Scooter startup Lime has sought to back peddle on an explanation given by its VP of global expansion late last week when asked why it had hired the controversial PR firm, Definers Public Affairs.

The opposition research firm, which has ties to the Republican Party, has been at the center of a reputation storm for Facebook, after a New York Times report last month suggested the controversial PR firm sought to leverage anti-semitic smear tactics — by sending journalists a document linking anti-Facebook groups to billionaire George Soros (after he had been critical of Facebook).

Last month it also emerged that other tech firms had engaged Definers — Lime being one of them. And speaking during an on stage interview at TechCrunch Disrupt Berlin last Thursday, Lime’s Caen Contee claimed it had not known Definers would use smear tactics.

Yet, as we reported previously, a Definers employee sent us an email pitch in October in which it wrote suggestively that “Bird’s numbers seem off”.

This pitch did not disclose the PR firm was being paid by Lime.

Asked about this last week Contee claimed not to know anything about Definers’ use of smear tactics, saying Lime had engaged the firm to work on its green and carbon free programs — and to try to understand “what were the levers of opportunity for us to really create the messaging and also to do our own research; understanding the life-cycle; all the pieces that are in a very complex business”.

“As soon as we understood they were doing some of these things we parted ways and finished our program with them,” he also said.

However, following the publication of our article reporting on his comments, a Lime spokesperson emailed with what the subject line billed as a “statement for your latest story”, tee-ing this up by writing: “Hoping you can update the piece”.

The statement went on to claim that Contee “misspoke” and “was inaccurate in his description of [Definers] work”.

However it did not specify exactly what Contee had said that was incorrect.

A short while later the same Lime spokesperson sent us another version of the statement with updated wording, now entirely removing the reference to Contee.

You can read both statements below.

As you read them, note how the second version of the statement seeks to obfuscate the exact source of the claimed inaccuracy, using wording that seeks to shift blame in way that a casual reader might interpret as external and outside the company’s control…

Statement 1:

Our VP of Global Expansion misspoke at TechCrunch Disrupt regarding our relationship with Definers and was inaccurate in his description of their work. As previously reported, we engaged them for a three month contract to assist with compiling media coverage reports, limited public relations and fact checking, and we are no longer working with Definers.

What was presented at Disrupt regarding our relationship with Definers and the description of their work was inaccurate. As previously reported, we engaged them for a three month contract to assist with compiling media coverage reports, limited public relations and fact checking, and we are no longer working with Definers.

Despite the Lime spokesperson’s hope for a swift update to our report, they did not respond when we asked for clarification on what exactly Contee had said that was “inaccurate”.

A claim of inaccuracy that does not provide any detail of the substance upon which the claim rests smells a lot like spin to us.

Three days later we’re still waiting to hear the substance of Lime’s claim because it has still not provided us with an explanation of exactly what Contee said that was ‘wrong’.

Perhaps Lime was hoping for a silent edit to the original report to provide some camouflaging fuzz atop a controversy of the company’s own making. i.e. that a PR firm it hired tried to smear a rival.

If so, oopsy.

Of course we’ll update this report if Lime does get in touch to provide an explanation of what it was that Contee “misspoke”. Frankly we’re all ears at this point.

Source: Tech Crunch

In 1990, Kleiner Perkins rejected 99.4% of the proposals it received, while investing in 12 new companies a year. Those investees made Kleiner Perkins “the most successful financial institution in the history of the world,” boasting “returns of about 40 percent per year, compounded, for coming up on thirty years.”

Nowadays, the Valley’s VC poster child is Y Combinator, who invest in more like 250 companies annually. They’re famously selective, accepting something like 1.5% of applicants, but still noticeably less selective than Kleiner Perkins in its heyday. They invest less money (though not necessarily that much less; KP bought 25% of Netscape for a mere $5 million back in 1994) in more companies.

In 1995, three networks controlled essentially all American television, and made only enough to fill the week; nowadays there is so much TV that you could bingewatch a new scripted series every day of the year. In 1995, the top ten movies of the year were responsible for 14% of the total box office. So far in 2018, the top ten have claimed a full 25% of the total gross. Something similar happened in publishing; the so-called “midlist” was largely replaced by a “bestseller or bust” attitude.

In 1995, if you were a journalist, your readership was dictated almost entirely by who published you. No matter how compelling your piece in the Halifax Daily News may have been, the same number of people would glance at your headline as at the others in that issue, and that number would be drastically smaller than that of any article, no matter how buried, in the New York Times. Now, the relative readership of any article, both between and within publications, is determined mostly by social media sharing, and inevitably follows a power-law curve, such that a surprisingly small number of pieces attract the lion’s share of readers.

What do these fields have in common? The number of “hits” has remained relatively constant, while their value has grown, and the number of “swings” has grown to the point where it is difficult for any person, or even any group, to pay close attention to them all. And the outcomes inevitably follow a power law. So it doesn’t make sense to focus on individual outcomes any more; instead you focus on cohorts, and you think stochastically.

“Stochastic” means “randomly determined,” and your initial inclination may be to recoil — of course producers and investors and publishers aren’t acting randomly! They put enormous amounts of analysis, effort, and intelligence into what they do! Which is true. But I put it to you that as gatekeepers’ power has diminished, and the number of would-be directors, CEOs, and pundits has skyrocketed, while the costs of trying have shrunk — randomness has become a more and more important factor.

It’s easy to cite anecdotes. What if Excite had bought Google when it was offered to them for $1 million? How far were we, really, from a world in which Picplz succeeded and Instagram failed? Any honest success story will include elements of luck, which is, in this context, another word for randomness. My contention is that the world’s larger trends — greater interconnectedness, faster speed, democratized access to technology — make randomness an ever-more-important factor.

