Category: Technology

Startup Zenefits Under Scrutiny For Flouting Insurance Laws

Zenefits founder Parker Conrad speaks at a conference in New York in 2013.

Brian Ach / Getty Images

The Silicon Valley startup Zenefits, valued at $ 4.5 billion in a funding round earlier this year, apparently flouted insurance laws by allowing unlicensed brokers to sell health insurance — an approach that has led to at least one regulatory inquiry into the legality of its operations.

Zenefits, a middleman in the health insurance business, has repeatedly failed to enforce legal requirements that anyone selling a health insurance policy have an appropriate state license, a BuzzFeed News investigation has found. The San Francisco-based company allowed numerous salespeople to act as insurance brokers in at least seven states without licenses to do so, according to internal emails and records, as well as interviews with eight former employees with direct knowledge of the matter.

BuzzFeed News has reviewed examples of the unlicensed sale of insurance by Zenefits employees dating back as far as the summer of 2014 and continuing through this summer. It is unclear when the practice began and whether it continues today; the company says it now has strict procedures in place to enforce licensing rules.

At least one regulator, the insurance commissioner in Washington state, is currently examining whether Zenefits operated there without licenses, according to a spokesperson for the agency, Stephanie Marquis. The Washington inquiry began in early 2015 and has not yet been resolved, she said.

Zenefits management seemed aware of the potentially serious consequences of violating licensing rules. Under Washington law, anyone who knowingly sells, solicits, or negotiates insurance without the proper state license is guilty of a Class B felony, which can carry a prison sentence of up to 10 years, as well as a civil penalty of up to $ 25,000 for each violation.

“You are putting the company at risk” by not “immediately” getting broker licenses in Washington, Niji Sabharwal, a Zenefits senior sales operations manager, told sales reps in April.

Upon learning of the Washington inquiry, Zenefits scrambled to get its house in order. Sales reps who had closed deals in that state were told of the inquiry by a Zenefits senior sales operations analyst, Erin Stephens, in an email in early April. The subject line read, “URGENT — Get Licensed in Washington.”

The email, and two follow-up notes, were sent on a Thursday. On the following Monday, 22 Zenefits employees became licensed brokers in Washington, state records show. Four others received their Washington licenses later that month.

Only this July, more than two years after Zenefits launched, did the company introduce a standardized “license management system” to track whether sales reps had licenses, an internal email shows. (Earlier efforts at license tracking were not comprehensive, according to two former employees.) That email, sent by Sabharwal to managers who oversaw sales reps, acknowledged that there were still “a few reps” who hadn’t yet received licenses “but are currently working deals.”

While Zenefits sales reps were told that they needed licenses to do their job, managers in many cases showed a blasé attitude toward the requirement, pushing the unlicensed reps to meet sales quotas, the former employees said. In several cases, sales reps who had failed a broker license exam once or more times were allowed to continue working the phones. At least one person who lacked any license in any state but hit his sales quotas last fall was promoted, according to state records and former employees.

“It is — and has always been — Zenefits’ policy that every individual who sells insurance at Zenefits, as well as the company itself, must be licensed to sell insurance,” Zenefits said in a written statement provided to BuzzFeed News by a spokesman, Kenneth Baer. “Zenefits has more than 280 active resident insurance licenses and more than 2,500 active non-resident licenses, and these licensed brokers have sold thousands of insurance policies over the past two-and-a-half years.”

“We have taken corrective action, including terminating the employee, when we have learned of violations, either because individuals failed to pass the brokerage exam or have otherwise violated our licensing policies,” the statement continued. “Any accusations of other individuals violating our licensure policies will be thoroughly investigated, and we will take appropriate remedial action.”

Zenefits gives away free software to small businesses to manage their employee benefits, though fundamentally it is an insurance brokerage firm, collecting recurring commissions when it sells health insurance policies to those businesses. It says its technology and user-friendliness can help it displace stodgy insurance brokers and claim their lucrative commissions.

The insurance brokerage industry is heavily regulated, and technological innovation has historically been slow to take hold. Many conventional brokers still rely on mountains of forms and spreadsheets — enhancing the appeal of Zenefits for customers who resent paperwork and value speed. On the other hand, conventional brokers argue that an important part of their job is to provide advice gained from study and experience, something that can’t easily be replicated by fresh-faced sales reps and sophisticated software.

Zenefits’ strategy for disrupting this industry — where human lives literally are at stake — has typified the current tech boom: rapid growth, with little regard for the conventions of old-school industries.

“If you’re an insurance broker, we’re going to drink your milkshake,” Parker Conrad, the Zenefits co-founder and CEO, said at a tech event in 2013.

Among new startups of recent years, few have generated as much praise from investors and reporters as Zenefits. Launched only in 2013, it quickly grew into a Silicon Valley “unicorn,” with a $ 4.5 billion valuation as of May. Forbes called it the “hottest startup” of 2014. Business Insider said it was a startup “to bet your career on in 2015.”

The Hollywood celebrities Ashton Kutcher and Jared Leto are investors in the privately held company. A Silicon Valley celebrity, the former PayPal executive David Sacks, is its chief operating officer. Its other backers include the mutual fund giant Fidelity and the big private equity investor TPG, as well as the prominent venture capital firm Andreessen Horowitz, which has invested more money in Zenefits than in any other startup in its portfolio. (Andreessen Horowitz is also an investor in BuzzFeed.)

Virginia Mayo / Associated Press

The revelation about unlicensed brokers, which has never previously been made public, comes as the company is facing questions about its ability to live up to its lofty valuation. Fidelity, which bought Zenefits shares in the May investment round, marked down the value of its stake by 48% as of the end of September, according to data from the investment research company Morningstar. While Zenefits has said it hopes to hit $ 100 million in annual revenue by January, one indicator suggested the figure had reached only $ 45 million by August, according to a recent Wall Street Journal report. The Zenefits spokesman declined to comment on that report.

