique hotels, and features plenty of square footage, which it expects will appeal to both families as well as companies that send teams of employees to cities and want to do it more economically.

Domio has a host of competitors, if you’ll forgive the pun. Marriott International earlier this year introduced a branded home-sharing business called Tribute Portfolio Homes wherein it says it vets, outfits and maintains homes of its choosing to hotel standards. And Marriott is among a growing number of hotels to recognize that customers who stay in a hotel for a business trip or a family vacation might prefer a multi-bedroom apartment with hotel-like amenities.

Property management companies have been raising funding left and right for the same reason. Among them: Sonder, a four-year-old, San Francisco-based startup offering “spaces built for travel and life” that, according to Crunchbase, has raised $135 million from investors, much of it this year; TurnKey, a six-year-old, Austin, Tex.-based home rental management company that has raised $72 million from investors, including via a Series D round that closed back in March; and Vacasa, a nine-year-old, Portland, Ore.-based vacation rental management company that manages more than 10,000 properties and which just this week closed on $64 million in fresh financing that brings its total funding to $207.5 million.

That’s saying nothing of Airbnb itself, which has begun opening hotel-like branded apartment complexes that lease units to both long-term renters and short-term visitors in partnership with development partner Niido.

Whether Domio can stand out from competitors remains to be seen, but investors are happy to provide give it the financing to try. The company is today announcing that it has raised $12 million in Series A equity funding led by Tribeca Venture Partners, with participation from SoftBank Capital NY and Loric Ventures. The round comes on the heels of Domio announcing a $50 million joint venture last month with the private equity firm Upper 90 to exclusively fund the leasing and operations of as many as 25 apartment-style hotels for group travelers.

Indeed, Domio thinks one advantage it may have over other home-share companies is that rather than manage the far-flung properties of different owners, it can shave costs and improve the quality of its offerings by entering five- to 10-year leases with developers and then branding, furnishing and operating entire “apart hotel” properties. (It even has partners in China making its furniture.)

As CEO and former real estate banker Jay Roberts told us earlier this week, the plan is to open up 25 of these buildings across the U.S. over the next couple of years. The units will average 1,500 square feet and feature three bedrooms and if all goes as planned, they’ll cost 10 to 25 percent below hotel prices, too.

And if the go-go property management market turns? Roberts insists that Domio can “slow down growth if necessary.” He also notes that “Airbnb was founded out of the recession, supported by people who were interested in saving money. We’re starting to see companies that want to be more cost-effective, too.”

Domio had earlier raised $5 million in equity and convertible debt from angel investors in the real estate industry; altogether it has now amassed funding of $67 million.


Source: Tech Crunch

Lessons from building Brex into a billion-dollar startup

When I think about my experience as an immigrant and entrepreneur in Silicon Valley, I remember growing up in Brazil and how we saw tech founders and CEOs as kings. We imagined what it would be like to assume the throne.

But these weren’t just any kings. Silicon Valley was the kingdom of nerds and underdogs. We identified with these guys, they were just like us. We were fed the myth of a Silicon Valley meritocracy, and the illusion that all you needed was ambition, determination, and a good idea to meet the right person and get funded.

What we didn’t understand was that this myth was not completely rooted in reality. Not everyone has access to the American Dream, and those who do have a track record of success before they’re given their moment to prove, or in our case, pitch ourselves.

Part of this disconnect was cultural. In Brazil, when I began my first startup, Pagar.me, a payment processing company, my co-founder Pedro Franceschi and I were two 16 year-old kids who learned how to code before we were ten. While it was hard for people to take us seriously initially—I mean, would you quit your job to work for two 16 year- olds? Being so young also worked to our advantage; it revealed that we were passionate, driven, and invested in tech at an age that we didn’t need to be.

Once we got our start-up off the ground, our employees were as invested in us as we were invested in them and the company. That’s because in Brazil, most of us grew up with parents that stayed their whole lives at the same company. You grew with the company, and that’s the approach we took when it came to hiring for our first company: who did we see sharing our same vision and growing with us?

Coming to the United States was almost a completely opposite experience. The barrier of entry was much higher. You have to go to the right college, graduate from right incubator programs, develop relationships with the right VCs, and have at least one successful startup under your belt before anyone would even consider booking a meeting with you.

