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Body cameras spread, changing how cops do their job

Fri, 2015-05-01 11:59

Attorney General Loretta Lynch has announced a $20 million Justice Department pilot project to provide body cameras to selected police departments nationwide, to help encourage and study their use.

While dash cams that record from inside a police car are now widely deployed nationwide, body cams are currently in use in a small minority of police departments. The systems are expensive—with an initial investment for cameras, and ongoing costs for data storage and technology management.

The police department in Rialto, California, has been using body cams since 2012. They're small, cigarette-lighter-sized video cameras mounted to a helmet or uniform, with built-in data storage for videos, connected to a small battery pack. The cameras — Rialto’s are supplied by Taser International — are supposed to be turned on by the officer before any significant encounter with a member of the public, a witness or a suspect. That means everything from a routine traffic stop, to a domestic dispute, to a robbery in progress.

Rialto was the subject of one of the first controlled academic studies of the impact of body cams on policing.

Rialto police chief Tony Farrar was studying for a master’s degree at the Cambridge University Institute of Criminology in the U.K. in 2012. He worked with several of his professors to craft a study on the roll out of body cams in his police department. Farrar obtained approximately $100,000 in state and federal grants to purchase cameras (at about $1,000 each, plus the hardware and software necessary to upload and store video from each officer’s shift).

Farrar says the results of that initial study were impressive—so impressive, he outfitted the entire department, all 106 sworn officers in the small Southern California city of 100,000, in 2013.

“We’ve got less officer complaints, less times that we have to use force,” says Farrar. Complaints against police by civilians declined by 88 percent in the first year body cams were being worn, according to the Cambridge study; use-of-force by police declined by 60 percent. Violent incidents against the police also declined — the Cambridge researchers speculate that people interacting with police know they’re being videotaped, and moderate their behavior as a result. Farrar says the department’s rate of successful prosecution improved, because of better evidence being gathered on the body cams.

Farrar’s conclusion: “Hopefully, we have an increase in public trust and credibility and the overall legitimacy of policing.”

Still, not everyone in the department was on board to hit the streets “packing video.” Farrar says, “some of the more seasoned officers had a few more questions.” A young patrol officer in the department, Randall Peterson, who is a former Marine with two and a half years on the force, agrees. He says there was “controversy” when the body cams were rolled out.

But he himself quickly came to accept them as a valuable addition to his standard procedure and gear when he goes out patrolling his beat. On a recent day shift, he was looking for witnesses and a suspect in an alleged assault. If he found them, he planned to videotape everything that transpired. For the suspect in particular, he says, “there’s a huge potential for him to either make a spontaneous statement that he did commit the offense, or, say he decides he wants to run or fight, then it’s going to catch any offense that he commits after the fact during my contact.”

“A big part of my job is protecting myself from civil liability,” says Peterson. “And why not help myself? That’s how I see it.”

Chief Farrar says all the videotaping hasn’t crimped his veteran officers’ style—on patrol or at headquarters.

“Officers sometimes have a very unique way of relieving stress and tension, and pulling pranks on each other,” says Farrar. “I went downstairs to briefing the other day and they kind of ripped me apart. We don’t arbitrarily search videos looking for officers that did something wrong or may have said something wrong.”

Police departments grapple with body camera costs

Officer Peterson feels comfortable in his privacy while on the job. He says he videotapes what’s required, and is careful to control his mode of expression in front of civilians. But, “I have the ability to turn the camera off when I want to tell a joke to my partner. And I honestly should have the professionalism to realize that if I’m in front of the public, I should probably keep my inappropriate jokes to myself.”

Chief Farrar says he absolutely does want his officers to be conscious that they’re being recorded, to temper their behavior in stressful law enforcement situations.

“If you have a long foot chase, or a long car chase, or you make a very good arrest, the officers want to congratulate each other or whatever,” says Farrar. “But I don’t think it’s appropriate to be high-fiving at the end of a car chase.”

However, inhibiting police officers from acting as they otherwise would, absent a camera recording their every word and move, is seen as a problem by law enforcement officers who oppose mandatory use of body cams. And it’s also a concern shared by some criminal justice experts.

Professor Maki Haberfeld chairs the program in law, police science and criminal justice administration at John Jay College of Criminal Justice in New York. Haberfeld predicts that increasingly ubiquitous video-monitoring of police, plus police officials, prosecutors and civil rights lawyers scrutinizing all that video for evidence of misconduct, will make officers on the beat afraid to use adequate force when they need to.

“There’s no doubt in my mind that they will second-guess themselves, they will hesitate, and it can potentially create a danger,” she says.

Haberfeld is also skeptical as to whether more videotaping will really help good cops defend their use of force, or protect the public when bad cops go over the line.

“Things can be understood out of context even if they’re recorded,” says Haberfeld. “This is going to be scrutinized against standards that are totally unrealistic, by people who do not understand how police work is done properly. Certain situations appear to be abusive when they’re not.”

