California may mandate a woman in the boardroom, but businesses are fighting it

California is moving toward becoming the first state to require companies to have women on their boards –assuming the idea could survive a likely court challenge.

Sparked by debates around fair pay, sexual harassment and workplace culture, two female state senators are spearheading a bill to promote greater gender representation in corporate decision-making. Of the 445 publicly traded companies in California, a quarter of them lack a single woman in their boardrooms.

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine.

“Gender diversity brings a variety of perspectives to the table that can help foster new and innovative ideas,” said Democratic Sen. Hannah-Beth Jackson of Santa Barbara, who is sponsoring the bill with Senate President Pro Tem Toni Atkins of San Diego.”It’s not only the right thing to do, it’s good for a company’s bottom line.”

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California.

Jennifer Barrera, senior vice president of policy at the California Chamber of Commerce, argued against the bill and said it only focuses “on one aspect of diversity” by singling out gender.

“This bill basically mandates that we hire the woman above anybody else who we may be fulfilling for purposes of diversity,” she said at a hearing.

Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Five years ago, California was the first state to pass a resolution, authored by Jackson, calling on public companies to increase gender diversity. In response, about 20 percent of the companies headquartered in the state followed through with putting women on their boards, according to the research firm Board Governance Research. But the resolution was non-binding and expired in December 2016.

Other countries have been more proactive. Norway in 2007 was the first country to pass a law requiring 40 percent of corporate board seats be held by women, and Germany set a 30 percent requirement in 2015. Spain, France and Italy have also set quotas for public firms.

In California, smaller companies have fewer female directors. Out of 50 companies with the lowest revenues, 48 percent have no female directors, according to Board Governance Research. Only 8 percent of their board seats are held by women.

The 2017 study said larger companies did a better job of appointing women, with all 50 of the highest-revenue companies having at least one female director and 23 percent of board seats held by women.

“The main issue is still that a lot of companies headquartered here don’t have women on their boards,” said Annalisa Barrett, clinical professor of finance at the University of San Diego’s School of Business. “We quite often like to think of California as progressive and a leader on social issues, so that’s kind of disappointing.”

Barrett publishes an annual report of women on boards in California. Public companies are major employers in the state, and their financial performance has a big impact on public pension funds, mutual funds and investment portfolios. “Financial performance does really impact the broader community,” she said.

The National Association of Women Business Owners, sponsor of the bill, says an economy as big as California’s ought to “set an example globally for enlightened business practice.” In a letter of support, the association cites studies that suggest corporations with female directors perform better than those with no women on their boards.

One University of California, Davis study did find that companies with more women serving on their boards saw a higher return on assets and equity, but the author acknowledges this may not suggest a cause-and-effect.

California’s new online cancellation law benefits many disgruntled subscribers in other places, too

A new California law that went into effect on July 1 will make it much easier for people to cancel subscriptions online. Since the bill, sponsored by State Sen. Bob Hertzberg (D-Van Nuys), includes all services that have paying customers in the state, it will also benefit dissatisfied customers in many places outside California.

The legislation, California Senate Bill No. 313, covers “any business that makes an automatic renewal or continuous service offer to a consumer in this state,” so that includes a very wide range of services, including newspapers and magazines, subscription boxes, streaming services and more. Not only that, but if you made the subscription online, the law stipulates that you are also allowed to cancel it online. In other words, you can no longer be forced to call a customer service phone number to stop the service, a task that is usually much more frustrating and time-consuming than signing up in the first place.

The bill also requires more transparency in how companies present promotional offers. For example, if they lure in users with a free trial or gift, then they also need to include a “clear and conspicuous explanation” in the offer of how much customers will be charged after the trial ends or if the pricing will change. It also needs to tell you how to cancel (and actually allow you to do so) before you are charged.

If you sign up for a subscription at a promotional or discounted price that is only valid for a certain amount of time, the company must get your consent again before charging your debit or credit card when the price returns to its normal rate.

According to Nieman Lab, many news organizations in California are already making changes to their systems to comply with the new law.

Here’s what it was like to stumble into Netflix and Lyft’s activation for GLOW at ‘Muscle Beach’

Today at “Muscle Beach” in Venice, Calif., Netflix and Lyft joined forces for a promotional campaign in support of the streaming media site’s (really excellent) dramatization of the origin story for the women’s wrestling league — GLOW (or the Gorgeous Ladies of Wrestling).

Your intrepid reporter was taking a walk on the beach and stumbled upon the marketing stunt (which was kind of genius).

For those of y’all who don’t know, Muscle Beach is sort of a mecca for weight lifters and body builders — including, back in the ’80s, a young Ah-nold Schwarzenegger. A history that made it an ideal spot to celebrate Netflix’s (pretty terrific) ode to all things new wave-d, hair metal-ed, neon accented, high-waisted, cocaine addled and muscle-bound.

Members of the cast posed for pictures, and wrestlers engaged in training sessions and ’80s-themed exercise classes throughout the day.

The activation will be up for the next week and included a Reebok pop-up with limited-edition ’80s styles; a photo booth and costumes for pictures; free copies of Paper Magazine and trading cards emblazoned with the pictures of each of the most popular characters from the show.

The day wasn’t without incident. Some Muscle Beach-goers got into a war of words with security over the event’s unannounced takeover of the basketball courts adjacent to the “beach.”

The second season of “GLOW” dropped today on Netflix.

 

Apple is rebuilding Maps from the ground up

I’m not sure if you’re aware, but the launch of Apple Maps went poorly. After a rough first impression, an apology from the CEO, several years of patching holes with data partnerships and some glimmers of light with long-awaited transit directions and improvements in business, parking and place data, Apple Maps is still not where it needs to be to be considered a world-class service.

Maps needs fixing.

Apple, it turns out, is aware of this, so it’s re-building the maps part of Maps.

It’s doing this by using first-party data gathered by iPhones with a privacy-first methodology and its own fleet of cars packed with sensors and cameras. The new product will launch in San Francisco and the Bay Area with the next iOS 12 beta and will cover Northern California by fall.

Every version of iOS will get the updated maps eventually, and they will be more responsive to changes in roadways and construction, more visually rich depending on the specific context they’re viewed in and feature more detailed ground cover, foliage, pools, pedestrian pathways and more.

This is nothing less than a full re-set of Maps and it’s been four years in the making, which is when Apple began to develop its new data-gathering systems. Eventually, Apple will no longer rely on third-party data to provide the basis for its maps, which has been one of its major pitfalls from the beginning.

“Since we introduced this six years ago — we won’t rehash all the issues we’ve had when we introduced it — we’ve done a huge investment in getting the map up to par,” says Apple SVP Eddy Cue, who now owns Maps, in an interview last week. “When we launched, a lot of it was all about directions and getting to a certain place. Finding the place and getting directions to that place. We’ve done a huge investment of making millions of changes, adding millions of locations, updating the map and changing the map more frequently. All of those things over the past six years.”

But, Cue says, Apple has room to improve on the quality of Maps, something that most users would agree on, even with recent advancements.