Zenefits is among a class of richly valued startups that have taken an aggressive stance toward longstanding industry rules. Uber and Airbnb, for example, have shown that it can be a winning strategy to clash with state and city governments over rules that the startups claim are outmoded or unfair. Zenefits got a taste of this sort of battle late last year, when Utah insurance regulators sought to block the company from operating there over claims that its free software amounted to an improper inducement for customers. (Utah allowed Zenefits back in this year.)

The sale of insurance is governed at the state level. In every state, brokers who sell health insurance policies to companies based there are required to have a license from that state. Many brokers interpret the laws to mean that they need a license not only to sell insurance but also to discuss it with clients in any meaningful way.

In California, where many Zenefits customers are located, the law says people can't “solicit, negotiate, or effect contracts of insurance” without a license. An important exemption is for clerical and support work, like setting up appointments or gathering basic information from customers. Under California law, selling insurance without a valid license is a misdemeanor punishable by a fine of up to $ 50,000 or up to a year in prison.

Zenefits itself is a licensed brokerage company and Conrad, the CEO, has a broker license in all 50 states. But the employees who do the selling are also legally required to be licensed brokers in the states where they work.

“Whether you’re selling through an app or through a brick-and-mortar store, you have to be licensed” in every state in which you sell insurance policies, said Adam Beck, a professor of health insurance at the American College of Financial Services in Bryn Mawr, Pennsylvania. “Working for someone who happens to be licensed in not sufficient.”

The unlicensed sale of insurance is challenging for regulators to catch, largely because there is no public database of insurance policies sold. Regulators generally rely on tips, including from customers, who can check whether their broker is licensed using state databases like this one, this one, or this one.

“When we started Zenefits, we followed a practice common to many small independent brokerages of having each broker licensed in their home state and having the agency itself also registered in all 50 states so as to allow out-of-state sales,” Zenefits said in its statement. “As we grew and heard from regulators that they wanted each licensed broker individually to acquire a non-resident license, we set out to do just that.”

Conrad speaks at a conference in San Francisco in 2015

Steve Jennings / Getty Images

The Zenefits sales force is run by Sam Blond, the San Francisco-based vice president of sales. He joined the company in late 2013 after quickly rising through the sales organization at EchoSign, a software startup that was sold to Adobe in 2011. Many of the apparently unlicensed insurance sales occurred in Zenefits’ big satellite office in Scottsdale, Arizona, which opened in the fall of last year and quickly filled up with hundreds of employees. But there is evidence of unlicensed selling of insurance in Zenefits’ San Francisco headquarters as well.

One Zenefits sales rep who didn’t have a license in any state closed insurance deals with at least 27 companies, starting in February and continuing through June, an internal document shows. The sales rep, who was based in Scottsdale and left Zenefits this summer, convinced eight of the companies to enroll in new health insurance, according to the document. He convinced 19 companies to make Zenefits their broker of record, the document shows. The states where he closed deals included Arizona, California, Massachusetts, Michigan, Nevada, and New Jersey.

In San Francisco, a different sales rep, who started in June 2014, sold a health insurance policy to a New York-based startup called Goodsie during her first months on the job. Conrad had personally reached out several times to woo Goodsie, which provides e-commerce software to businesses, but he bowed out and let the rep take over, emails show. This sales rep, however, lacked a New York broker license until June of this year, state records show.

Among the 22 Zenefits employees who got insurance licenses in Washington on the Monday after being warned about the regulatory inquiry, nine were based in Scottsdale, state records and their LinkedIn profiles show. The other 13 were in San Francisco.

Three of the former Zenefits employees interviewed by BuzzFeed News, refusing to speak on the record for fear of professional or legal consequences, acknowledged that they routinely pitched or sold health insurance policies without adequate licensing. Three others said they supervised the sale of health insurance by unlicensed sales reps.

“I made like $ 15,000 in the time I was there, just on commissions. And I never got my license,” said an insurance salesperson who left Zenefits this summer. She estimated she had more than 100 conversations with different customers about insurance. “I took my test three times in a row, and I failed. They still let me work.”

Without her license, she had to improvise on calls with customers.

When faced with a tricky question, “I would just Google it,” she said. She would tell the customer, “hold on one second, let me email the expert, he's on the line, hold on one second, I'll get back to you.” But in reality, “I would pick one of the first three links and I would just go off of that.”

A large number of the new hires in the Scottsdale office came from other technology companies, with experience in sales but little familiarity with health insurance. Zenefits offered to pick up the cost of studying for and taking the broker test, several former employees said. But new sales reps there soon discovered that getting licensed wasn’t seen as an urgent priority. More important was hitting sales quotas, which initially would increase each month.

Those who hit the quotas, even if they lacked broker licenses, were rewarded, the former employees said. One of the earliest hires for the Scottsdale office started as a health insurance sales rep in September 2014, according to his LinkedIn profile and interviews with two former colleagues. He was promoted in January to a sales manager job, which would not necessarily require a broker license, and he was promoted again last month.

This sales rep had no broker license until September of this year, when he got a license in California, according to a search of every state insurance database for his name. After BuzzFeed News first attempted to contact him for this article, he got licenses in states including Arizona, Connecticut, Illinois, Louisiana, Nevada, Oregon, and Virginia, state records show.

Once an insurance broker gets a license in one state, they can pay a fee and fill out information online to have the credential replicated in other states where they do business. But even this simple task eluded many sales reps. One former sales rep who started in the Scottsdale office last fall said he had an Arizona license but didn’t bother to get licenses in the other states where he was selling insurance until January, when Blond instructed sales reps to focus on particular states.

Even after that instruction, sales reps had a relaxed attitude toward the licensing requirements, former employees said. Another former sales rep said he procrastinated after passing his broker exam, waiting two months before filling out the paperwork to get his first license this spring. In the meantime, he sold insurance.