Pedro and I had to carefully position ourselves before we even got to the Valley. When we finally did get to the U.S., we had already launched a successful startup and we were accepted to Stanford. Soon after, we were accepted by Y-Combinator, and that’s where we built relationships with the key players that would open up the doors for future meetings.

With our current startup, Brex,  we found that there weren’t just cultural differences at play, but different approaches we needed to take in order for our business to be successful. For example, in Brazil, we bootstrapped our first startup, and as a result, we had to find our product-market fit immediately. When you are so cash-constrained, it also limits how much you can build your company, and you think in terms of short-term wins instead of sustained growth. Your growth strategy is confined and you’re constantly reacting to your immediate client demands.

In the U.S., VCs and angel-investors aren’t interested in the short-term. They’re interested in long-term growth and how you are going to deliver 10x profits over a ten year period. Our strategy could no longer be: plan as we go and grow with our customer. Instead, we needed to deliver a roadmap, and when that roadmap changed or evolved, communicate those changes and adopt a culture of transparency.   

Additionally, we learned how difficult it is to find and retain  talent in the U.S.; it can feel like a Sisyphean task. Millennials for example, spend less than two years on average at a job, and if you spend six years or more at the same company, recruiters will actually ask you: “why?” So how can you build a company for the long-term in an environment where employees are not personally invested in the growth of your company?

We also learned that many successful tech startups offer stock options to their early employees, but as the company evolves and changes over time, those same stock options are not offered to future employees. This creates the exact opposite of a meritocracy. Why would a new employee work harder, longer, and bring more to the table if you are not going to be compensated for it?

Instead of using this broken model, we have invested in paying our team higher wages upfront, and based on performance, we award our team members with stock options. We want to be a company that people are proud of working at longterm, and we want to create a culture that is merit-based.

While some of the myths that we first believed in about Silicon Valley are now laughable looking back, they were also really instructional as to how we wanted to build our company and what pitfalls we wanted to avoid.

Even though nearly half of tech startups are founded by immigrant entrepreneurs, we have a cultural learning curve in order to have the opportunity to be “the next unicorn.” And maybe that’s the point, we’re experiencing a moment in time during which myths and unicorns no longer serve us, and what we need instead is the background, experience, and vision to create a company that is worth the hype.


Source: Tech Crunch

Alumni Ventures Group is the most active venture fund you’ve never heard of

Alumni Ventures Group’s (AVG) limited partners aren’t endowment or pension funds. Its typical LP is a heart surgeon in Des Moines, Iowa.

The firm has both an unorthodox model of fundraising and dealmaking. Across 25 micro funds, AVG is raising and investing upwards of $200 million per year for and in tech startups.

Tucked away in Boston, far from the limelight of Silicon Valley, few seem to be paying attention to AVG. There are a few reasons why, and those seem to be working to the firm’s advantage.

Today, AVG is announcing a close of roughly $30 million for three additional funds: Green D Ventures, Chestnut Street Ventures and Purple Arch Ventures, which represent capital committed by Dartmouth, the University of Pennsylvania and Northwestern alums, respectively.

“People don’t really know what to make of us”

AVG walks and talks like a venture fund, but a peek under the hood reveals its unconventional fundraising mechanisms.

Rather than collecting $5 million minimum investments from institutional LPs, AVG takes $50,000 directly from individual alums of prestigious universities. The firm pools the capital and creates university-specific venture funds for graduates of Duke, Stanford, Harvard, MIT and several other colleges. 

“People don’t really know what to make of us because we’re so different,” said Michael Collins, AVG’s founder and chief executive officer.

Collins started AVG to make venture capital more accessible to individual people. He’s been a VC since 1986, formerly of TA Associates, and had grown tired of the hubris that runs rampant in the industry. In 2014, he started a $1.5 million fund for alums of his alma mater, Dartmouth. Since then, AVG has grown into 25 funds, each of which fundraise annually and are seeing substantial growth over their previous raises.

“What we observed is VC is a really good asset class but it’s really designed for institutional investors,” Collins (pictured below) said. “It’s really hard for individual people to put together a smart, simple portfolio unless they do it themselves. That’s why we created AVG.”