“We wanted to take this to the next level,” says Cue. “We have been working on trying to create what we hope is going to be the best map app in the world, taking it to the next step. That is building all of our own map data from the ground up.”

In addition to Cue, I spoke to Apple VP Patrice Gautier and more than a dozen Apple Maps team members at its mapping headquarters in California this week about its efforts to re-build Maps, and to do it in a way that aligned with Apple’s very public stance on user privacy.

If, like me, you’re wondering whether Apple thought of building its own maps from scratch before it launched Maps, the answer is yes. At the time, there was a choice to be made about whether or not it wanted to be in the business of maps at all. Given that the future of mobile devices was becoming very clear, it knew that mapping would be at the core of nearly every aspect of its devices, from photos to directions to location services provided to apps. Decision made, Apple plowed ahead, building a product that relied on a patchwork of data from partners like TomTom, OpenStreetMap and other geo data brokers. The result was underwhelming.

Almost immediately after Apple launched Maps, it realized that it was going to need help and it signed on a bunch of additional data providers to fill the gaps in location, base map, point-of-interest and business data.

It wasn’t enough.

“We decided to do this just over four years ago. We said, ‘Where do we want to take Maps? What are the things that we want to do in Maps?’ We realized that, given what we wanted to do and where we wanted to take it, we needed to do this ourselves,” says Cue.

Because Maps are so core to so many functions, success wasn’t tied to just one function. Maps needed to be great at transit, driving and walking — but also as a utility used by apps for location services and other functions.

Cue says that Apple needed to own all of the data that goes into making a map, and to control it from a quality as well as a privacy perspective.

There’s also the matter of corrections, updates and changes entering a long loop of submission to validation to update when you’re dealing with external partners. The Maps team would have to be able to correct roads, pathways and other updating features in days or less, not months. Not to mention the potential competitive advantages it could gain from building and updating traffic data from hundreds of millions of iPhones, rather than relying on partner data.

Cue points to the proliferation of devices running iOS, now over a billion, as a deciding factor to shift its process.

“We felt like because the shift to devices had happened — building a map today in the way that we were traditionally doing it, the way that it was being done — we could improve things significantly, and improve them in different ways,” he says. “One is more accuracy. Two is being able to update the map faster based on the data and the things that we’re seeing, as opposed to driving again or getting the information where the customer’s proactively telling us. What if we could actually see it before all of those things?”

I query him on the rapidity of Maps updates, and whether this new map philosophy means faster changes for users.

“The truth is that Maps needs to be [updated more], and even are today,” says Cue. “We’ll be doing this even more with our new maps, [with] the ability to change the map in real time and often. We do that every day today. This is expanding us to allow us to do it across everything in the map. Today, there’s certain things that take longer to change.

“For example, a road network is something that takes a much longer time to change currently. In the new map infrastructure, we can change that relatively quickly. If a new road opens up, immediately we can see that and make that change very, very quickly around it. It’s much, much more rapid to do changes in the new map environment.”

So a new effort was created to begin generating its own base maps, the very lowest building block of any really good mapping system. After that, Apple would begin layering on living location data, high-resolution satellite imagery and brand new intensely high-resolution image data gathered from its ground cars until it had what it felt was a “best in class” mapping product.

There is only really one big company on earth that owns an entire map stack from the ground up: Google .

Apple knew it needed to be the other one. Enter the vans.

Apple vans spotted

Though the overall project started earlier, the first glimpse most folks had of Apple’s renewed efforts to build the best Maps product was the vans that started appearing on the roads in 2015 with “Apple Maps” signs on the side. Capped with sensors and cameras, these vans popped up in various cities and sparked rampant discussion and speculation.

The new Apple Maps will be the first time the data collected by these vans is actually used to construct and inform its maps. This is their coming out party.

Some people have commented that Apple’s rigs look more robust than the simple GPS + Camera arrangements on other mapping vehicles — going so far as to say they look more along the lines of something that could be used in autonomous vehicle training.

Apple isn’t commenting on autonomous vehicles, but there’s a reason the arrays look more advanced: they are.

Earlier this week I took a ride in one of the vans as it ran a sample route to gather the kind of data that would go into building the new maps. Here’s what’s inside.

In addition to a beefed-up GPS rig on the roof, four LiDAR arrays mounted at the corners and eight cameras shooting overlapping high-resolution images, there’s also the standard physical measuring tool attached to a rear wheel that allows for precise tracking of distance and image capture. In the rear there is a surprising lack of bulky equipment. Instead, it’s a straightforward Mac Pro bolted to the floor, attached to an array of solid state drives for storage. A single USB cable routes up to the dashboard where the actual mapping-capture software runs on an iPad.

While mapping, a driver…drives, while an operator takes care of the route, ensuring that a coverage area that has been assigned is fully driven, as well as monitoring image capture. Each drive captures thousands of images as well as a full point cloud (a 3D map of space defined by dots that represent surfaces) and GPS data. I later got to view the raw data presented in 3D and it absolutely looks like the quality of data you would need to begin training autonomous vehicles.

More on why Apple needs this level of data detail later.

When the images and data are captured, they are then encrypted on the fly and recorded on to the SSDs. Once full, the SSDs are pulled out, replaced and packed into a case, which is delivered to Apple’s data center, where a suite of software eliminates from the images private information like faces, license plates and other info. From the moment of capture to the moment they’re sanitized, they are encrypted with one key in the van and the other key in the data center. Technicians and software that are part of its mapping efforts down the pipeline from there never see unsanitized data.

This is just one element of Apple’s focus on the privacy of the data it is utilizing in New Maps.

Probe data and privacy

Throughout every conversation I have with any member of the team throughout the day, privacy is brought up, emphasized. This is obviously by design, as Apple wants to impress upon me as a journalist that it’s taking this very seriously indeed, but it doesn’t change the fact that it’s evidently built in from the ground up and I could not find a false note in any of the technical claims or the conversations I had.

Indeed, from the data security folks to the people whose job it is to actually make the maps work well, the constant refrain is that Apple does not feel that it is being held back in any way by not hoovering every piece of customer-rich data it can, storing and parsing it.

The consistent message is that the team feels it can deliver a high-quality navigation, location and mapping product without the directly personal data used by other platforms.

“We specifically don’t collect data, even from point A to point B,” notes Cue. “We collect data — when we do it — in an anonymous fashion, in subsections of the whole, so we couldn’t even say that there is a person that went from point A to point B. We’re collecting the segments of it. As you can imagine, that’s always been a key part of doing this. Honestly, we don’t think it buys us anything [to collect more]. We’re not losing any features or capabilities by doing this.”

The segments that he is referring to are sliced out of any given person’s navigation session. Neither the beginning or the end of any trip is ever transmitted to Apple. Rotating identifiers, not personal information, are assigned to any data or requests sent to Apple and it augments the “ground truth” data provided by its own mapping vehicles with this “probe data” sent back from iPhones.

Because only random segments of any person’s drive is ever sent and that data is completely anonymized, there is never a way to tell if any trip was ever a single individual. The local system signs the IDs and only it knows to whom that ID refers. Apple is working very hard here to not know anything about its users. This kind of privacy can’t be added on at the end, it has to be woven in at the ground level.