Of course, police could just turn off their video recorders when they’re in a dangerous situation, or if a situation has the potential to make them look bad. But that would violate police policy in most jurisdictions where body cams are in use.

And, in response to the potential for police to fail to record incidents or attempt to manipulate what has been recorded, some critics of police behavior are already calling for body cams to be set or designed to record all the time, throughout an officer’s shift. Then officers wouldn’t have to turn the cameras on to record an incident; in fact, they wouldn’t be able to turn the body cams off.

“It’s oppressive to have to work on-camera every minute of the day,” says Lewis Maltby, president of the National Workrights Institute, a public-interest legal group formerly affiliated with the ACLU. “It should only be done where it’s really necessary. But there are cases where it may be necessary, like police officers. It’s literally a matter of life and death, and experience has shown that we can’t detect police abuse any other way.”

Your Wallet: What are you chasing?

Fri, 2015-05-01 10:21

What are you chasing in your financial life? Retirement? Savings?

Will you catch it? Tell us about your race.

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Building a more accessible home, no matter your budget

Fri, 2015-05-01 10:02

When Staff Sergeant Matt Dewitt came home from Iraq, what he wanted most was to be able to take care of his family — to live comfortably at home with his wife and two young children, taking care of them as he always had. But the war left him wounded — both of his arms were amputated below the elbow.

Staff Sergeant Matt Dewitt. 

Courtesy This Old House

In his former home, day-to-day tasks became harder than usual. Simple things, like giving his kids a bath, were impossible; Dewitt couldn't independently use the spigots or change the water temperature. 

Dewitt's story echoes that of many people who, after an injury, illness or onset of disability changes their life, find themselves seeking a more accessibly designed home. 

In Dewitt's case, the solution was a new home, built through a joint effort by the nonprofit Homes For Our Troops and PBS's "This Old House."

Armed with about $400,000 from Homes For Our Troops, the "This Old House" team built the Dewitt family a new home from the ground up. The entire house was designed with accessibility in mind: keyless entry, touchless faucets, temperature sensors, and rooms and showers without thresholds. Building this way uses a principal called Universal Design, and includes modifications meant to meet a wide variety of needs. 

The Dewitt home. 

Courtesy This Old House

"This Old House" host Kevin O'Connor says building or modifying a home to meet the needs of a person with a disability is a complex process.

"The first thing that really should happen with any renovation is to do an assessment," he says. "You want to actually figure out: what are their needs? Are they in a wheelchair? If they're not now, will they be in the future? Are they an amputee? Do they have a caregiver with them, and is that caregiver there part-time, or full-time?"

O'Connor says the best assessments are done alongside a healthcare provider — a doctor or therapist who can speak to their patient's specific needs and make sure they're being met, with the goal that someone can live in their home "comfortably and independently."

For people adapting their home without help from outside groups or grants, modifications can be expensive. O'Connor says that there's a wide range of costs for renovations, the most expensive of which involves making a two-story house wheelchair accessible with an elevator or lift. 

Fernando Hernandez, who was paralyzed at 19 by a tumor on his spine, has dealt with a broad spectrum of adaptations with varying costs.

When he first started using his wheelchair, Hernandez was attending USC, and he moved from his apartment into an accessible dorm. His family moved into a more accessible house, but it still had two stories, so they spent about $17,000 on a lift. Other modifications to that home brought the grand total closer to $30,000. 

When Hernandez moved into his own home three years ago, he was working with a much different budget.

"I wanted to do very little modification to the house," he says. "I definitely was looking for a one story house, and wide door openings, and an open concept house."

Hernandez modified his home by adding a few short plywood ramps his friend built to help him go more smoothly over thresholds and small steps. Instead of widening his doorways — something O'Connor says can cost about $450 per door — he bought special hinges for about $5 each. They pull the door outside of the frame, allowing a few inches of extra space to get through in a wheelchair, something that Hernandez says is important to him, since he's six-foot-six. 

Hernandez made his home more accessible with aesthetics in mind, and some of his favorite accessible furniture wasn't made especially for people in wheelchairs, but serves two purposes. His headboard, for example, includes a bar to help him transfer in and out of bed, and his dining table is pedestal style, so he can roll right up to any spot. As accessible design becomes more mainstream, people designing and furnishing homes with accessibility in mind have more options, and lower costs.

One exception? The bathroom.

"The bathroom is one of the big areas that does require quite a bit of expense," Hernandez says, "and definitely money well spent if you do all the safety things that you need to."

In his bathroom, Hernandez has a shower bench, a couple grab bars for stability and a wheelchair bathroom bench, which sits over the toilet. Hernandez says that even the bathroom renovations were doable on a DIY budget: grab bars cost about $25 to $100, depending on size and type, and his shower bench was about $100. 

O'Connor says even for people without disabilities, renovating accessibly is important, and is becoming more so as people purchase homes with plans to stay there as they age.

"Right now in this country, there are well over 40 million people who are 65 or older, and in my experience, that is the population that is driving these changes." O'Connor says. "It's making people think 'Hey, if we're going to renovate, maybe we should get rid of the bathtub, and maybe we should put in a curb-less shower'...and we are seeing that from perfectly able-bodied young people thinking forward. These changes are coming to the American home."