AVG and its team of 40 investment professionals make 150 to 200 investments per year of roughly $1 million each in U.S. startups across industries. In the second quarter of 2018, PitchBook listed the firm as the second most active global investor, ranked below only Plug and Play Tech Center and above the likes of Kleiner Perkins, NEA and Accel. 

Unlike the Kleiners, NEAs and Accels of the world, AVG never leads investments. Collins says they just “tuck themselves into” a deal with a great lead investor. They don’t take board seats; Collins says he doesn’t see any value in more than one VC on a company board. And they don’t try to negotiate deal terms.

Though unusual, all of this works to their advantage. Founders appreciate the easy capital and access to AVG’s network, and other VC firms don’t view AVG as a threat, making it easier for the firm to get in on great deals.

“We are low friction, we are small and we have a hell of a Rolodex,” Collins said.

VC doesn’t have to be a star business

Despite a deal flow that’s unmatched by many VC firms, AVG manages to fly under the radar — and the firm is totally OK with that.

“A lot of VC is a bit of a star business where people try to build their own individual brand,” Collins said. “They get out there; they like publicity; they blog; they speak at conferences; they want to be known as the person to bring great deals to. We don’t lead. We work in the background. We just don’t feel the need to put the energy into PR.”

“Most VC returns are really achieved through investing in great companies as opposed to changing the trajectory of a company because you’re on the board,” he added. “If you’re a seed investor in Airbnb or Google, you were really great to be an early investor in that company, not because you sat on the board and you’re brilliance created Google’s success.”

AVG has completed 115 investments in the last 12 months. It’s investing out of 10-year funds, so at just four years in, it has some more waiting to do before it’ll see the full outcomes of its investments. Still, Collins says 65 of their portfolio companies have had liquidity events so far, including Jump, which sold to Uber in April, and Whistle, acquired by Mars Petcare a few years back.

“I hope that we can be a catalyst to bring more people into this asset class,” he concluded.

“I am a big believer that it’s really important that America continues to lead in entrepreneurship and I think the more people that own this asset class the better.”


Source: Tech Crunch

Smart home makers hoard your data, but won’t say if the police come for it

A decade ago, it was almost inconceivable that nearly every household item could be hooked up to the internet. These days, it’s near impossible to avoid a non-smart home gadget, and they’re vacuuming up a ton of new data that we’d never normally think about.

Thermostats know the temperature of your house, and smart cameras and sensors know when someone’s walking around your home. Smart assistants know what you’re asking for, and smart doorbells know who’s coming and going. And thanks to the cloud, that data is available to you from anywhere — you can check in on your pets from your phone or make sure your robot vacuum cleaned the house.

Because the data is stored or accessible by the smart home tech makers, law enforcement and government agencies have increasingly sought data from the companies to solve crimes.

And device makers won’t say if your smart home gadgets have been used to spy on you.

For years, tech companies have published transparency reports — a semi-regular disclosure of the number of demands or requests a company gets from the government for user data. Google was first in 2010. Other tech companies followed in the wake of Edward Snowden’s revelations that the government had enlisted tech companies’ aid in spying on their users. Even telcos, implicated in wiretapping and turning over Americans’ phone records, began to publish their figures to try to rebuild their reputations.

As the smart home revolution began to thrive, police saw new opportunities to obtain data where they hadn’t before. Police sought Echo data from Amazon to help solve a murder. Fitbit data was used to charge a 90-year old man with the murder of his stepdaughter. And recently, Nest was compelled to turn over surveillance footage that led to gang members pleading guilty to identity theft.

Yet, Nest — a division of Google — is the only major smart home device maker that has published how many data demands it receives.

As first noted by Forbes last week, Nest’s little-known transparency report doesn’t reveal much — only that it’s turned over user data about 300 times since mid-2015 on over 500 Nest users. Nest also said it hasn’t to date received a secret order for user data on national security grounds, such as in cases of investigating terrorism or espionage. Nest’s transparency report is woefully vague compared to some of the more detailed reports by Apple, Google and Microsoft, which break out their data requests by lawful request, by region and often by the kind of data the government demands.

As Forbes said, “a smart home is a surveilled home.” But at what scale?

We asked some of the most well-known smart home makers on the market if they plan to release a transparency report, or disclose the number of demands they receive for data from their smart home devices.