Because Apple’s business model does not rely on it serving to you, say, an ad for a Chevron on your route, it doesn’t need to even tie advertising identifiers to users.

Any personalization or Siri requests are all handled on-board by the iOS device’s processor. So if you get a drive notification that tells you it’s time to leave for your commute, that’s learned, remembered and delivered locally, not from Apple’s servers.

That’s not new, but it’s important to note given the new thing to take away here: Apple is flipping on the power of having millions of iPhones passively and actively improving their mapping data in real time.

In short: Traffic, real-time road conditions, road systems, new construction and changes in pedestrian walkways are about to get a lot better in Apple Maps.

The secret sauce here is what Apple calls probe data. Essentially little slices of vector data that represent direction and speed transmitted back to Apple completely anonymized with no way to tie it to a specific user or even any given trip. It’s reaching in and sipping a tiny amount of data from millions of users instead, giving it a holistic, real-time picture without compromising user privacy.

If you’re driving, walking or cycling, your iPhone can already tell this. Now if it knows you’re driving, it also can send relevant traffic and routing data in these anonymous slivers to improve the entire service. This only happens if your Maps app has been active, say you check the map, look for directions, etc. If you’re actively using your GPS for walking or driving, then the updates are more precise and can help with walking improvements like charting new pedestrian paths through parks — building out the map’s overall quality.

All of this, of course, is governed by whether you opted into location services, and can be toggled off using the maps location toggle in the Privacy section of settings.

Apple says that this will have a near zero effect on battery life or data usage, because you’re already using the ‘maps’ features when any probe data is shared and it’s a fraction of what power is being drawn by those activities.

From the point cloud on up

But maps cannot live on ground truth and mobile data alone. Apple is also gathering new high-resolution satellite data to combine with its ground truth data for a solid base map. It’s then layering satellite imagery on top of that to better determine foliage, pathways, sports facilities, building shapes and pathways.

After the downstream data has been cleaned up of license plates and faces, it gets run through a bunch of computer vision programming to pull out addresses, street signs and other points of interest. These are cross referenced to publicly available data like addresses held by the city and new construction of neighborhoods or roadways that comes from city planning departments.

But one of the special sauce bits that Apple is adding to the mix of mapping tools is a full-on point cloud that maps in 3D the world around the mapping van. This allows them all kinds of opportunities to better understand what items are street signs (retro-reflective rectangular object about 15 feet off the ground? Probably a street sign) or stop signs or speed limit signs.

It seems like it also could enable positioning of navigation arrows in 3D space for AR navigation, but Apple declined to comment on “any future plans” for such things.

Apple also uses semantic segmentation and Deep Lambertian Networks to analyze the point cloud coupled with the image data captured by the car and from high-resolution satellites in sync. This allows 3D identification of objects, signs, lanes of traffic and buildings and separation into categories that can be highlighted for easy discovery.

The coupling of high-resolution image data from car and satellite, plus a 3D point cloud, results in Apple now being able to produce full orthogonal reconstructions of city streets with textures in place. This is massively higher-resolution and easier to see, visually. And it’s synchronized with the “panoramic” images from the car, the satellite view and the raw data. These techniques are used in self-driving applications because they provide a really holistic view of what’s going on around the car. But the ortho view can do even more for human viewers of the data by allowing them to “see” through brush or tree cover that would normally obscure roads, buildings and addresses.

This is hugely important when it comes to the next step in Apple’s battle for supremely accurate and useful Maps: human editors.

Apple has had a team of tool builders working specifically on a toolkit that can be used by human editors to vet and parse data, street by street. The editor’s suite includes tools that allow human editors to assign specific geometries to flyover buildings (think Salesforce tower’s unique ridged dome) that allow them to be instantly recognizable. It lets editors look at real images of street signs shot by the car right next to 3D reconstructions of the scene and computer vision detection of the same signs, instantly recognizing them as accurate or not.

Another tool corrects addresses, letting an editor quickly move an address to the center of a building, determine whether they’re misplaced and shift them around. It also allows for access points to be set, making Apple Maps smarter about the “last 50 feet” of your journey. You’ve made it to the building, but what street is the entrance actually on? And how do you get into the driveway? With a couple of clicks, an editor can make that permanently visible.

“When we take you to a business and that business exists, we think the precision of where we’re taking you to, from being in the right building,” says Cue. “When you look at places like San Francisco or big cities from that standpoint, you have addresses where the address name is a certain street, but really, the entrance in the building is on another street. They’ve done that because they want the better street name. Those are the kinds of things that our new Maps really is going to shine on. We’re going to make sure that we’re taking you to exactly the right place, not a place that might be really close by.”

Water, swimming pools (new to Maps entirely), sporting areas and vegetation are now more prominent and fleshed out thanks to new computer vision and satellite imagery applications. So Apple had to build editing tools for those, as well.

Many hundreds of editors will be using these tools, in addition to the thousands of employees Apple already has working on maps, but the tools had to be built first, now that Apple is no longer relying on third parties to vet and correct issues.

And the team also had to build computer vision and machine learning tools that allow it to determine whether there are issues to be found at all.

Anonymous probe data from iPhones, visualized, looks like thousands of dots, ebbing and flowing across a web of streets and walkways, like a luminescent web of color. At first, chaos. Then, patterns emerge. A street opens for business, and nearby vessels pump orange blood into the new artery. A flag is triggered and an editor looks to see if a new road needs a name assigned.

A new intersection is added to the web and an editor is flagged to make sure that the left turn lanes connect correctly across the overlapping layers of directional traffic. This has the added benefit of massively improved lane guidance in the new Apple Maps.

Apple is counting on this combination of human and AI flagging to allow editors to first craft base maps and then also maintain them as the ever-changing biomass wreaks havoc on roadways, addresses and the occasional park.

Here there be Helvetica

Apple’s new Maps, like many other digital maps, display vastly differently depending on scale. If you’re zoomed out, you get less detail. If you zoom in, you get more. But Apple has a team of cartographers on staff that work on more cultural, regional and artistic levels to ensure that its Maps are readable, recognizable and useful.

These teams have goals that are at once concrete and a bit out there — in the best traditions of Apple pursuits that intersect the technical with the artistic.

The maps need to be usable, but they also need to fulfill cognitive goals on cultural levels that go beyond what any given user might know they need. For instance, in the U.S., it is very common to have maps that have a relatively low level of detail even at a medium zoom. In Japan, however, the maps are absolutely packed with details at the same zoom, because that increased information density is what is expected by users.

This is the department of details. They’ve reconstructed replicas of hundreds of actual road signs to make sure that the shield on your navigation screen matches the one you’re seeing on the highway road sign. When it comes to public transport, Apple licensed all of the type faces that you see on your favorite subway systems, like Helvetica for NYC. And the line numbers are in the exact same order that you’re going to see them on the platform signs.

It’s all about reducing the cognitive load that it takes to translate the physical world you have to navigate into the digital world represented by Maps.