As accessibility in the present and the future becomes more important to people, universal design becomes more prevalent in buildings and houses. Universal design is the reason behind the increase in the number of homes with master bed and bathroom suites on the ground floor. It includes touches as obvious as open floor plans and as small as paddle door handles, which may be easier on arthritic hands than round knobs. 

O'Connor says that big building companies are already taking note, and that accessible options are out there for people who want them.

"There's no doubt about it that this is already there," O'Connor says. "People probably don't even know that they are buying features that would be considered universal design."

To learn more about the Dewitt home and the "This Old House" veterans project, tune in to "This Old House" on PBS starting May 14. 

Land a job with help from virtual reality

Fri, 2015-05-01 10:01

Albert "Skip" Rizzo is a pioneer in virtual technology. His newest program is the the Virtual Interactive Training Agent, or VITA.

It was developed by the USC Institute for Creative Technologies, in partnership with the Dan Marino Foundation. The interactive aims to help people navigate a job interview. For people on the autism spectrum, Rizzo says, job interviews can be particularly daunting.

VITA helps people practice questions with a virtual interviewer.

"We can set them to have three different behavioral dispositions. They can be that really nice, light-touch job interviewer, the neutral interviewer or the real stress interviewer — the real son-of-a-B," Rizzo says. "We can have people practice how they will respond to these types of characters under a range of conditions."

Aaron Brown-Coats went through the VITA program as part of the curriculum at the Dan Marino Foundation, and says working with the virtual characters helped change the way he interacts at his own job.

Inside the weird world of podcast advertising

Fri, 2015-05-01 07:10

This story was produced in collaboration with FiveThirtyEight. Audio for this story is forthcoming.

The most listened-to podcasts come mostly from public radio: Serial, Invisibilia, This American Life. But the ads? 

"Many of our advertisers are the same ones that you hear on Howard Stern," says Lex Friedman, who heads up ad sales at Midroll. "Literally, you hear Casper mattresses and Audible and Squarespace and ZipRecruiter." 

But this is something people like Friedman are trying to change. Ask about his dream advertisers, and he talks about categories like major movie studios, car companies, clothing companies — household name brands that you'll find on prime-time TV.


"Here's the crass answer: they have deeper pockets, right?" says Friedman. "So, if you can get Coca-Cola or car companies or studios...they have big budgets."

Big budgets that let those advertisers buy in bulk — spending less per ad, but buying more ads overall. 

To see why that's desirable, you can look at the data set put together by FiveThirtyEight data reporter intern Hayley Munguia. She spent two entire days listening to the latest episode of every single podcast in the iTunes top 100—and writing down all the ads. There were 186.

But more than a third of the shows she listened to had no ads. And on the other two thirds, the median number of ads was just two. That's a relatively low "sell-through" (as the percentage of ads sold is called) for shows that have the six ad slots. Lex Friedman says  is common on Midroll's shows. 

“If a show gets 50 or 60 percent sell-through, we’re happy with that,” he says. “But we’re not satisfied with that." 

The FiveThirtyEight databsase reveals that the vast majority of today's podcast ads are, indeed the "Howard Stern" ads: host-read scripts for mid-sized companies selling online.

"For the most part I would say they all blended together, but yeah," says Munguia. "There were a few that stood out for being particularly ... terrible."

For instance: Bill Burr's pre-Valentine's Day endorsement of Sharri's Berries—chocolate-dipped berries you can order online. 

"Show her you thought of something unique and different this year, and get her the gift she is sure to love: Sharri's Berries," Burr says near the beginning of the ad on his Monday Morning Podcast. "Yeah, get her something unique. Get her something you and f**king four million other people are going to get."

When Munguia heard this ad, she wondered: has anyone from Sharri's Berries ever heard this ad?

The answer is yes. I played the ad over the phone to Sharri's Berries' acquisition marketing director, Nick Fairbairn. 

"I mean, does that fall within our brand standards? Probably not," he says. "Is it authentic to Bill Burr the comedian in a podcast space that's not nationally regulated for language? Yeah, it's right on brand for him. And gosh it was ROI positive, too."

ROI as in "Return On Investment" — as in, that ad actually sold a lot of berries. Fairbairn credits the ability of the endorsement (or endorsement-style) "native ads" that are typical on podcasts to blur the line between content and commerce.

"Keep it authentic, don't force it," says Fairbairn. "I think that's the key to doing this stuff."

And they know the ads work, because of a different part of the ad — something Bill Burr repeated at least three times: 

"Go to, click on the microphone and type Burr," he says.

These coupon codes are the norm for today's podcast advertisers. They give listeners an incentive to become customers, and they also give advertisers a handy way to track ads' effectiveness. (Especially useful, because data on podcast listening is less than solid.)

But the question is: by proving that podcast ads can move berries, do they also prove their value for companies that don't count coupons — like, say, Coca-Cola?