For the most part, we received fairly dismal responses.

What the big four tech giants said

Amazon did not respond to requests for comment when asked if it will break out the number of demands it receives for Echo data, but a spokesperson told me last year that while its reports include Echo data, it would not break out those figures.

Facebook said that its transparency report section will include “any requests related to Portal,” its new hardware screen with a camera and a microphone. Although the device is new, a spokesperson did not comment on if the company will break out the hardware figures separately.

Google pointed us to Nest’s transparency report but did not comment on its own efforts in the hardware space — notably its Google Home products.

And Apple said that there’s no need to break out its smart home figures — such as its HomePod — because there would be nothing to report. The company said user requests made to HomePod are given a random identifier that cannot be tied to a person.

What the smaller but notable smart home players said

August, a smart lock maker, said it “does not currently have a transparency report and we have never received any National Security Letters or orders for user content or non-content information under the Foreign Intelligence Surveillance Act (FISA),” but did not comment on the number of subpoenas, warrants and court orders it receives. “August does comply with all laws and when faced with a court order or warrant, we always analyze the request before responding,” a spokesperson said.

Roomba maker iRobot said it “has not received any demands from governments for customer data,” but wouldn’t say if it planned to issue a transparency report in the future.

Both Arlo, the former Netgear smart home division, and Signify, formerly Philips Lighting, said they do not have transparency reports. Arlo didn’t comment on its future plans, and Signify said it has no plans to publish one. 

Ring, a smart doorbell and security device maker, did not answer our questions on why it doesn’t have a transparency report, but said it “will not release user information without a valid and binding legal demand properly served on us” and that Ring “objects to overbroad or otherwise inappropriate demands as a matter of course.” When pressed, a spokesperson said it plans to release a transparency report in the future, but did not say when.

Spokespeople for Honeywell and Canary — both of which have smart home security products — did not comment by our deadline.

And, Samsung, a maker of smart sensors, trackers and internet-connected televisions and other appliances, did not respond to a request for comment.

Only Ecobee, a maker of smart switches and sensors, said it plans to publish its first transparency report “at the end of 2018.” A spokesperson confirmed that, “prior to 2018, Ecobee had not been requested nor required to disclose any data to government entities.”

All in all, that paints a fairly dire picture for anyone thinking that when the gadgets in your home aren’t working for you, they could be helping the government.

As helpful and useful as smart home gadgets can be, few fully understand the breadth of data that the devices collect — even when we’re not using them. Your smart TV may not have a camera to spy on you, but it knows what you’ve watched and when — which police used to secure a conviction of a sex offender. Even data from when a murder suspect pushed the button on his home alarm key fob was enough to help convict someone of murder.

Two years ago, former U.S. director of national intelligence James Clapper said the government was looking at smart home devices as a new foothold for intelligence agencies to conduct surveillance. And it’s only going to become more common as the number of internet-connected devices spread. Gartner said more than 20 billion devices will be connected to the internet by 2020.

As much as the chances are that the government is spying on you through your internet-connected camera in your living room or your thermostat are slim — it’s naive to think that it can’t.

But the smart home makers wouldn’t want you to know that. At least, most of them.


Source: Tech Crunch

MoviePass is under investigation for securities fraud in New York state

More bad news for MoviePass .

At the direction of New York Attorney General Barbara Underwood, MoviePass parent company Helios and Matheson is now the subject of a fraud probe in New York state.

“We’ve launched a securities fraud investigation into ⁦@MoviePass⁩’ parent company,” Underwood confirmed in a tweet. “My office is committed to protecting New York investors and the integrity of our financial markets.”

The probe will examine whether the company misrepresented its financial situation to investors. The probe will leverage the Martin Act, a powerful New York statute that allows the Attorney General to aggressively pursue suspected instances of fraud in the state.

“We are aware of the New York Attorney General’s inquiry and are fully cooperating,” Helios and Matheson said in a statement provided to TechCrunch. “We believe our public disclosures have been complete, timely and truthful and we have not misled investors. We look forward to the opportunity to demonstrate that to the New York Attorney General.”

Underwood’s office declined to provide further details to TechCrunch, pointing us toward the CNBC report that originally reported the probe.