Bottom line

The new version of Apple Maps will be in preview next week with just the Bay Area of California going live. It will be stitched seamlessly into the “current” version of Maps, but the difference in quality level should be immediately visible based on what I’ve seen so far.

Better road networks, more pedestrian information, sports areas like baseball diamonds and basketball courts, more land cover, including grass and trees, represented on the map, as well as buildings, building shapes and sizes that are more accurate. A map that feels more like the real world you’re actually traveling through.

Search is also being revamped to make sure that you get more relevant results (on the correct continents) than ever before. Navigation, especially pedestrian guidance, also gets a big boost. Parking areas and building details to get you the last few feet to your destination are included, as well.

What you won’t see, for now, is a full visual redesign.

“You’re not going to see huge design changes on the maps,” says Cue. “We don’t want to combine those two things at the same time because it would cause a lot of confusion.”

Apple Maps is getting the long-awaited attention it really deserves. By taking ownership of the project fully, Apple is committing itself to actually creating the map that users expected of it from the beginning. It’s been a lingering shadow on iPhones, especially, where alternatives like Google Maps have offered more robust feature sets that are so easy to compare against the native app but impossible to access at the deep system level.

The argument has been made ad nauseam, but it’s worth saying again that if Apple thinks that mapping is important enough to own, it should own it. And that’s what it’s trying to do now.

“We don’t think there’s anybody doing this level of work that we’re doing,” adds Cue. “We haven’t announced this. We haven’t told anybody about this. It’s one of those things that we’ve been able to keep pretty much a secret. Nobody really knows about it. We’re excited to get it out there. Over the next year, we’ll be rolling it out, section by section in the U.S.”

Location-based virtual reality is increasing its footprint in the U.S.

Earlier this year, in a small, grey-walled storefront inside a very large mall in Torrance, Calif. (just past the AMC Center) , the virtual reality game-maker Survios planted its first flag in the market for location-based gaming.

It’s one of several companies (many based in Los Angeles) that are turning the city into a hub for anyone looking to experience the thrill of immersive gaming.

While Survios’ offering is more akin to the virtual arcades cropping up in cities across the country and around the world (including Dubai, New York, Seoul, and Tokyo), other companies like the Los Angeles-based Two Bit Circus and Lindon, Utah’s The Void are creating site specific game experiences that promise a different kind of approach to virtual reality.

For Survios and other companies that have placed multi-million dollar bets on the viability of virtual reality, the move to location-based gaming isn’t a matter of choice. It’s a matter of survival thanks to the persistent lack of demand from consumers. 

Sales of head-mounted displays began to climb out of their doldrums late last year, and are expected to surpass 1.5 million head mounted displays sold in 2018, according to data from Canalys. But that’s still a far smaller market than the 10 million game consoles that were sold in the U.S. alone in 2017 (not to mention the roughly 32 million consoles sold at the market’s peak in 2008), according data on the Statista website

The benefits of location-based experiences are clear. The cost of premium headsets and gaming systems prohibit most U.S. households from getting the gear in their hands and until those costs come down, out-of-home experiences provide the best way to get consumers comfortable with the technology.

That’s been the tactic ever since Nolan Bushnell and Ted Dabney launched Computer Space in 1971 with the first coin-operated computer game for arcades.

And one that VRWorld brought (with much fanfare) to virtual reality in the U.S. with the debut of its three-floor gaming hub near the Empire State Building in the heart of New York.

That experience, a more extravagant investment than Survios’ humble multi-bay storefront, was one of the first in the U.S. to commit to the sensory overload that is virtual reality. By 2018, New York was home to at least seven virtual reality spaces where users could experience the technology, according to The New York Times.

And while it’s hard to recreate a truly immersive, mobile game experience in the home, the ability to access cinematic quality production values, a physical space purpose-built for immersive game play, and the intellectual property of some of Hollywood’s most enduring brands (like The Void’s Star Wars experience) can make for a compelling pitch to consumers.

That’s the hope of people like Nancy Bennett, an entertainment industry veteran who was brought on as the Chief Creative Officer at Two Bit Circus.

“What’s cool about VR and a differentiator of the medium is that it gives you embodiment,” Bennett says. “There’s no other medium that does that.”

Bennett knows a thing or two about entertainment. A producer with MTV Networks, the founder of the collaborative game development platform Squarepushers Inc. and a celebrated creator of virtual reality projects for the National Football League, the National Basketball Association, Bennett won the Lumiere award for best music VR experience for her work on the “One At a Time” video for Alex Aiono. 

From haptic platforms and motion floors that simulate the ability to walk around a space, the location based experience will offer a more fully immersive platform that can lend itself to more interesting narratives, says Bennett.

For Bennett, the vision of a place like Two Bit Circus, or the experiences on offer from other location based platforms are about the combination of narrative and technology in a way that can provide verisimilitude to someone strapped into a headset.

She, and others in the location-based community, look to immersive theater like Sleep No More as a model for how to proceed. “Immersive theater is absolutely the platform that will help drag us along,” Bennett says. 

At Two Bit Circus, which raised $15 million from investors last January, virtual reality will be about 20% of the experiences on offer. The company’s inaugural space in Los Angeles will also avail itself of projection mapping, augmented reality and other ways to immerse and entertain, Bennett promises.

But immersion will be at the heart of it all, she said. “Those kinds of mixed immersive experiences are going to be de rigueur,” according to Bennett. “And locations are going to be the only places where you can pull that off.”

Bennett sees the industry offering different tiers of immersive entertainment. With virtual reality arcades like Survios’ in Torrance operating on one level and more highly immersive experiences like The Void and Baobab Studios operating on another.

It’s one reason why companies like Cinemark have announced that they’re working with The Void and other immersive, location-based virtual reality companies to create experiences in their theaters.

“Really it’s about what serves the creative goal,” says Bennett. “What I think is really cool is the opportunity to mash up the fast prototyping of the community into one space to get people to play. It isn’t just VR. There’s also new forms of play and arcades that are possible and interactive audience participation for content creation.”

Even with the wow-factor of the experience, it may not be enough to buck industry trends. IMAX was one of the first companies to carve out immersive virtual reality spaces in its theaters, but given its woeful performance in the first quarter of 2018, those efforts are now on hold, according to it chief executive Richard Gelfond.

“At this time, we do not anticipate opening additional VR centers, or making a meaningful future investments in the initiative,” he told analysts during the company’s first quarter earnings call.

It’s a dramatic change for a company that was touting its entrance into the location based market just a year earlier.

IMAX’s stumble belies the international success of location-based gaming. In this, Asia leads the way with virtual reality outposts like the Viveland theme park in China. An existing infrastructure of internet cafes meant that Asian gaming hubs could just throw virtual reality hardware into their mix of offerings and continue to attract an audience.

Meanwhile, companies in the U.S. need to depend on purpose built spaces for virtual reality gaming thanks to the dominance of in-home gaming consoles (which overtook arcade gaming at least a decade ago). The lack of similar out-of-home spaces led to IMAX deciding to set up their own experiences — and other movie theaters and amusement parks following suit.