"By no means is it perfect for anybody," says Derek Lu, a senior strategist at the Media Kitchen, which buys ads for companies including Goldman Sachs. 

"It's hard to measure engagement; it's hard to measure and track the user journey," he says. And advertisers get relatively limited reach in exchange. "[Companies that advertise on podcasts are] there because they can reach a very niche audience where they couldn't otherwise have reached them," he says.

One possibility, according to Sherrill Mane, SVP of industry services for the Interactive Advertising Bureau, is that they will remain niche. 

"It's a craft, almost," she says. "And in the craft business sometimes if you get a high enough unit price you don't need to sell mass."

In other words, as long as the top podcasts can charge high rates—for host-read ads with coupon codes; selling berries, websites and stamps—they may be just fine without Coca-Cola.


PODCAST: Off to the races

Fri, 2015-05-01 03:04

April was a decidedly mixed month for the economy. We take a look back. Plus, if luck is a lady then some ladies may get lucky at the racetrack this season. Traditionally, horse racing is a field dominated by men: male owners, male trainers, male jockeys. But now, ladies want in.

Uber helps spring clean for free ... if you're patient

Fri, 2015-05-01 02:00

Uber, the ride-share private car company, is known for occasionally using its fleet of cars and drivers to make unusual deliveries: puppies, kittens, ice cream and roses, to name a few. 

This Saturday it will roll out its "spring cleaning" service again. The service connects users with a driver who will whisk bags of clothing to a Goodwill donation center for free. 

Zuhairah Washington, general manager of Uber D.C., says "surprise and delight campaigns" like these allow "people to experience Uber in a different way."

Users who want to clean out their closets need only pack their clothing into bags, fire up Uber, select the "give" option, and then ... wait.

Whitney Johnson, an actor in New York, is a regular Uber user. But when she tried to use the spring cleaning service last year, she waited for four hours. Her advice? "Start early, keep trying, don't give up."

Silicon Tally: the deal...with Hulu?

Fri, 2015-05-01 02:00

It's time for Silicon Tally! How well have you kept up with the week in tech news?

This week, we're joined by Casey Johnston, who writes about technology and is an editor at The Wirecutter.

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Between derby and boxing, a big betting weekend

Fri, 2015-05-01 02:00

For sports gamblers, this Saturday will be like Christmas come early. Between the Kentucky Derby in the afternoon and the Mayweather—Pacquiao fight that evening, hundreds of millions of dollars will be wagered across the country.

In Nevada, the welterweight match between Floyd Mayweather and Manny Pacquiao could generate upwards of $50 million in bets, which would be a Nevada record.

Michael Grodsky is director of marketing for William Hill U.S., which operates more than 100 sports books in that state. He says, "80 percent of the bets that have been made are on Manny Pacquiao, and that's also 65 percent of the money that's in bet. So, we'll be rooting for Floyd Mayweather."

The Kentucky Derby also stands a chance of breaking betting records, but if you want to bet legally on other sports this weekend, Vegas is king.

Johnny Avello is known as the “Wizard of Odds” on the Vegas strip. His official title: executive director of race and sports operations at the Wynn Las Vegas.

"Well, if you like horse racing, boxing, NBA, NHL and baseball ... I guess it’s a gambler's delight," Avello says.

However, it’s still just a drop in the bucket in terms of total betting. I always estimate that Nevada's probably 3-4 percent of everything that's wagered in the U.S.”

Outside of horse racing, which is legal in other states, Avello says most sports betting in the U.S. is underground.

Why lower gas prices haven't spurred the economy

Fri, 2015-05-01 02:00

Gas prices have been under $3 dollars in most of the U.S. for six months now. Which put a load of unspent money in drivers’ pockets, available to spend. But that spending economic stimulus has hardly shown up.

Drivers who fill up can now leave gas stations with an extra $20 they didn't have to spend. Where does it go?

“At least a good portion of that has always been spent,” says Dean Maki, economist at Point72 Asset Management. “Consumers aren’t so disciplined they’re unwilling to spend additional income that they get. Typically they do spend at least a significant portion of that additional income."

But that spending hasn’t shown up in the numbers. Retail sales are tepid. One possibility is the splurge just isn’t here yet. Consumers have yet to be convinced low gasolines prices will last.

“Typically, consumers would want to wait for confirmation that low gasoline prices are here to stay,” Greg Daco of Oxford Economics says. “We still have yet to see the full benefit.”

That may come soon, now that the long winter’s over. But not every economist is expecting that.

“These predictions were wrong,” says economist Ed Hirs of the University of Houston and the oil and gas firm Hillhouse Resources. “There is no direct tie between low gas prices and GDP.”

Hirs argues that money not spent on gasoline has gone to pay off debt, and in some cases buy health insurance required by the Affordable Care Act. The Wall Street analysts who predicted a spending boom have a financial interest in such projections, Hirs says.

“They’re cheerleaders for the market,” Hirs says. “They are not going to stand up and say, ‘Hey this is temporary. Just take your 20 bucks and put it under your mattress.’ That doesn’t sell any shares or bonds.”