Washington state regulators delivered a jolt to Zenefits, however. On April 2, just after 2 p.m., Stephens, the senior sales operations analyst, sent an email to sales reps who had “closed business in Washington in 2014 or 2015 without providing your licensing information to the sales operations team (thus, Zenefits at large.)”

She said Zenefits faced “an inquiry” from Washington's insurance regulator into the company's business practices. “As part of the response,” she said, “we must list out every broker who deals with Washington clients and their WA license number. This requires that we gather all licensing information from individual reps” — this part was underlined and in red lettering — “TODAY by 4:00 PM.”

“If you are not licensed in Washington, take 5 minutes to complete the process on NIPR,” Stephens added, referring to the website that lets people apply to transfer their credentials to other states. She told sales reps to add their confirmation numbers to a Google doc after completing online applications.

Not everyone who received the email appeared to grasp its urgency.

“Drop what you are doing and submit the application to get licensed in WA,” read a bolded sentence in a follow-up email, sent just after 6 p.m. by Sabharwal, the senior sales operations manager.

“This is the third communication on this. It takes less than 10 mins,” he continued. “You are putting the company at risk by not doing this immediately.”

Months later, in July, unlicensed insurance sales were apparently still a problem. In the July 6 email announcing the license management system, Sabharwal said Zenefits would “now be able to prevent a rep from closing a deal if they are not licensed to sell into that state.”

“This is an area of great concern as the consequences of breaking these rules can be detrimental to our ability to operate in that state,” he continued.

In its written statement, Zenefits said, “As we have grown, so have our compliance procedures.” Zenefits said job offer letters to sales reps now specify licensing requirements, and that the company’s internal software systems now include licensing checks as part of the sales process.

A week after Sabharwal’s email, licensing information for a number of sales reps still hadn’t been entered into the new system, according to another email from him. The email, which Sabharwal sent to sales managers on July 13, contained a chart showing “Incomplete Resident Licenses by Manager.” The 16 managers listed by name in the chart corresponded to a combined 33 incomplete records for sales reps.

“A valid license means that they have their license number and expiration date,” Sabharwal reminded the managers. “Just passing the insurance test does not constitute a license.”

The former sales rep who closed at least 27 deals without a broker license appeared to shift his strategy toward the middle of the year, emails to his customers show. In a February email to one small business CEO he was courting, he said, “I primarily am a broker and obtain the responsibility to work with our clients in that capacity.”

Later, in interactions with a different company, he appeared to take a more conservative approach. The customer, Defib This, a small company in Santa Cruz, Calif. that runs emergency response training courses, had been “desperately searching for insurance,” according to Aki Williams, the chief operating officer.

But Williams was a “little peeved,” when the sales rep refused to have any meaningful discussions about insurance policies. “He sent us emails that had multiple options, but we really couldn't pin him down to say, 'This is what's going to work best for your company,'” Williams said.

Williams ended up buying an insurance policy through the sales rep that took effect in July. She said she had no idea that he lacked a broker license.

When Zenefits sought to fix this issue, it declined to pull unlicensed sales reps off the phones entirely, the July 6 email from Sabharwal shows. For new hires going forward, Sabharwal told sales managers, the company would start “requiring reps to have passed their license exams before starting boot camp, which will ensure that they have a license by the time they get on the phones.” But the policy for current sales reps was apparently different.

“There [are] still, however, a few reps who have passed the test, submitted the application, and are awaiting their license number but are currently working deals,” he continued. “We are going to make an exception for these reps and allow them to close deals as long as their manager is on the phone with them.”

Sabharwal emphasized this instruction in his follow-up email on July 13.

“A reminder that if any of your reps do not have a valid license in hand for their resident state (usually CA or AZ), YOU MUST be on every call where insurance is discussed,” he told sales managers.

Two former employees said they participated in such phone calls, in which an unlicensed rep would be supervised by a more senior employee with a broker license. Such a solution, however, falls into a legal gray area, according to William Gausewitz, a Sacramento-based partner at the law firm Michelman & Robinson who formerly was a deputy insurance commissioner at the California Department of Insurance.

“I don't think it complies technically with the licensing laws,” Gausewitz said, commenting in general on the practice. “But if the unlicensed people are supervised by a licensed broker, the department is not going to be as suspicious that the agency is engaged in flagrant lawbreaking violations.”

BuzzFeed – Tech

Teens And Young Adults Get Ripped Off More Than Anyone Else Online

“Millennials” also say they know more about online security than any other age group.

ITU/Rowan Farrell / Via Flickr: itupictures

Teenagers and adults born after 1980 are pretty damn confident they know more about online security than anyone else. And why wouldn't they? They're the first generation to grow up with the internet.

Yet a higher proportion of that same super-confident generation has been a victim of cybercrime than people of any other age group, according to a new consumer report by security giant Symantec.

In the 2016 Norton Cybersecurity Insights Report, “millennials” rated themselves as having better knowledge of basic security measures and better overall tech savvy than any other group. But half of all the “millennials” surveyed had experienced crime online, with 36 percent having been victimized within the past year.

What gives?

“Millennials use more devices and are connected more, so their exposure is bigger,” said Kevin Haley, Director of Security Response at Symantec. “They've taken that feeling of invincibility and they're out there all the time.”

Haley's point — that people born between 1981 and 2000 are more vulnerable because they use more devices more often — makes sense. But consider some of the behavior the age group engages in. According to the report, “millennials” share passwords at the highest rate of any age group, at 31%. That includes passwords for things like email and Netflix, but it also includes banking. Symantec found that a third of all people who shared passwords in the US shared their banking information.