And there’s still the chance that in-home virtual reality will be able to pick up the pace and boost adoption more quickly than the market expects.

Analysts for the industry tracker Canalys forecast that the industry will sell nearly 10 million units in 2021, on par with the (shrinking) console market. Standalone virtual reality headsets are expected to push the market to 7.6 million units sold by the end of 2018, according to Canalys.

Still, for the immediate future, for those looking to get the full benefit of a virtual reality experience, their best bet is to find the nearest Void experience and battle some storm troopers, check out an arcade, or wait for the unveiling of Two Bit Circus’ first facility later this year.

Does Google’s Duplex violate two-party consent laws?

Google’s Duplex, which calls businesses on your behalf and imitates a real human, ums and ahs included, has sparked a bit of controversy among privacy advocates. Doesn’t Google recording a person’s voice and sending it to a data center for analysis violate two-party consent law, which requires everyone in a conversation to agree to being recorded? The answer isn’t immediately clear, and Google’s silence isn’t helping.

Let’s take California’s law as the example, since that’s the state where Google is based and where it used the system. Penal Code section 632 forbids recording any “confidential communication” (defined more or less as any non-public conversation) without the consent of all parties. (The Reporters Committee for the Freedom of the Press has a good state-by-state guide to these laws.)

Google has provided very little in the way of details about how Duplex actually works, so attempting to answer this question involves a certain amount of informed speculation.

To begin with I’m going to consider all phone calls as “confidential” for the purposes of the law. What constitutes a reasonable expectation of privacy is far from settled, and some will have it that you there isn’t such an expectation when making an appointment with a salon. But what about a doctor’s office, or if you need to give personal details over the phone? Though some edge cases may qualify as public, it’s simpler and safer (for us and for Google) to treat all phone conversations as confidential.

As a second assumption, it seems clear that, like most Google services, Duplex’s work takes place in a data center somewhere, not locally on your device. So fundamentally there is a requirement in the system that the other party’s audio will be recorded and sent in some form to that data center for processing, at which point a response is formulated and spoken.

On its face it sounds bad for Google. There’s no way the system is getting consent from whomever picks up the phone. That would spoil the whole interaction — “This call is being conducted by a Google system using speech recognition and synthesis; your voice will be analyzed at Google data centers. Press 1 or say ‘I consent’ to consent.” I would have hung up after about two words. The whole idea is to mask the fact that it’s an AI system at all, so getting consent that way won’t work.

But there’s wiggle room as far as the consent requirement in how the audio is recorded, transmitted and stored. After all, there are systems out there that may have to temporarily store a recording of a person’s voice without their consent — think of a VoIP call that caches audio for a fraction of a second in case of packet loss. There’s even a specific cutout in the law for hearing aids, which if you think about it do in fact do “record” private conversations. Temporary copies produced as part of a legal, beneficial service aren’t the target of this law.

This is partly because the law is about preventing eavesdropping and wiretapping, not preventing any recorded representation of conversation whatsoever that isn’t explicitly authorized. Legislative intent is important.

“There’s a little legal uncertainty there, in the sense of what degree of permanence is required to constitute eavesdropping,” said Mason Kortz, of Harvard’s Berkman Klein Center for Internet & Society. “The big question is what is being sent to the data center and how is it being retained. If it’s retained in the condition that the original conversation is understandable, that’s a violation.”

For instance, Google could conceivably keep a recording of the call, perhaps for AI training purposes, perhaps for quality assurance, perhaps for users’ own records (in case of time slot dispute at the salon, for example). They do retain other data along these lines.

But it would be foolish. Google has an army of lawyers and consent would have been one of the first things they tackled in the deployment of Duplex. For the onstage demos it would be simple enough to collect proactive consent from the businesses they were going to contact. But for actual use by consumers the system needs to engineered with the law in mind.

What would a functioning but legal Duplex look like? The conversation would likely have to be deconstructed and permanently discarded immediately after intake, the way audio is cached in a device like a hearing aid or a service like digital voice transmission.

A closer example of this is Amazon, which might have found itself in violation of COPPA, a law protecting children’s data, whenever a kid asked an Echo to play a Raffi song or do long division. The FTC decided that as long as Amazon and companies in that position immediately turn the data into text and then delete it afterwards, no harm and, therefore, no violation. That’s not an exact analogue to Google’s system, but it is nonetheless instructive.

“It may be possible with careful design to extract the features you need without keeping the original, in a way where it’s mathematically impossible to recreate the recording,” Kortz said.

If that process is verifiable and there’s no possibility of eavesdropping — no chance any Google employee, law enforcement officer or hacker could get into the system and intercept or collect that data — then potentially Duplex could be deemed benign, transitory recording in the eye of the law.

That assumes a lot, though. Frustratingly, Google could clear this up with a sentence or two. It’s suspicious that the company didn’t address this obvious question with even a single phrase, like Sundar Pichai adding during the presentation that “yes, we are compliant with recording consent laws.” Instead of people wondering if, they’d be wondering how. And of course we’d all still be wondering why.

We’ve reached out to Google multiple times on various aspects of this story, but for a company with such talkative products, they sure clammed up fast.

In a bid to corner supply, Bird locks in exclusive deals with the biggest scooter vendors

It seems like all is fair in love and scooter wars.

In the battle royal to become the last dock-less scooter startup standing (and un-besmirched by poop), Bird has inked what it is characterizing as exclusive deals with Ninebot (the parent company of Segway) and Xiaomi (yes, that Xiaomi), for rights to their supply of scooters for ride-sharing in the U.S.

Ninebot and Xiaomi are the current champions in the scooter manufacturing market, and locking in their supply may cut off a big source of hardware for competitors Spin and LimeBike, both of which used Ninebot and Xiaomi for scooters.

“That’s news to us, we have a contract with both,” wrote an executive at a leading scooter company, when asked about the deal and its implications for the scooter business.

A person familiar with the Bird transaction placed the deal in the hundreds of millions of dollars and declined to speculate on what the agreement with the two supplier could mean for its competitors.

Since its launch in Santa Monica, Calif. in September  2017, Bird has become synonymous with both the perils and promise that scooters hold for last mile mobility.

While they undoubtedly make traveling across campuses or in relatively small communities much more convenient than car services or shuttles, they’re also clogging sidewalks, parks, alleys, and even beaches, while creating untold numbers of minor visits to emergency rooms in the cities they’ve expanded into.

And Bird has expanded into a lot of cities. The company is currently operating in San Diego, Los Angeles, San Francisco, Austin, Washington, DC, Nashville and Atlanta.

San Francisco’s administrators are fighting back against the scooter companies storming the sidewalks by instituting a new permitting process. The city plans to limit the number of scooters in the city to 1,250 and will require companies to register with the MTA.

How did Thumbtack win the on-demand services market?

Earlier today, the services marketplace Thumbtack held a small conference for 300 of its best gig economy workers at an event space in San Francisco.