Not just fillies: women are becoming racehorse owners

Fri, 2015-05-01 01:59

Make a bad investment choice, and it can feel almost as if  you were kicked in the stomach. But then again, some investments can kick you in the gut — literally.

"They can kick, they can bite," says Sheila Rosenblum of her nine horses. Rosenblum is owner of Lady Sheila Stable and the head of the all women's racing syndicate Lady Sheila Stable Two. "I happen to have some very nice horses but some naughtier ones too," she says.

At 8:00 A.M. on a drizzly, muddy weekday morning, Rosenblum is at Belmont Racetrack on Long Island watching the grooms check her horses to make sure they're sound before they’re exercised. But aside from a small handful of women working as exercise riders, or in the stables, Rosenblum is the only non-equine female in sight.

Traditionally horse racing is a male dominated industry. But now, Rosenblum, and women like her, are changing the industry. All of the investors in both of the syndicates Rosenblum oversees are women.

“It's exhilarating, it's challenging," says Rosenblum of working in the mostly-male industry. "It's tough as heck. But I love it.”

According to the National Thoroughbred racing association, the average price of a racehorse is $60,000. But prices can go up into the millions. One of the most expensive horses ever sold, Seattle Dancer, went for $13 million as a yearling in 1985. But at his retirement, he had only netted about $150,000. Prospective owners beware.

“They’re going to have to find somebody to buy their horse. They’re going to have to find someone to train their horses," says Laurie Wolf, co-founder of the all female syndicate – Starladies Racing. "It's not like something you can just look up in the yellow pages," she says.

For newcomers, notes Wolf, horse racing can have a steep learning curve.

“It sort of seems like a secret club," she says. "Unless you're in the business, it seems like it's not an easy business to walk right into."

Last month, La Verdad, a horse owned by Sheila Rosenblum, won a $200,000 race. But Rosenblum acknowledges the business of horses is a risky one. While they may be huge and strong and fast, horses are also fragile. All it takes is one wrong step or a blown tendon.

“This is Wall Street for horses,” she says.

For owners, it can feel like they’re betting on the horses even when they’re not betting on the horses.

80 percent of horses don't earn a profit, says Dan Metzger, president of the thoroughbred owners and breeders association. But a lot of owners, he says, get into racing, not to make money. "Some people buy yachts. Some people join country clubs," he says. And some ... buy horses. Horse owners, says Metzger, are risk takers. "They're looking to hit lighting in a bottle. They're looking to hit the horse that's going to win a major race."

But since the financial crisis, investors have been less willing to take a gamble on a horse, says Alex Waldrop, President and CEO of the National Thoroughbred Racing Association.

"You're seeing people at every level, men and women, who are a little more risk averse, who are being a little more cautious," he says. As a result, more investors are seeking out opportunities to buy, not a horse, but a piece of one, investing in syndicates, like the kind that Sheila Rosenblum and Laurie Wolf run.

More investors, says Waldrop—men and women both—are good for business.

When she first became involved in the business of horses says Rosenblum, she faced pushback for being a woman in man's world. "It was a fact," she says. "I paid my dues. I'm still paying them."

And, she notes, many of the young thoroughbreds in the stable are also preoccupied by thoughts of females. But she says, it's a different breed, they're thinking about, altogether.








Off to the races!

Fri, 2015-05-01 01:44
$35 million

That's how much funding was raised by anonymous social networking app Secret. It'll now return some of that money after the company folded this week. Secret failed for some fairly standard reasons – tough competition, users losing interest, losing key employees and so on – but it's unusual because of just how much money they had. Most failed start-ups only raise $1 million or less before they go belly-up.

180 episodes

That's how many episodes were made of a little sitcom named Seinfeld. Heard of it? You're about to hear a lot more: it was announced this week that Hulu has bought the streaming rights for all 180 of those episodes. But you already knew that, didn't you? So why not head over to Silicon Tally, our weekly quiz on the week in tech, and prove your news savvy.


That's the portion of one Manhattan restaurant's business that goes to Seamless and Grubhub, the owner says. Those delivery apps dominate New York City and many other markets, but smartphone takeout is fertile territory, and many companies are lining up – and investing tons – to try and take a bite out of their business.

$50 million

By some estimates, that's how much could be generated in Nevada via bets placed on the Mayweather—Pacquiao fight taking place on Saturday Night. It's a big weekend for betting, what with the Kentucky Derby taking place that same afternoon. Some betting experts are anticipating it could be a record-breaking weekend for money brought in through bets placed on sporting events.


Speaking of the Kentucky Derby, $60,000 is the average price of a racehorse. Talk about an investment that could literally kick you in the gut, especially when you consider that 80 percent of horses do not earn money for their owners. But for some, buying a racehorse is a status symbol; more like buying a luxury yacht, or joining a country club. And these days, more women are joining the ranks of horse owners.