The report, out Monday, exposes the enormous gap between public awareness of risk online and the steps most people actually take to protect themselves. “Millennials” are only part of the picture. 82 percent of people are worried about cybercrime, but their behavior hardly reflects their worry. Among some of the more concerning findings, 62 percent of people globally use what they describe as “bad” passwords, and more than half of all parents don't do anything to restrict what their children do online.

And when it comes to cybersecurity, the disconnect between self-perception and reality is not just a “millennial” problem. Despite consumer perception of risk, and despite the lack of consumer precaution, every age group surveyed graded itself an “A” in security behavior.

BuzzFeed – Tech

How Tech Learned From Past Crises And Reacted To The Paris Attacks

What Facebook, Airbnb, and Uber did when terrorists attacked Paris.

Tobias Schwarz / AFP / Getty Images

Following Friday's terrorist attacks across Paris, which left at least 129 dead, many of the websites and apps we use on a regular basis made an effort to help those caught in the disaster.

But the process can also be fraught with sensitive considerations, with companies not wanting to be seen to be capitalizing on tragedy.

Here's how some of the major tech companies respond to the events in Paris:

Facebook’s deploys Safety Check:

Facebook's deploys Safety Check:

Facebook


View Entire List ›

BuzzFeed – Tech

India’s Biggest Ride-Hail Player Just Launched Its Own Payments App

olamoney.com

Ask the CEOs and founders of the world’s biggest ride-hail companies what their companies will look like five years from now and they're likely to describe a broad, on-demand logistics service. Companies like Uber and Ola are already moving fast toward this future using their transportation platforms to undergird services like UberEats and Ola’s grocery delivery offering Ola Store. But now Ola is taking a step in an entirely new direction: payments.

Late Thursday, India’s biggest ride-hail company debuted a new stand-alone app for Ola Money — its refillable digital wallet. It’s a move Ola has been contemplating since Ola Money became the payment method of choice for more than half of all Ola rides and began gaining traction among local retailers. The new stand-alone app supports these transactions and also allows people to recharge their mobile phone plans and transfer money to other people.

“We realized payments and Ola Money is the key thing that ties all the different services that we’re offering together, from transportation to delivery,” Rushil Goel, head of Ola Money, told BuzzFeed News. “We realized a few months ago given our position [in transportation] and given that our customers are using it a lot for that we [can make] the payment service a focus in itself. It’s a pretty interesting piece that comes out of the fact that we have a strong position in transportation.”

Goel conceded that the digital wallet space in India is fairly crowded, but he said Ola is confident Ola's vast user base will be enough to differentiate Ola Money. “There are a lot of wallets and digital payment options now available in India, but we are tied to such a high-frequency use case,” he said. “People are keeping a lot more money with us — much more than any of the other [digital payment options]. If you look at the numbers, we’re pretty much one of the largest wallets in the country right now.”

While this is something of an exploratory effort for Ola, Goel said he foresees a time when the company is more of a broad consumer brand than just a transportation service. “At a broad level it becomes a consumer brand because in some sense it enables more and more use cases for the customer,” he said. “The core business will still be around on-demand services whether it's cars, food, or groceries. But the payment piece of it becomes a very strong offshoot, and enables even more use cases.”

A stand-alone digital wallet is also a service that isn’t necessarily market-specific; it can be easily lifted out of India and transferred to other countries like China and Singapore — where Ola now has strategic partners in Chinese ride-hail company Didi-Kuadi and Singapore-based GrabTaxi. But for the time being, said Goel, Ola is focused strictly on “going deep” in India.

BuzzFeed – Tech

Here’s The Data That Shows Why Twitter Switched To Hearts From Stars

Twitter is looking to settle the hearts vs. stars debate once and for all.

In a talk at the Open Mobile Summit in San Francisco this morning, Twitter Product SVP Kevin Weil shared data on the heart's performance vs. the star — aka: the favorite — that drove Twitter's decision to make the switch.

“It’s a change that’s been fantastic for the platform,” said Weil. “We see now 6% more hearts, 6% more likes on Twitter than we saw with favorites.” He also noted that new users tend to engage 9% more with this change.

Weil's remarks marked the first time Twitter shared data related to the switchover, which occurred last week to mixed reviews. After years of the star functioning as a de facto bookmarking tool, and a button you used to signal you were done with a conversation, Twitter switched over to hearts last week saying it wanted to “make Twitter easier and more rewarding to use.”

The data, released only a week into the change, should be approached with a dose of caution since the heart's novelty factor may be responsible for skewing the numbers. Still, the numbers at least initially back up the decision to make the move.

When Twitter introduced the heart last week, it was met with a firestorm of criticism from power users who felt the company was overlooking their needs in order to meet Wall Street demands. For those hoping for a reversal, this early data suggests the heart is here to stay.

BuzzFeed – Tech

Hacking The Pipeline: How HBCUs Are Taking Tech’s Diversity Issue Into Their Own Hands

Michelle Rial / BuzzFeed News


Leslie Tita's tone grows oddly anxious as he curls into the back of a Lyft, and speeds away from Howard University. Tita is a successful entrepreneur who owns a co-working space for entrepreneurs from Africa. He's strikingly tall and sturdily built, with long fine dreadlocks and an infectious grin, and doesn't seem the type to be worried about anything. But ask him about the “pipeline problem” in tech — the notion that tech companies don't hire enough people of color because there is not enough available talent — and you'll see his brow furrow.

“Lately there's been a lot of talk about race in general and that’s translated to tech, but what worries me is that it feels very trendy,” he says. “I have mixed feelings on how the big companies are trying to address it without working together, and I feel this fear that in a couple of months it's going to die down.”

Tita has reason for this trepidation: Despite tech’s insistence that the talent pool for engineering students of color is insufficient, that it is a so-called pipeline problem, data suggests that’s not exactly true. A study in USA Today last year suggested that universities are graduating black and Hispanic computer science and computer engineering graduates at twice the rate that technology companies are hiring them.