For the nearly ten-year-old company the event was designed to introduce some new features and a redesign of its brand that had softly launched earlier in the week. On hand, in addition to the services professionals who’d paid their way from locations across the U.S. were the company’s top executives.

It’s the latest step in the long journey that Thumbtack took to become one of the last companies standing with a consumer facing marketplace for services.

Back in 2008, as the global financial crisis was only just beginning to tear at the fabric of the U.S. economy, entrepreneurs at companies like Thumbtack andTaskRabbit were already hard at work on potential patches.

This was the beginning of what’s now known as the gig economy. In addition to Thumbtack and TaskRabbit, young companies like Handy, Zaarly, and several others — all began by trying to build better marketplaces for buyers and sellers of services. Their timing, it turns out, was prescient.

In snowy Boston during the winter of 2008, Kevin Busque and his wife Leah were building RunMyErrand, the marketplace service that would become TaskRabbit, as a way to avoid schlepping through snow to pick up dog food .

Meanwhile, in San Francisco, Marco Zappacosta, a young entrepreneur whose parents were the founders of Logitech, and a crew of co-founders including were building Thumbtack, a professional services marketplace from a home office they shared.

As these entrepreneurs built their businesses in northern California (amid the early years of a technology renaissance fostered by patrons made rich from returns on investments in companies like Google and Salesforce.com), the rest of America was stumbling.

In the two years between 2008 and 2010 the unemployment rate in America doubled, rising from 5% to 10%. Professional services workers were hit especially hard as banks, insurance companies, realtors, contractors, developers and retailers all retrenched — laying off staff as the economy collapsed under the weight of terrible loans and a speculative real estate market.

Things weren’t easy for Thumbtack’s founders at the outset in the days before its $1.3 billion valuation and last hundred plus million dollar round of funding. “One of the things that really struck us about the team, was just how lean they were. At the time they were operating out of a house, they were still cooking meals together,” said Cyan Banister, one of the company’s earliest investors and a partner at the multi-billion dollar venture firm, Founders Fund.

“The only thing they really ever spent money on, was food… It was one of these things where they weren’t extravagant, they were extremely purposeful about every dollar that they spent,” Banister said. “They basically slept at work, and were your typical startup story of being under the couch. Every time I met with them, the story was, in the very early stages was about the same for the first couple years, which was, we’re scraping Craigslist, we’re starting to get some traction.”

The idea of powering a Craigslist replacement with more of a marketplace model was something that appealed to Thumbtack’s earliest investor and champion, the serial entrepreneur and angel investor Jason Calcanis.

Thumbtack chief executive Marco Zappacosta

“I remember like it was yesterday when Marco showed me Thumbtack and I looked at this and I said, ‘So, why are you building this?’ And he said, ‘Well, if you go on Craigslist, you know, it’s like a crap shoot. You post, you don’t know. You read a post… you know… you don’t know how good the person is. There’re no reviews.’” Calcanis said. “He had made a directory. It wasn’t the current workflow you see in the app — that came in year three I think. But for the first three years, he built a directory. And he showed me the directory pages where he had a photo of the person, the services provided, the bio.”

The first three years were spent developing a list of vendors that the company had verified with a mailing address, a license, and a certificate of insurance for people who needed some kind of service. Those three features were all Calcanis needed to validate the deal and pull the trigger on an initial investment.

“That’s when I figured out my personal thesis of angel investing,” Calcanis said.

“Some people are market based; some people want to invest in certain demographics or psychographics; immigrant kids or Stanford kids, whatever. Mine is just, ‘Can you make a really interesting product and are your decisions about that product considered?’ And when we discuss those decisions, do I feel like you’re the person who should build this product for the world And it’s just like there’s a big sign above Marco’s head that just says ‘Winner! Winner! Winner!’”

Indeed, it looks like Zappacosta and his company are now running what may be their victory lap in their tenth year as a private company. Thumbtack will be profitable by 2019 and has rolled out a host of new products in the last six months.

Their thesis, which flew in the face of the conventional wisdom of the day, was to build a product which offered listings of any service a potential customer could want in any geography across the U.S. Other companies like Handy and TaskRabbit focused on the home, but on Thumbtack (like any good community message board) users could see postings for anything from repairman to reiki lessons and magicians to musicians alongside the home repair services that now make up the bulk of its listings.

“It’s funny, we had business plans and documents that we wrote and if you look back, the vision that we outlined then, is very similar to the vision we have today. We honestly looked around and we said, ‘We want to solve a problem that impacts a huge number of people. The local services base is super inefficient. It’s really difficult for customers to find trustworthy, reliable people who are available for the right price,’” said Sander Daniels, a co-founder at the company. 

“For pros, their number one concern is, ‘Where do I put money in my pocket next? How do I put food on the table for my family next?’ We said, ‘There is a real human problem here. If we can connect these people to technology and then, look around, there are these global marketplace for products: Amazon, Ebay, Alibaba, why can’t there be a global marketplace for services?’ It sounded crazy to say it at the time and it still sounds crazy to say, but that is what the dream was.”

Daniels acknowledges that the company changed the direction of its product, the ways it makes money, and pivoted to address issues as they arose, but the vision remained constant. 

Meanwhile, other startups in the market have shifted their focus. Indeed as Handy has shifted to more of a professional services model rather than working directly with consumers and TaskRabbit has been acquired by Ikea, Thumbtack has doubled down on its independence and upgrading its marketplace with automation tools to make matching service providers with customers that much easier.

Late last year the company launched an automated tool serving up job requests to its customers — the service providers that pay the company a fee for leads generated by people searching for services on the company’s app or website.

Thumbtack processes about $1 billion a year in business for its service providers in roughly 1,000 professional categories.

Now, the matching feature is getting an upgrade on the consumer side. Earlier this month the company unveiled Instant Results — a new look for its website and mobile app — that uses all of the data from its 200,000 services professionals to match with the 30 professionals that best correspond to a request for services. It’s among the highest number of professionals listed on any site, according to Zappacosta. The next largest competitor, Yelp, has around 115,000 listings a year. Thumbtack’s professionals are active in a 90 day period.

Filtering by price, location, tools and schedule, anyone in the U.S. can find a service professional for their needs. It’s the culmination of work processing nine years and 25 million requests for services from all of its different categories of jobs.

It’s a long way from the first version of Thumbtack, which had a “buy” tab and a “sell” tab; with the “buy” side to hire local services and the “sell” to offer them.

“From the very early days… the design was to iterate beyond the traditional model of business listing directors. In that, for the consumer to tell us what they were looking for and we would, then, find the right people to connect them to,” said Daniels. “That functionality, the request for quote functionality, was built in from v.1 of the product. If you tried to use it then, it wouldn’t work. There were no businesses on the platform to connect you with. I’m sure there were a million bugs, the UI and UX were a disaster, of course. That was the original version, what I remember of it at least.”

It may have been a disaster, but it was compelling enough to get the company its $1.2 million angel round — enough to barely develop the product. That million dollar investment had to last the company through the nuclear winter of America’s recession years, when venture capital — along with every other investment class — pulled back.