MoviePass and parent company Helios and Matheson (HMNY) has flailed wildly throughout 2018, abruptly making major changes to the movie subscription service, watching its stock prices walk off a cliff and seeking emergency infusions of cash in the process.

In Q2, Helios and Matheson posted losses of $126.6 million compared to a net loss of roughly $150 million in all of 2017. Its 2017 losses were attributed to its acquisition of a majority stake in MoviePass, but the 2018 losses are obviously a different story. Shares of Helios and Matheson were down 8.5% at the time of writing.


Source: Tech Crunch

Uber is developing an on-demand staffing business

Uber is reportedly developing a short-term staffing business to offer 1099 independent contractors for events and corporate functions, the Financial Times first reported. Dubbed Uber Works, the service would provide waiters, security guards and other temporary staffers to business partners, a source close to Uber told TechCrunch.

Uber has been working on the project for several months in Chicago, after first trialing the project in Los Angeles. Uber already has a vast network of drivers — all of whom have become familiarized with the process of filing taxes as an independent contractor — who may be looking for additional work. However, Uber’s current pilot program does not include active Uber drivers.

Uber Works falls under the purview of Rachel Holt, who stepped into the role of head of new modalities in June. Holt, who has been with Uber since 2011, is tasked with ramping up and onboarding new mobility services like bikes, scooters, car rentals and public transit integration.

In a job posting for a general manager to lead special projects in Chicago, Uber says, “our business is based around providing a flexible, on-demand supply for our business partners – it’s imperative that we have intuitive and responsive account management to support for our business partners in addressing their needs promptly.”

Uber declined to comment for this story. But as the company gears up for its initial public offering next year, Uber is clearly trying to diversify its business. In the last year, Uber double-downed on multi-modal transportation with the acquisition and deployment of JUMP bike-share. And in the last month, Uber deployed electric scooters in Santa Monica, Calif.

Whether this effort launches remains to be seen, but it’s certainly something Uber is exploring and positioning as a business-to-business service. In a similar vein, Uber is also working to create a pipeline to hire some of its driver partners.


Source: Tech Crunch

Researchers create virtual smells by electrocuting your nose

The IEEE has showcased one of the coolest research projects I’ve seen this month: virtual smells. By stimulating your olfactory nerve with a system that looks like one of those old-fashioned kids electronics kits, they’ve been able to simulate smells.

The project is pretty gross. To simulate a smell, the researchers are sticking leads far up into the nose and connecting them directly to the nerves. Senior research fellow at the Imagineering Institute in Malaysia, Kasun Karunanayaka, wanted to create a “multisensory Internet” with his Ph.D. student, Adrian Cheok. Cheok is Internet famous for sending electronic hugs to chickens and creating the first digital kisses.

The researchers brought in dozens of subjects and stuck long tubes up their noses in an effort to stimulate the olfactory bulb. By changing the intensity and frequency of the signals, they got some interesting results.

The subjects most often perceived odors they described as fragrant or chemical. Some people also reported smells that they described as fruity, sweet, toasted minty, or woody.

The biggest question, however, is whether he can find a way to produce these ghostly aromas without sticking a tube up people’s noses. The experiments were very uncomfortable for most of the volunteers, Karunanayaka admits: “A lot of people wanted to participate, but after one trial they left, because they couldn’t bear it.”

While I doubt we’ll all be wearing smell-o-vision tubes up our noses any time soon, this idea is fascinating. It could, for example, help people with paralyzed senses smell again, a proposition that definitely doesn’t stink.


Source: Tech Crunch

There’s now proof that quantum computers can outperform classical machines

The hype around quantum computing is real. But to fully realize the promise of quantum computing, it’ll still take a few years of research and scientific breakthroughs. And indeed, it still remains to be seen if quantum computers will ever live up to the hype. Today, though, we got mathematical proof that there are really calculations that quantum computers will definitely be able to perform faster than any classical computer.

What we have today are quantum computers with a very limited number of qubits and short coherence time. Those limitations put a damper on the amount of computation you can perform on those machines, but they still allow for some practical work. Unsurprisingly, researchers are very interested in seeing what they can do with the current set of available machines. Because they have such short coherence time before the system becomes chaotic and useless for any computations, you can only perform a relatively small number of operations on them. In quantum computing speak, that’s “depth,” and today’s systems are considered shallow.