Perhaps its because they're looking in the wrong places. The feeder universities for the big tech companies, like MIT and Stanford, have their own diversity issues. (At Stanford, African-Americans represent a paltry 7.8% of undergraduates. At MIT it's 10%.) In short, tech firms are building pipelines from places without any black people to begin with.

Which explains why Tita is volunteering his weekend as a mentor for an event called HBCU Hacks — a series of two-day hackathons held at historically black colleges and universities, organized by the nonprofit organization Black Founders. At these events, computer science and engineering students of color spend their weekends to conceive of, code, and hopefully finish some variety of app, game, or technical product. In short, they're trying to re-route the pipes.

That is, if they can get the internet working. A few minutes before we bailed in the Lyft, Tita was moving across the floor inside the wood-paneled reading room in Downing Hall, a linoleum-floored engineering building on the edge of the Howard University campus. Fifteen or so students were also milling about quietly, idly tapping their phones or staring at the ground, backpacks on their shoulders. Tables strewn with ethernet cables sat empty, and a table with breakfast food and cold cardboard jugs of Starbucks coffee had been picked apart by bored and hungry students. One student wearing a hooded sweatshirt with Google's logo across the back tended to a sagging sign that read “HBCU Hacks.” It should be an exhausting, nonstop event, but the students and mentors were idle, due to a particularly vexing hurdle: a campus-wide internet outage.

“There's really only two things you need for a hackathon, and that's a computer and internet and, of course, we're missing one of them,” said Tita, before letting out a strained laugh.

Black Founders

The Howard hackathon comes at a time when tech companies are under increasing scrutiny for their lack of diversity. Yet as the likes of Apple, Google, and Facebook increasingly roll out diversity reports and announce new efforts to fix the pipeline problem, the obvious fact remains that it's especially hard for people of color to gain employment at the elite companies of Silicon Valley. Diversity is frequently discussed among big tech companies now but it remains underserved in terms of actual hiring.

“We are working to increase diversity in the talent pipeline and make Yahoo a great place to work for a diverse employee base,” Yahoo’s 2015 report read after disclosing that African-Americans made up just 2% of its workers. Facebook, whose 2014 report revealed the 5,500 person company had only 81 black employees, stressed that it was “trying desperately to have a more diverse workforce and deal with the constraints on the pipeline.” And yet to some extent, the problem may be that tech companies view the problem as, well, a pipeline.

Despite hopeful and sometimes even grand gestures from companies like Apple, which last year gave a massive grant to the Thurgood Marshall College Fund, much of the difficult work of building companies that genuinely reflect the ethnic makeup of their users will ultimately fall to the students of color and their institutions. The majority of that work — as many black entrepreneurs see it right now — won't take place onstage or at a press conference, but under the fluorescent lights of co-working spaces and engineering halls, where engineers, coders, and designers of color strive to build the workforce that can bridge Silicon Valley's diversity gap.

It’s this sense of self-reliance that has led people like Monique Woodard, the executive director of the diversity-in-tech nonprofit Black Founders, to partner with historically black colleges and universities across the country for this series of hackathons. Black Founders hopes to create the foundation necessary to build a culture of innovation in the tech space that, pipeline or not, Silicon Valley won’t be able to ignore.

“You see a lot of companies paying lip service about diversity, but when you talk about HBCUs there’s some pushback. That’s not where they’re recruiting,” Woodard told BuzzFeed News. “They are still looking for a Stanford student, a Harvard student, an MIT student — they just want that person to be black now. That’s not always realistic. Why not work with the engineering and business schools at HBCUs as well?”

Black Founders

Of course, no matter where they come from, they need internet to get there. And currently, the Howard hackathon is all out of that. But resourcefulness is the rule of the day. So Tita hatched a new plan and offered to host the students at his office, I/O Spaces, a few miles up the road in Silver Spring, Maryland. “Everybody call an Uber or Lyft,” one of the hackathon organizers told the group. “Grab a buddy and let's just get out of here.”

On the ride over, Tita was upbeat and focused on getting the students up and hacking. “I think it's so important to give young engineers at these HBCUs the chance to see what it's like to build something and maybe even get the chance to get funding,” he explained. “But really, it's a chance to say to them, 'Hey, this is real — this tech stuff is not just like a specific niche of people. You can build a startup.'”

As the Lyft driver pulls up to the co-working space Tita says that part of his urgency comes from the realization that although the world appears to be paying closer attention to racial inequality across the country, he’s worries it’s a momentary cycle, and is aware that window might close.

But his wariness passes quickly. “The good thing is that even though it's a trend, people can make good money off of trends,” he says, flashing a smile before entering the co-working space. “The question is, how can we, as black entrepreneurs, make the best of this moment in time?”

Hackathons aren’t much as far as spectator sports go. Save for trips to the bathroom and scuttling back and forth to a modest table stacked with pre-made sandwich wraps and soda, the students rarely move from their respective seats. Allee Clark, a senior computer science student at Howard, is working at a table with three other students on an app called Nemesis, which will employ a Tinder-like swipe interface to allow friends to find worthy partners to debate on any number of issues. “Arguing with people is pretty much the oldest and best part of the internet,” he laughs, before explaining that the group will try to develop “a behavioral API of sorts to show what kind of person you are.” The project is light-hearted and Clark and his team are using the weekend as valuable practice. They are less focused on the outcome than the experience. “If I weren’t here, I’d probably be be back in my room trying to build something else, but here there’s at least some free food,” Clark says.

That lackadaisical mood is a bit disheartening to Aaron Saunders, a local entrepreneur and adjunct faculty member teaching computer science at Howard. Saunders worries that Howard and other HBCUs have fallen behind in providing a curriculum advanced enough to graduate top-tier engineering talent.