“We were pounding the pavement trying to find somebody to give us money for a Series A round,” Daniels said. “That was a very hard period of the company’s life when we almost went out of business, because nobody would give us money.”

That was a pre-revenue period for the company, which experimented with four revenue streams before settling on the one that worked the best. In the beginning the service was free, and it slowly transitioned to a commission model. Then, eventually, the company moved to a subscription model where service providers would pay the company a certain amount for leads generated off of Thumbtack.

“We weren’t able to close the loop,” Daniels said. “To make commissions work, you have to know who does the job, when, for how much. There are a few possible ways to collect all that information, but the best one, I think, is probably by hosting payments through your platform. We actually built payments into the platform in 2011 or 2012. We had significant transaction volume going through it, but we then decided to rip it out 18 months later, 24 months later, because, I think we had kind of abandoned the hope of making commissions work at that time.”

While Thumbtack was struggling to make its bones, Twitter, Facebook, and Pinterest were raking in cash. The founders thought that they could also access markets in the same way, but investors weren’t interested in a consumer facing business that required transactions — not advertising — to work. User generated content and social media were the rage, but aside from Uber and Lyft the jury was still out on the marketplace model.

“For our company that was not a Facebook or a Twitter or Pinterest, at that time, at least, that we needed revenue to show that we’re going to be able to monetize this,” Daniels said. “We had figured out a way to sign up pros at enormous scale and consumers were coming online, too. That was showing real promise. We said, ‘Man, we’re a hot ticket, we’re going to be able to raise real money.’ Then, for many reasons, our inexperience, our lack of revenue model, probably a bunch of stuff, people were reluctant to give us money.”

The company didn’t focus on revenue models until the fall of 2011, according to Daniels. Then after receiving rejection after rejection the company’s founders began to worry. “We’re like, ‘Oh, shit.’ November of 2009 we start running these tests, to start making money, because we might not be able to raise money here. We need to figure out how to raise cash to pay the bills, soon,” Daniels recalled. 

The experience of almost running into the wall put the fear of god into the company. They managed to scrape out an investment from Javelin, but the founders were convinced that they needed to find the right revenue number to make the business work with or without a capital infusion. After a bunch of deliberations, they finally settled on $350,000 as the magic number to remain a going concern.

“That was the metric that we were shooting towards,” said Daniels. “It was during that period that we iterated aggressively through these revenue models, and, ultimately, landed on a paper quote. At the end of that period then Sequoia invested, and suddenly, pros supply and consumer demand and revenue model all came together and like, ‘Oh shit.’”

Finding the right business model was one thing that saved the company from withering on the vine, but another choice was the one that seemed the least logical — the idea that the company should focus on more than just home repairs and services.

The company’s home category had lots of competition with companies who had mastered the art of listing for services on Google and getting results. According to Daniels, the company couldn’t compete at all in the home categories initially.

“It turned out, randomly … we had no idea about this … there was not a similarly well developed or mature events industry,” Daniels said. “We outperformed in events. It was this strategic decision, too, that, on all these 1,000 categories, but it was random, that over the last five years we are the, if not the, certainly one of the leading events service providers in the country. It just happened to be that we … I don’t want to say stumbled into it … but we found these pockets that were less competitive and we could compete in and build a business on.”

The focus on geographical and services breadth — rather than looking at building a business in a single category or in a single geography meant that Zappacosta and company took longer to get their legs under them, but that they had a much wider stance and a much bigger base to tap as they began to grow.

“Because of naivete and this dreamy ambition that we’re going to do it all. It was really nothing more strategic or complicated than that,” said Daniels. “When we chose to go broad, we were wandering the wilderness. We had never done anything like this before.”

From the company’s perspective, there were two things that the outside world (and potential investors) didn’t grasp about its approach. The first was that a perfect product may have been more competitive in a single category, but a good enough product was better than the terrible user experiences that were then on the market. “You can build a big company on this good enough product, which you can then refine over the course of time to be greater and greater,” said Daniels.

The second misunderstanding is that the breadth of the company let it scale the product that being in one category would have never allowed Thumbtack to do. Cross selling and upselling from carpet cleaners to moving services to house cleaners to bounce house rentals for parties — allowed for more repeat use.

More repeat use meant more jobs for services employees at a time when unemployment was still running historically high. Even in 2011, unemployment remained stubbornly high. It wasn’t until 2013 that the jobless numbers began their steady decline.

There’s a question about whether these gig economy jobs can keep up with the changing times. Now, as unemployment has returned to its pre-recession levels, will people want to continue working in roles that don’t offer health insurance or retirement benefits? The answer seems to be “yes” as the Thumbtack platform continues to grow and Uber and Lyft show no signs of slowing down.

“At the time, and it still remains one of my biggest passions, I was interested in how software could create new meaningful ways of working,” said Banister of the Thumbtack deal. “That’s the criteria I was looking for, which is, does this shift how people find work? Because I do believe that we can create jobs and we can create new types of jobs that never existed before with the platforms that we have today.”

The formula behind San Francisco’s startup success

Why has San Francisco’s startup scene generated so many hugely valuable companies over the past decade?

That’s the question we asked over the past few weeks while analyzing San Francisco startup funding, exit, and unicorn creation data. After all, it’s not as if founders of Uber, Airbnb, Lyft, Dropbox and Twitter had to get office space within a couple of miles of each other.

We hadn’t thought our data-centric approach would yield a clear recipe for success. San Francisco private and newly public unicorns are a diverse bunch, numbering more than 30, in areas ranging from ridesharing to online lending. Surely the path to billion-plus valuations would be equally varied.

But surprisingly, many of their secrets to success seem formulaic. The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and ability to post massive, sustained losses; high-powered investors; and a preponderance of easy-to-explain business models.

No, it’s not a recipe that’s likely replicable without talent, drive, connections and timing. But if you’ve got those ingredients, following the principles below might provide a good shot at unicorn status.

First you conquer, then you earn

Losing money is not a bug. It’s a feature.

First, lose money until you’ve left your rivals in the dust. This is the most important rule. It is the collective glue that holds the narratives of San Francisco startup success stories together. And while companies in other places have thrived with the same practice, arguably San Franciscans do it best.

It’s no secret that a majority of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations. Uber, called the world’s most valuable startup, reportedly lost $4.5 billion last year. Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that. Even Airbnb, whose model of taking a share of homestay revenues sounds like an easy recipe for returns, took nine years to post its first annual profit.

Not making money can be the ultimate competitive advantage, if you can afford it.

Industry stalwarts lose money, too. Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history. Square, valued at nearly $20 billion, has never been profitable on a GAAP basis. DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year (and more than $100 million in each of the two preceding years). Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.

We could go on. But the basic takeaway is this: Losing money is not a bug. It’s a feature. One might even argue that entrepreneurs in metro areas with a more fiscally restrained investment culture are missing out.

What’s also noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits themselves. Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business. Today, Uber and Lyft have decimated the value of taxi medallions.

Not making money can be the ultimate competitive advantage, if you can afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share. Then, when rivals are out of the picture, it’s possible to raise prices and start focusing on operating in the black.