$7.2 billion

The global box office gross of movies in the Marvel Cinematic Universe, not including "Avengers: Age of Ultron," which opens Friday. The "shared universe" – a collection of film franchises that share characters and storylines – is the new model major studios are taking on. Bloomberg breaks down the business logic behind these connected films, and how studios are scouring their intellectual property – Lego, Transformers, "Star Wars," Ghostbusters, DC Comics, etc. – to try and catch up with Marvel Studios.

Investors in Secret to get some money back

Thu, 2015-04-30 13:00

One of last year’s Silicon Valley darlings has already reached its demise. The social networking app Secret is shutting down. In its less than 18-month run, the company raised $35 million from investors. And early on, it surpassed 15 million downloads.

“It’s certainly been sort of a moonshot, at the speed of the rocket ship ride that is modern internet virality,” says Max Wolff, chief economist at Manhattan Venture Partners, which researches and values tech companies before they go public.

Secret allowed users to blast an anonymous message or picture to friends and connections, to their delight or dismay. Wolff says it was especially popular among high school and college kids.

“There was everything from, “Everyone be careful, there's a dangerous person who's picking fights,’ to ‘Yeah, I have a crush on him or her,’” he says.

But the app quickly ran into issues — cyberbullies took unseemly advantage of the anonymity it offered. Wolff says a redesign made the app look too much like competitors Whisper and Yik Yak. Interest fizzled. Key employees jumped ship.

David Byttow, Secret's co-founder and chief executive, wrote in a Medium post Wednesday that the company no longer matched his vision and he would shut it down.

“I believe in failing fast in order to go on and make only new and different mistakes,” he wrote.

Byttow added that Secret still has a significant amount of capital, which he will return to investors.

“I believe the right thing to do is to return the money rather than attempt to pivot,” he wrote.

Even if Secret had stayed afloat and tried to change course, it would’ve been hard to renew the initial buzz and investor interest, according to Matthew Wong, research analyst at CB Insights, which tracks private company financing.

“The chances of success aren't as high as they definitely were earlier,” he says.

Manhattan Venture Partners’ Max Wolff says successful turnarounds are rare in this start-up app space. He likens the app economy to the music industry, where you might have a hit single.

“And you put together a really expensive tour, and by the fifth week of the tour, you're playing to no one,” he says. “Do you really need to spend all the money you were advanced by the record company and finish the next 20 cities?”


Baltimore, now and then

Thu, 2015-04-30 13:00

Kim Peace was a young girl in April 1968, when Baltimore erupted after the death of Martin Luther King, Jr.

“I seen people looting and tearing stores up and stuff,” she says. “I really didn’t understand what was going on, but now I know.”

Fifty years later, Peace lives in the neighborhood where Freddie Gray was arrested, and where the violence broke out this week after Gray’s funeral. Afterward, she and her granddaughter helped the cleanup effort.

Today, Mayor Stephanie Rawlings-Blake promised justice, even as the wait continues for answers about how the young black man died in police custody. Baltimore police have turned their investigation over to prosecutors, who will decide whether to bring charges in the case.

The turmoil in Baltimore has led to comparisons to the much larger riots of 1968. Some of the same neighborhoods in Baltimore were affected, and in many ways those neighborhoods never really recovered.

The ’68 riots were far more widespread than what happened this week, says Michael Higginbotham, a law professor at the University of Baltimore, but the roots are the same.

“We're talking about high unemployment, we're talking about poverty, homelessness, drugs, crime and hopelessness,” he says. “That’s what were the causes in 1968 and they’re the same causes, and the problem is we haven't dealt with that.”

In fact, Higginbotham says, the 1968 riots only made those conditions worse, because some businesses were reluctant to invest.

Patricia Fernandez-Kelly, who wrote “The Hero’s Fight” about West Baltimore, doesn't buy that fear keeps businesses away. She blames generations of neglect.

“It is because we have not invested in those neighborhoods,” she says. “Those are folks who really do not have a loud political voice.”

One teacher in Baltimore is trying to give his students more of a voice. At Mount Royal Elementary and Middle School, Baba Olumiji’s 7th and 8th graders spent this morning writing letters to their City Council members. Many of the students live in neighborhoods where stores were looted and burned this week.

“We wanted the children to actually start to learn how to positively advocate for their needs,” Olumiji says.  

When school reopened after the unrest, Olumiji used the legacy of the ‘68 riots to teach non-violence.

“We thought it was important for the children to see that neighborhoods don't always get restored,” he says.  “A community has been damaged, perhaps — hopefully not — irreparably.”   

Now, the hope is that West Baltimore won’t be forgotten again.

Microsoft wants to guess your age

Thu, 2015-04-30 13:00

I know I was a bit rough on Microsoft yesterday, saying they didn't do anything cool anymore.

Well, it's amazing what a difference a day can make, huh? They're working on a new facial recognition tool that lets upload a picture of yourself — or anyone else — and it tells you how old it thinks you are.

I tried it with a couple of pictures of me, and let's just say I really really like the results.