“When I finally got in to teach, I told myself I was going to focus on getting students to build, and it was a struggle because I was asking them to make something and they’re only being taught theory, not real-world application,” he explained. “They're prepping kids to go off to Lockheed Martin and IBM and those kinds of jobs and that’s all fine and good but they’re not doing what Stanford and the best universities are doing — preparing kids to create things — to create their own company.”

Black Founders

Worse, Saunders worries that curriculums at many HBCUs can be too slow to evolve to match what’s happening in the private sector, putting graduates at an even further disadvantage when they try to score jobs at big, fast-moving tech firms. “My personal opinion is that I don't think a lot of these kids are, on the whole, ready to work at Facebook, Pinterest, Twitter. And that's the harsh reality,” he said. “If you’re not turning out a product these tech companies want, then you’re setting people up for failure.”

While Saunders admitted tech curriculums lag at many public institutions across the country, he argues the effects are amplified at HBCUs like Howard. “If you go to some other state schools and say, 'Hey, raise your hand if you know somebody in software development,' there's a likelihood that in that network they know somebody. That doesn’t exist at HBCUs. The difference is other communities have a strong network. Most here don’t.”

The students suggest a more nuanced perspective: Access to bigger tech companies is available, but only on the companies’ terms. “Google is always around; they have Googlers that come to stay and teach at Howard’s campus, so Google is literally, like, downstairs,” one junior engineering student said, speaking of Howard’s Googler in Residence program. (Google declined to make its Googlers in Residence available for comment, but Yolanda Mangolini, Google's director of diversity and inclusion, told BuzzFeed News via a prepared statement that “Historically Black Colleges and Universities are and have always been an important pillar in the black community, and embedding our Googler engineers as instructors has helped bring practitioners to the classroom.”)

Indeed, the Googler in Residence program has its engineers embed and teach not just at Howard, but also at Hampton University, Fisk University, and Spelman and Morehouse colleges. The mere fact of that presence can make a difference, say students. “Google makes it a lot easier to get an internship, not because they’re biased toward us but because they are here. Microsoft and Facebook are around maybe twice a year at most, but when I apply to Microsoft using their site I get nothing; no response, no confirmation email. Never. It's like it's going into a black hole,” another junior mechanical engineering student said.

For Alanna Walton, a Howard sophomore in computer engineering, Big Tech’s real presence at the university has helped shape the trajectory of her still-young academic career. After taking a class with the Googler in Residence, Walton secured an internship at the search giant over the summer. By the time she made it back to campus this fall, she’d already begun laying the groundwork for her startup idea with three other Howard students, a customizable haircare business called GottaBeYour. Walton is soft-spoken and wears a high school shirt that reads “Powderpuff Seniors” but speaks about her business with the concern of a seasoned entrepreneur, already trained in speaking about scalability and unreliable vendors.

At the hackathon, Walton sits cross-legged on the ground, balancing her laptop on her knees, deep in focus. Amid haggling with shampoo vendors for GottaBeYour and bootstrapping the project with the money she made at Google, she’s using the weekend to build something different. “Bringing something that you already started into a hackathon, that feels weird or kind of like cheating,” she said. “Plus, I can try something different and maybe learn another thing or two — I’m really into wireless beacons right now.”

And so she and her partner Lucretia Williams are working on Food EZ, an app that allows people to set up drive-thru orders ahead of time but that aren’t sent to the kitchen until you reach the beacon’s connectivity radius. “Maybe it won’t work, but the technology is really interesting and there’s a lot to figure out.”

To talk to the hackathon mentors this ability to embrace and be comfortable with failure is just one of many cultural barriers complicating diversity programs — and learning to embrace it is critical. “We talk about culture fit all the time and accepting failure is just completely outside of our culture. We don't have the luxury to fail,” Howard graduate and mentor Beverly Turner, who runs her own private technology exposure programs, said.

That willingness to try something new — and maybe fail at it — is prized worldview in Silicon Valley. Failure, breaking things, the perennially available exciting and potentially lucrative opportunities on the horizon for every failed startup founder: This is the standard template for success in the tech industry. But as even the most successful entrepreneurs of color have found, the luxury of failure is a foreign concept.

Black Founders

BuzzFeed – Tech

Airbnb Eve: A Tech Behemoth Comes Face To Face With San Francisco

With the next big vote for regulating Airbnb is less than a week away, Airbnb product executives gathered for dinner. Here’s what they talked about.

Columbus St. in San Francisco and the exterior of The Cookhouse, where the Airbnb dinner took place.

Via Flickr: mobili

On Wednesday night, less than a week before a citywide election will determine the fate of Airbnb in San Francisco, a small group of journalists met with an even smaller group of the company's executives over dinner. The event, proposed a few weeks back, was hosted by Airbnb in a rented event space called the Cookhouse.

The Cookhouse has whitewashed brick walls and airy windows and french doors that look out over the heavy foot traffic and flashing neon lights of Columbus Street, in San Francisco's version of Little Italy; the space is, in other words, a rental that feels like the home of a well-kempt and nice-smelling rich person, which made it the perfect place to contemplate the future of Airbnb, a company that has made its money out of helping people rent out their own well-kempt and (hopefully!) nice-smelling homes. Even if the company's future — which is particularly muddled at the moment — is not what any of the Airbnb employees wanted to talk about.

In fairness, it's been a hard couple of weeks for them. Last week, the company became the subject of a social media (and, ultimately, regular media) outcry after pictures of an ill-conceived ad campaign went viral. The ads, which were less-than-gentle suggestions by Airbnb for where the city could spend its taxes dollars, were seen by many as a sign of the entitled disconnection of the city's tech elite, and roundly lambasted.


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BuzzFeed – Tech

It’s Getting Harder And Harder For Twitter To Find New Users

Twitter just isn't growing like it used to.