Raise money from investors who’ve done this before

You can’t lose money on your own. And you can’t lose any old money, either. To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously backed valuable, unprofitable Northern California startups.

It’s not a mysterious list. Most of the names are well-known venture and seed investors who’ve been actively investing in local startups for many years and commonly feature on rankings like the Midas List. We’ve put together a few names here.

You might wonder why it’s so much better to lose money provided by Sequoia Capital than, say, a lower-profile but still wealthy investor. We could speculate that the following factors are at play: a firm’s reputation for selecting winning startups, a willingness of later investors to follow these VCs at higher valuations and these firms’ skill in shepherding portfolio companies through rapid growth cycles to an eventual exit.

Whatever the exact connection, the data speaks for itself. The vast majority of San Francisco’s most valuable private and recently public internet and technology companies have backing from investors on the short list, commonly beginning with early-stage rounds.

Pick a business model that relatives understand

Generally speaking, you don’t need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does. Instead, it’s more along the lines of: “They have an app for getting rides from strangers,” or “They have an app for renting rooms in your house to strangers.” It may sound strange at first, but pretty soon it’s something everyone seems to be doing.

It’s not a recipe that’s likely replicable without talent, drive, connections and timing. 

list of 32 San Francisco-based unicorns and near-unicorns is populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and Airbnb. While there are some lesser-known enterprise software names, they’re not among the largest investment recipients.

Part of the consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center. If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less space-constrained suburban setting.

Reading between the lines of red ink

While it can be frustrating to watch a company lurch from quarter to quarter without a profit in sight, there is ample evidence the approach can be wildly successful over time.

Seattle’s Amazon is probably the poster child for this strategy. Jeff Bezos, recently declared the world’s richest man, led the company for more than a decade before reporting the first annual profit.

These days, San Francisco seems to be ground central for this company-building technique. While it’s certainly not necessary to locate here, it does seem to be the single urban location most closely associated with massively scalable, money-losing consumer-facing startups.

Perhaps it’s just one of those things that after a while becomes status quo. If you want to be a movie star, you go to Hollywood. And if you want to make it on Wall Street, you go to Wall Street. Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while losing eye-popping sums of money, then you go to San Francisco.

Two Facebook and Google geniuses are combining search and AI to transform HR

Two former product wizards from Facebook and Google are combining Silicon Valley’s buzziest buzz words — search, artificial intelligence, and big data — into a new technology service aimed at solving nothing less than the problem of how to provide professional meaning in the modern world.

Founded by chief executive Ashutosh Garg, a former search and personalization expert at Google and IBM research, and chief technology officer Varun Kacholia, who led the ranking team at Google and YouTube search and the News Feed team at Facebook, Eightfold.ai boasts an executive team that has a combined 80 patents and more than 6,000 citations for their research.

The two men have come together (in perhaps the most Silicon Valley fashion) to bring the analytical rigor for which their former employers are famous to the question of how best to help employees find fulfillment in the workforce.

“Employment is the backbone of society and it is a hard problem,” to match the right person with the right role, says Garg. “People pitch recruiting as a transaction… [but] to build a holistic platform is to build a company that fundamentally solves this problem,” of making work the most meaningful to the most people, he says.

It’s a big goal, and it’s backed by $24 million in funding provided by some big-time investors — Lightspeed Ventures and Foundation Capital .

The company’s executives say they want to wring all of the biases out of recruiting, hiring, professional development and advancement by creating a picture of an ideal workforce based on publicly available data collected from around the world. That data can be parsed and analyzed to create an almost Platonic ideal of any business in any industry.

That image of an ideal business is then overlaid on a company’s actual workforce to see how best to advance specific candidates and hire for roles that need to be filled to bring a business closer in line with its ideal.

“We have crawled the web for millions of profiles… including data from Wikipedia,” says Garg. “From there we have gotten data round how people have moved in organizations. We use all of this data to see who has performed well in an organization or not. Now what we do… we build models over this data to see who is capable of doing what.”

There are two important functions at play, according to Garg. The first is developing a talent network of a business — “the talent graph of a company,” he calls it. “On top of that we map how people have gone from one function to another in their career.”

Using those tools, Garg says Eightfold.ai’s services can predict the best path for each employee to reach their full potential.

The company takes its name from Buddhism’s eightfold path to enlightenment, and while I’m not sure what the Buddha would say about the conflation of professional development with spiritual growth, Garg believes that he’s on the right track.

“Every individual with the right capability and potential placed in the right role is meaningful progress for us,” says Garg. 

Eightfold.ai already counts more than 100 customers using its tools across different industries. Its software has processed more than 20 million applications to date, and increased response rates among its customers by 700 percent compared to the industry average — all while reducing screening costs and time by 90 percent, according to a statement.

“Eightfold.ai has an incredible opportunity to help people reach their full potential in their careers while empowering the workforces of the future,” said Peter Nieh, a partner at Lightspeed Ventures in a statement. “Ashutosh and Varun are bringing to talent management the transformative artificial intelligence and data science capability that they brought to Google, YouTube and Facebook. We backed Ashutosh previously when he co-founded BloomReach and look forward to partnering with him again.”

The application of big data and algorithmically automated decision-making to workforce development is a perfect example of how Silicon Valley approaches any number of problems — and with even the best intentions, it’s worth noting that these tools are only as good as the developers who make them.

Indeed, Kacholia and Garg’s previous companies have been accused of relying too heavily on technology to solve what are essentially human problems.

The proliferation of propaganda, politically minded meddling by foreign governments in domestic campaigns and the promotion of hate speech online has been abetted in many cases by the faith technology companies like Google and Facebook have placed in the tools they’ve developed to ensure that their information and networking platforms are functioning properly (spoiler alert: they’re not).

And the application of these tools to work — and workforce development — is noble, but should also be met with a degree of skepticism.

As an MIT Technology Review article noted from last year:

Algorithmic bias is shaping up to be a major societal issue at a critical moment in the evolution of machine learning and AI. If the bias lurking inside the algorithms that make ever-more-important decisions goes unrecognized and unchecked, it could have serious negative consequences, especially for poorer communities and minorities. The eventual outcry might also stymie the progress of an incredibly useful technology (see “Inspecting Algorithms for Bias”).

Algorithms that may conceal hidden biases are already routinely used to make vital financial and legal decisions. Proprietary algorithms are used to decide, for instance, who gets a job interview, who gets granted parole, and who gets a loan.

“Many of the biases people have in recruiting stem from the limited data people have seen,” Garg responded to me in an email. “With data intelligence we provide recruiters and hiring managers powerful insights around person-job fit that allows teams to go beyond the few skills or companies they might know of, dramatically increasing their pool of qualified candidates. Our diversity product further allows removal of any potential human bias via blind screening. We are fully compliant with EEOC and do not use age, sex, race, religion, disability, etc in assessing fit of candidates to roles in enterprises.”

Making personnel decisions less personal by removing human bias from the process is laudable, but only if the decision-making systems are, themselves, untainted by those biases. In this day and age, that’s no guarantee.