China's new deposit insurance is about systemic change

Thu, 2015-04-30 13:00

Tomorrow China introduces something the U.S. has had since the Great Depression:  deposit insurance.  You know if a bank goes under, your money stays safe.  It’s reassuring. 

Except in this case, China’s government is trying to reassure people in order to make them more nervous.  Or at least more cautious.

How does that work? Well, many people there don’t need to be reassured. 

“Right now, everybody in China already assumes their deposits are 100 percent guaranteed,” says Douglas Elliott, fellow at the Brookings Institution.  He says everyone knows, and has observed, that “the government and Communist Party believe strongly in social stability.”

This all-but-written-out guarantee is known as an implicit guarantee, and it’s a problem.  Baizhu Chen, professor of clinical finance and business economics at the USC Marshall School of Business, says “the government does not want to have this extra financial burden on them every time the banks have some problems.”

Another problem:  laziness.  If banks know they’ll get paid back by the government, they won’t care as much about what kinds of loans they’re making. 

“When investors think all this stuff is implicitly guaranteed, nobody’s doing credit analysis, nobody’s kicking the tires,” says Jennifer Carpenter, associate professor at NYU's Stern School of Business. This is, it’s worth noting, is not a problem only in China. 

But if people are already too reassured that the government will bail banks out, why have deposit insurance to reassure people that banks will get bailed out?

“The role of deposit insurance is actually to tell people what’s not insured,” says Carpenter.  

Deposit insurance has limits.  Very clear limits.  It only covers bank accounts of the equivalent of about $80,000 or less.  It only applies to real banks.  So deposit insurance is a real thing, not a vague expectation that the government will take care of everything.  And it’s part of something much larger taking place in China’s economy.

“The country is moving towards market-based solutions,” Chen says.

Deposit insurance is just part of China’s policy of slowly taking the training wheels off its financial system.  One closely-watched step has been to relax control over what interest rates banks can offer to account holders.  The Chinese government will most likely relax that control further in the coming years.  That means banks will have to compete over the interest rates they offer to account holders, and they will have to make loans to back them up.   Some may fail.  The introduction of deposit insurance lets that happen with a safety net – just not one that’s too big.    

New apps take aim at Seamless and Grubhub

Thu, 2015-04-30 12:36

In New York City, a town that loves takeout, apps are replacing the telephone and paper menus as a way to place an order.

The biggest app around is Seamless. That company so dominates online ordering that many restaurants feel they’re forced to do delivery by Seamless rules. But that could be changing, as billions of dollars are invested in new online ordering systems.

Seamless, with its partner Grubhub, handles orders for 30,000 restaurants, from Boston to Chicago to Los Angeles. Abby Hunt, a company spokeswoman, said that fact alone shows the services are providing value.

“Grubhub and Seamless together process more than 200,000 orders a day," she says. "So we’re able to connect restaurateurs to people who wouldn’t otherwise know that they exist."

While Seamless really is seamless for customers, restaurants pay a high price for the service through commissions that can go as high as 20 percent on each order.

“The problem is that if it doesn't translate into more actual revenue or profit for us, then there’s no upside to us” said Lukus Hasenstab, a co-owner of Penelope, an American comfort food spot in Midtown. “We’re just working harder for less.”

For every abstainer, though, there’s a restaurant that sees Seamless as indispensable. When Burger Heights launched in Upper Manhattan last year, it quickly listed with Seamless and GrubHub.

Co-founder Mike Vinocur scanned a spreadsheet of orders on a recent Saturday night, and quickly calculated Seamless and GrubHub’s impact.

“Maybe a third of our business could be through their service,” Vinocur said.

Can’t live with it. Can’t live without it. That’s how much power Seamless has over New York restaurants.

But Seamless only looks invincible, according to Steven Jacobs. He writes about e-commerce for the website Street Fight.

“The reality is these markets are changing extremely quickly,” Jacobs says, “and as companies like Yelp and Google look at the home delivery and food delivery market, the status quo for Seamless right now could change in a matter of a few years.”

Rosenheim Advisors reports $2.4 billion in private capital flowed into food tech and media in 2014, a 42 percent increase from 2013.

This year, Yelp bought the online ordering company, Eat24, and started taking orders directly through its website. Google is taking baby steps in this direction as well, by giving better results when you search food and restaurants.

And there are smaller upstarts doing weird and wacky things, Like Push for Pizza, which had a hit with a web video, advertising pizza that could be ordered with the tap of a single button.

In time, Jacobs says, one or more of these companies will get popular, and offer real competition to Seamless and Grubhub. And that, in turn could bring down the hefty commissions that only a dominant player can demand.

“I think it’s in a way anathema to the very culture of the internet,” Jacobs says.

How will Seamless and Grubhub respond? The company is already thinking about it. Part of the answer may be re-positioning the company as a true friend of restaurants.

“We actually have an in-house restaurant in our Chicago office and our New York office as well that helps put our employees in the shoes of the restaurateurs,” says spokeswoman Abby Hunt.

It’s hard to say what app we’ll be using to procure our pizzas and hot-and-sour-soups, even a year from now. But one thing’s pretty clear: with more people ordering takeout online, restaurants will have to get used to working with the tech middlemen that now stand between them and their customers.