The social media company said on Tuesday that its number of monthly active users totaled 307 million in the third quarter of the year, excluding those who use the service through texting. While that may seem like a big number, it's only 8% more users than in the corresponding period a year earlier. Compared to the second quarter of this year, the number of users grew just 1%.

This 8% growth rate is slow, particularly in the eyes of Wall Street investors. In all of the quarters since Twitter went public in 2013, it hasn't reported a slower rate, according to an analysis by The Wall Street Journal.

Employees of Japanese toy company Tomy dressed as Twitter birds during the company's Halloween Day event.

Yoshikazu Tsuno / AFP / Getty Images

In important ways, Twitter exceeded analysts’ projections. The company reported $ 569 million of revenue for the quarter, beating the expectation of $ 560 million. And its profit, adjusted to exclude some expenses, came in at $ 67 million, or 10 cents a share, better than the expectation of 5 cents per share. Without those adjustments, the company made a $ 132 million loss.

But Twitter's struggles with growth are what investors have focused on in the last year, and its stock fell more than 12% in after-hours trading on Tuesday. Investors were also spooked by the company's disappointing forecast for its fourth-quarter performance.

As of the close of trading on Tuesday, Twitter stock is down 30% from the price it traded at after its first day as a public company in November 2013. On that first day, investors valued the then loss making company at almost $ 25 billion, betting that it would grow in the explosive manner familiar to those who have followed internet success stories like Facebook and Google. Instead, the company has struggled.

Just take a look at this chart. One almost gets the feeling that Twitter is a slowly deflating balloon. Each quarter, a little more air seeps out.

Users are the crucial ingredient in Twitter's business plan. More people using the service means more eyeballs viewing ads and other promotions, thus generating more revenue for Twitter.

Twitter is doing some things to try to attract more people. It recently introduced Moments, which lets people follow particular stories, and it's planning on running an ad during the World Series tonight.

But so far, Twitter hasn't been able to produce the kind of hockey-stick-shaped growth that investors love. It's not Facebook, a company that overcame an initial setback after its IPO by dramatically sharpening its focus on mobile devices.

Here's another version of the user growth chart, focusing on the United States. The big question for Twitter — and the fear keeping investors up at night — is whether user growth has simply begun to plateau.

BuzzFeed – Tech

The Best Cable-Cutting Device For People Who Are Broke As Hell

A review of Google’s small and mighty media streamer.

Jenny Chang / BuzzFeed

This is the redesigned Google Chromecast. It’s an Oreo-sized gadget that streams music and video to your TV.

This is the redesigned Google Chromecast. It's an Oreo-sized gadget that streams music and video to your TV.

Instead of watching your computer on your lap, you can Netflix and Chill on a big screen like a grown ass adult.

Nicole / BuzzFeed

The Chromecast is cheap. In fact, of all of the streaming devices out there – the Roku Streaming Stick ($ 50), the Amazon Fire Stick ($ 40), the yet-to-be-released Apple TV ($ 150) – it's the cheapest at $ 35.


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BuzzFeed – Tech

Wiz Khalifa’s “See You Again” Just Hit One Billion YouTube Views

An appreciation.

Via youtube.com

Wiz Khalifa's “See You Again” is many things: a smash hit, a brilliant piece of corporate synergy, true art, a touching tribute to a fallen friend. And as of today, it's something else: A record-setting YouTube hit.

The song had already set a single-song streaming record on Spotify (recently usurped by Justin Bieber's “What Do You Mean) and became one of the most successful rap songs of all time, per the Billboard charts. Now, it's joined an elite club: On Friday, “See You Again” passed the billion-view mark on YouTube.

The success of the heartfelt tribute to Paul Walker shouldn’t be a surprise to anyone. It’s a brilliant song.

The success of the heartfelt tribute to Paul Walker shouldn't be a surprise to anyone. It's a brilliant song.

Via youtube.com

It’s only the tenth video to reach 1 billion views.

It's only the tenth video to reach 1 billion views.

YouTube


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BuzzFeed – Tech

Get To Know Your Poop Bacteria With This New iPhone App

A company called uBiome wants to bring microbiome testing and research to the masses. But there are limits to what you’ll learn, and unlike in traditional research, you pay to participate.

Mheim3011 / Getty Images

The bacteria in your gut, long overlooked and considered unglamorous, is now one of the hottest subjects in biology. These trillions of food-digesting microbes seem to play a significant role in our health and ability to fight disease, though scientists are still trying to pin down exactly how they do so. Now a startup that's conducting a giant, crowdsourced microbiome study is extending that work via a new iPhone app with an eye toward better understanding how your gut may influence your weight.

But there's a catch: Unlike traditional clinical studies, if you want to take part in this one, you'll have to pay up.

uBiome, a biotech startup that began life with a crowdfunding campaign in 2012, sells $ 89 gut bacteria sequencing kits — think of them as the bacteria equivalent of 23andMe's DNA spit kits, but grosser. Swab some poop off your toilet paper, take uBiome's health and lifestyle survey, and a few weeks later the company will show you how your microbiome compares to those of others who've done the same test, publicly available microbiome study data, and (if you're a gut bacteria enthusiast) any earlier samples you've submitted.

Yet participants' information will be used to create products sold for profit. In addition to charging participants, uBiome is using their data to create diagnostic tests and may someday open it up to pharmaceutical companies. The service also won't give you a diagnosis or any actionable advice about changing your diet or health: The microbiome is complex and ever-changing, so there is no “normal” or “healthy” one to aim for.

Still, uBiome notes that studies have linked various lifestyle and medical factors — like being vegetarian or taking antibiotics — with differences in microbiome profiles, even if the exact nature of those relationships aren't clear. According to uBiome, tens of thousands of people have already submitted samples.

The startup has now adapted that service into an iPhone app available today. Built with ResearchKit, Apple's open-source software platform that lets iPhone app users participate in clinical studies, the app quizzes people about their diet, exercise, and other weight-related lifestyle factors before directing people to send in a bacteria sample.