Science today published a paper (“Quantum advantage with shallow circuits”) by Sergey Bravyi of IBM Research, David Gosset of the University of Waterloo’s Institute for Quantum Computing and Robert König of the Institute for Advanced Study and Zentrum Mathematik, Technische Universität München. In this paper, the researchers prove that a quantum computer with a fixed circuit depth is able to outperform a classical computer that’s tackling the same problem because the classical computer will require the circuit depth to grow larger, while it can stay constant for the quantum computer.

There is very little that’s intuitive about quantum computing, of course, but it’s worth remembering that quantum computers are very different from classical computers.

“Quantum circuits are not just basically the same but different from classical circuits,” IBM Q Ecosystem and Strategy VP Bub Sutor told me. Classic circuits, […]they are bits, they are zeros and ones, and there’s binary logic, ANDs, ORs, NOTs and things like. The very, very basic gate sets, the types of operations you can do in quantum are different. When these qubit are actually operating, with this notion of superposition you have much, much more to operate elbow room, not just two bits. You actually have a tremendous amount of more room here.” And it’s that additional room you get, because qubits can encode any number and not just zeros and ones, that allows them to be more powerful than a classical computer in solving the specific kind of problem that the researchers tackled.

The question the researchers here asked was if constant-depth quantum circuits can solve a computational problem that constant-depth classical circuits cannot? The problem they decided to look at is a variation on the well-known Bernstein-Vazirani problem (well-known among quantum computing wonks, that is). You don’t need to jump into the details here, but the researchers show that even a shallow quantum computer can easily outperform a classical computer in solving this problem.

“We tried to understand what kinds of things we can do with a shallow quantum circuit and looked for an appropriate model for a type of computation that can be done on a near-term quantum device,” Bravyi told me. “What our result says is that there are certain computational problems for which you can solve on a quantum computer with a constant depth. So as you increase the number of input bits, the depth of the quantum algorithm that solves the problem remains constant.” A constant depth classical computer can not solve this problem, though.

Sutor was very quick to note that we shouldn’t over-hype the current state of quantum computing or this result, though. “We try to be extremely cautious and honest in terms of saying ‘this is what quantum computers can do today’ versus what classical computers will do,” he told me. “And we do this for a very specific reason in that that this is something that will play out over the next three to five years and decades — probably decades.” But what this result shows is that it’s worth exploring quantum algorithms.

As Sutor noted, “there is still this core question, which is, ‘why are you bothering?’” Today’s result should put that question to rest, but Sutor still stressed that he tries to stay grounded and never says quantum computing “will” do something until it does. “There’s a strategy through this, but there’s going to be little left turns and right turns along the way.”


Source: Tech Crunch

Google Maps’ ETA sharing feature hits iOS

If you’re heading out to meet someone, there are plenty of ways to inform them of your location and estimated arrival. Chat apps like WhatsApp, Messenger, LINE and iMessage, for example, offer location-sharing functionality, while navigation apps like Waze and CityMapper and even ridesharing apps like Uber offer live updating ETAs. Now, Google Maps’ own ETA feature is at last coming to iOS. The feature is also getting a few tweaks following last year’s launch on Android, the company says.

In May 2017, Google Maps first introduced its own take on location and ETA sharing.

From a “Share Location” option in the app’s main navigation bar, you’re able to pick how long you want to share your location and choose with whom to share it — the latter from a set of frequent contacts or by entering someone’s name, number or email to pull from your address book.

Then, from the navigation screen, another option called “Share trip progress” allows users to share their live ETA with others as they start their trip.

Today, Google is bringing this ETA feature to Google Maps on iOS.

To try it out, tap on the ˄ button once you’ve begun navigation, then tap “Share trip progress.” This will allow you to share with favorite contacts your live location, route and your ETA, as before.

However, the feature is also being improved with today’s release to allow for sharing across third-party apps like Messenger, WhatsApp, LINE and others. That makes it easier to include in your text message threads and group chats, which are probably already underway.

The feature works for driving, walking and cycling navigation, says Google. It’s live now on iOS and Android.


Source: Tech Crunch