The Transaction: a silver promise

Thu, 2015-04-30 12:03

Marketplace listener Carol Thompson received a birthday present from her husband Ted – a necklace with the etching “Heaven Has In Store What Thou Hast Lost.” It was a comforting message referring to a daughter who had passed away a few years before. The necklace arrived in the mail just days after her husband died unexpectedly, but receiving the necklace gave Carol a sense of peace.

A warehouse dash with Rent the Runway

Thu, 2015-04-30 11:24

Wednesday at Rent the Runway’s Secaucus warehouse is its busiest day of the week.  The company offers designer clothing as short-term rentals to its customers, at a fraction of the cost it would take to purchase the item. But since most of their customers are renting for events that take place on Saturday, Wednesday becomes the key day when items that have been rented are returned and need to be sent out again for the following weekend.

“You have to turn it around with essentially a zero day turn around time” says Rent the Runway’s co-founder and CEO, Jenn Hyman.

“If you go into any woman’s closet throughout the United States you’ll see that when you open the doors, most of the closet is black. It’s filled with black dresses and black tops. Why is that? Is that because women’s favorite color is black? No, it’s because it’s the most rational option,” explains Hyman.  “The whole point of Rent the Runway is to leave some of your common sense at home and actually try something printed or pink or sequined or fun, just because you can.”

Tobin Low

And sure enough, printed, pink, and sequined dresses fill the warehouse.

When the pre-stamped envelopes that the company provides to renters for returns begin to filter in to the warehouse, they’re scanned and sorted based on their contents. 

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If an item inside needs to be sent out that same day, it’s put into one bin; if it’s not needed just yet, it goes into another. The urgent envelopes are opened and the dresses and accessories inside are sent to be cleaned.

This is a huge undertaking. Luckily, Rent the Runway’s warehouse happens to be conveniently located near a dry-cleaner: their own. When Rent the Runway opened this Secaucus warehouse late last year, they became the largest dry cleaner in the United States.

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And if a stain or a spot needs to be removed, they have experienced workers like Nick, The Stain Guy, to help out.

Click below to hear Nick, The Stain Guy at work.

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The dresses are dry cleaned, and then sent on to a pool of about 50 seamstresses to mend anything that might be amiss. Some dresses are altered to fit the height of the customer who ordered them.

“One of the key insights that we had when we started the business was that women felt like they had to wear a new outfit for every occasion” says Hyman. She explains, “they had been photographed and that photograph was now up on Facebook and they couldn’t repeat their outfit.”

The company also offers a subscription service similar to Netflix. Users pay a flat monthly fee and receive three items at a time from their queue of dresses, accessories, and jewelry.

Many customers order multiple items – a dress in two sizes, and accessories.  The company’s software helps keep track of what’s missing from an order and when an order is complete, ready to be packaged and sent out. At the end of the day, at about 8pm, UPS picks up stacks of Rent the Runway boxes, ready to be shipped out.

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A large portion of the Secaucus warehouse is vacant but Hyman expects she’ll be expanding in to that area son enough. She has a grand vision for the Rent the Runway’s future.

“I believe that every woman in this country and later every woman in the world should have a subscription to fashion, just like you have a subscription to music or to entertainment and via that subscription, you would be able to just have fun with this amazing industry that we’re in.”

Astronaut Chris Hadfield on living above the sky

Thu, 2015-04-30 08:00

The sky's not the limit for Commander Chris Hadfield, a retired Canadian astronaut. For him, it's just the start of everything else.

Hadfield spent more than 150 days living in space, the bulk of it during a three-month stint at the International Space Station where six astronauts from countries all over the world live and work.

Hadfield's time in space coincided with a change in social media and communications. During his first space voyages in 1995 and 2001, there was no way for Hadfield to relay information about his experiences while in space. But, by the time he got to the ISS in 2013, improvements in technology and huge leaps in social media interaction made it possible for him to keep in touch: on Twitter, Facebook and YouTube.

Hadfield says when it comes to living in space, there has been significant change. People from 15 different countries left Earth in November of 2000.

"For the last 14 years, we have permanently been living off the planet, and when I say we, I mean humanity," he says. "Once you start permanently settling somewhere, then it really just becomes a new part of human culture."

That culture is still in early development, but it is growing as more stories start coming back from space. The ISS, for instance, is now home to a guitar and an espresso machine. Astronauts are becoming more accustomed to sending videos home, and telling people on Earth about their out-of-this-world lives. Soon space culture will include an album of folk music Hadfield recorded in space.

He compares space exploration to early settlers of undiscovered continents.

"When the first settlers came across the Bering Strait 20,000 years ago from Asia, their culture changed the place and defined the people themselves, and we're just getting into that stage of leaving Earth in space," he says.

So where to next from the ISS?

"It will go eventually from the space station to the moon, over the next few generations, and from the moon eventually to Mars, just as we've spread over the whole surface of the Earth," Hadfield says.