Notably, uBiome is the first for-profit company with a ResearchKit app that requires people to use or buy its product. All seven other apps on the platform are led by universities, nonprofits, and academic medical centers, though there are others in the works at pharmaceutical companies.

uBiome CEO Jessica Richman says the app is an extension of the company's mission to democratize research through the Internet. “Previously, the only science that could get funded was through research grants given to senior researchers,” she told BuzzFeed News. “When you have crowdfunded science or citizen science, and citizens can support science they want to do on their own bodies, you have a tremendous opportunity for people to research things interesting to them and not to anyone else.”

uBiome

Citizen science sometimes ruffles the feathers of traditional science. In late 2012, the co-founders — Richman and Zachary Apte, a University of California, San Francisco, student — raised $ 357,000 on Indiegogo to start the company and send kits to donors. But some scientists took them to task for announcing a study of human samples without first hiring an independent review board — a third-party group that monitors ethical and safety issues in human research. Richman and Apte responded that, as bootstrapping entrepreneurs, they lacked the thousands of dollars to pay for such a board before their campaign; they did so once the funds were raised and before samples were processed. uBiome has since raised more than $ 4.5 million from Andreessen Horowitz and the tech incubator Y Combinator.

The iPhone app, which is free to download, aims to show how microbiomes differ among people with different eating habits and weights, like being on a high-fat, high-carb, vegetarian, or Paleo diet or trying to gain or lose weight. The first 1,000 users will get a uBiome kit free; the rest will have to pay for kits that normally range from $ 89 to $ 399 at a 50% discount (or 20% off a subscription that delivers kits monthly). A “buy” button in the lower-right corner takes them to uBiome's website to complete the purchase; the only way to be a participant is to be a customer.

One criticism against uBiome has been that in traditional studies, research subjects don't have to pay to participate. Richman noted that the company has given away kits numbering in the “mid-thousands,” including to people with infections and inflammatory bowel disease (conditions believed to be linked closely to the microbiome).

Richman argues that uBiome, as a for-profit, can't make its services free to everyone. “If you can't afford $ 89, you can't have science done for you,” she said. “But while still being a business, we try to support the kinds of studies that will generate data we think should exist.”


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BuzzFeed – Tech

LinkedIn Just Sent An Email To Let People Know It Was Sued For Sending Too Many Emails

The professional social network will pay $ 13 million into a settlement fund.

Spencer Bergen / BuzzFeed

LinkedIn — professional social network and useless email generator — just settled a class-action lawsuit…for sending too many emails.

In May, LinkedIn CEO Jeff Weiner told BuzzFeed News that “there are certain members to whom we're sending too much email,” in a live interview with San Francisco Bureau Chief Mat Honan. Now the company will be taken to task for it.

Late Friday, the company contacted those on the service who “may have used LinkedIn's Add Connections feature between September 17, 2011, and October 31, 2014,” to notify them that a class-action lawsuit had been filed against the company.

Essentially, LinkedIn's “Add Connections” feature was a quick way to connect with the people in a contact list — a one-click method to notify everyone that you had joined the service. However, LinkedIn used access to users' contact lists to send two “reminder” emails, which a court found had been sent without the users' consent. Those additional emails are the focus of the lawsuit, and why LinkedIn will now pay out.

LinkedIn acknowledged no wrongdoing but opted to settle the lawsuit. It will pay $ 13 million into a fund for payments to plaintiffs.

You are receiving this e-mail because you may have used LinkedIn's Add Connections feature between September 17, 2011 and October 31, 2014.
A federal court authorized this Notice. This is not a solicitation from a lawyer.

Why did I get this notice? This Notice relates to a proposed settlement (“Settlement”) of a class action lawsuit (“Action”) against LinkedIn Corporation (“LinkedIn”) based on LinkedIn's alleged improper use of a service called “Add Connections” to grow its member base.

What is the Action about? The Action challenges LinkedIn's use of a service called Add Connections to grow its member base. Add Connections allows LinkedIn members to import contacts from their external email accounts and email connection invitations to one or more of those contacts inviting them to connect on LinkedIn. If a connection invitation is not accepted within a certain period of time, up to two “reminder emails” are sent reminding the recipient that the connection invitation is pending. The Court found that members consented to importing their contacts and sending the connection invitation, but did not find that members consented to LinkedIn sending the two reminder emails. The Plaintiffs contend that LinkedIn members did not consent to the use of their names and likenesses in those reminder emails. LinkedIn denies these allegations and any and all wrongdoing or liability. No court or other entity has made a judgment or other determination of any liability.

What relief does the Settlement provide? LinkedIn has revised disclosures, clarifying that up to two reminders are sent for each connection invitation so members can make fully-informed decisions before sending a connection invitation. In addition, by the end of 2015, LinkedIn will implement new functionality allowing members to stop reminders from being sent by canceling the connection invitation. LinkedIn has also agreed to pay $ 13 million into a fund that can be used, in part, to make payments to members of the Settlement Class who file approved claims. Attorneys representing the Settlement Class will petition the Court for payment of the following from the fund: (1) reasonable attorneys' fees, expenses, and costs up to a maximum of $ 3,250,000, and (2) service awards for the Plaintiffs up to a maximum of $ 1,500 each. The payment amount for members of the Settlement Class who file approved claims will be calculated on a pro rata basis, which means that it will depend on the total number of approved claims. If the number of approved claims results in a payment amount of less than $ 10, LinkedIn will pay an additional amount up to $ 750,000 into the fund. If the pro rata amount is so small that it cannot be distributed in a way that is economically feasible, payments will be made, instead, to Cy Pres Recipients selected by the Parties and approved by the Court. No one knows in advance whether or in what amount payments will be made to claimants.

BuzzFeed – Tech