This is not automatically a good thing. People talk about “stochastic terrorism,” a.k.a. “The use of mass public communication, usually against a particular individual or group, which incites or inspires acts of terrorism which are statistically probable but happen seemingly at random.” Think of killers who dedicate their attack to ISIS after the fact despite no previous communication with them, or, more generally and contentiously, political violence promoted by broadcasting hatred and extremism.

And it seems that climate change is increasingly a stochastic disaster. Warmer weather means more energy in the atmosphere, which means more volatile behavior, which means more catastrophes like droughts, wildfires, hurricanes. Does climate change cause those things? Not directly. It increases the probability of them happening. It means both more and bigger hits, if you will.

This doesn’t apply to every field of human endeavor. But it seems to apply to essentially every field driven by unusual, extreme successes or failures — to Extremistan, to use Nassim Taleb’s term. Extremistan seems to everywhere be growing more extreme, and there’s no end in sight.

Source: Tech Crunch

In order to have innovative smart city applications, cities first need to build out the connected infrastructure, which can be a costly, lengthy, and politicized process. Third-parties are helping build infrastructure at no cost to cities by paying for projects entirely through advertising placements on the new equipment. I try to dig into the economics of ad-funded smart city projects to better understand what types of infrastructure can be built under an ad-funded model, the benefits the strategy provides to cities, and the non-obvious costs cities have to consider.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on. I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.

Using ads to fund smart city infrastructure at no cost to cities

When we talk about “Smart Cities”, we tend to focus on these long-term utopian visions of perfectly clean, efficient, IoT-connected cities that adjust to our environment, our movements, and our every desire. Anyone who spent hours waiting for transit the last time the weather turned south can tell you that we’ve got a long way to go.

But before cities can have the snazzy applications that do things like adjust infrastructure based on real-time conditions, cities first need to build out the platform and technology-base that applications can be built on, as McKinsey’s Global Institute explained in an in-depth report released earlier this summer. This means building out the network of sensors, connected devices and infrastructure needed to track city data. 

However, reaching the technological base needed for data gathering and smart communication means building out hard physical infrastructure, which can cost cities a ton and can take forever when dealing with politics and government processes.

Many cities are also dealing with well-documented infrastructure crises. And with limited budgets, local governments need to spend public funds on important things like roads, schools, healthcare and nonsensical sports stadiums which are pretty much never profitable for cities (I’m a huge fan of baseball but I’m not a fan of how we fund stadiums here in the states).

As city infrastructure has become increasingly tech-enabled and digitized, an interesting financing solution has opened up in which smart city infrastructure projects are built by third-parties at no cost to the city and are instead paid for entirely through digital advertising placed on the new infrastructure. 

I know – the idea of a city built on ad-revenue brings back soul-sucking Orwellian images of corporate overlords and logo-paved streets straight out of Blade Runner or Wall-E. Luckily for us, based on our discussions with developers of ad-funded smart city projects, it seems clear that the economics of an ad-funded model only really work for certain types of hard infrastructure with specific attributes – meaning we may be spared from fire hydrants brought to us by Mountain Dew.

While many factors influence the viability of a project, smart infrastructure projects seem to need two attributes in particular for an ad-funded model to make sense. First, the infrastructure has to be something that citizens will engage – and engage a lot – with. You can’t throw a screen onto any object and expect that people will interact with it for more than 3 seconds or that brands will be willing to pay to throw their taglines on it. The infrastructure has to support effective advertising.  

Second, the investment has to be cost-effective, meaning the infrastructure can only cost so much. A third-party that’s willing to build the infrastructure has to believe they have a realistic chance of generating enough ad-revenue to cover the costs of the projects, and likely an amount above that which could lead to a reasonable return. For example, it seems unlikely you’d find someone willing to build a new bridge, front all the costs, and try to fund it through ad-revenue.

When is ad-funding feasible? A case study on kiosks and LinkNYC

To get a better understanding of the types of smart city hardware that might actually make sense for an ad-funded model, we can look at the engagement levels and cost structures of smart kiosks, and in particular, the LinkNYC project. Smart kiosks – which provide free WiFi, connectivity and real-time services to citizens – have been leading examples of ad-funded smart city projects. Innovative companies like Intersection (developers of the LinkNYC project), SmartLink, IKE, Soofa, and others have been helping cities build out kiosk networks at little-to-no cost to local governments.

LinkNYC provides public access to much of its data on the New York City Open-Data website. Using some back-of-the-envelope math and a hefty number of assumptions, we can try to get to a very rough range of where cost and engagement metrics generally have to fall for an ad-funded model to make sense.

To try and retrace considerations for the developers’ investment decision, let’s first look at the terms of the deal signed with New York back in 2014. The agreement called for a 12-year franchise period, during which at least 7,500 Link kiosks would be deployed across the city in the first eight years at an expected project cost of more than $200 million. As part of its solicitation, the city also required the developers to pay the greater of either a minimum annual payment of at least $17.5 million or 50 percent of gross revenues.

Let’s start with the cost side – based on an estimated project cost of around $200 million for at least 7,500 Links, we can get to an estimated cost per unit of $25,000 – $30,000. It’s important to note that this only accounts for the install costs, as we don’t have data around the other cost buckets that the developers would also be on the hook for, such as maintenance, utility and financing costs.

Turning to engagement and ad-revenue – let’s assume that the developers signed the deal with the expectations that they could at least breakeven – covering the install costs of the project and minimum payments to the city. And for simplicity, let’s assume that the 7,500 links were going to be deployed at a steady pace of 937-938 units per year (though in actuality the install cadence has been different). In order for the project to breakeven over the 12-year deal period, developers would have to believe each kiosk could generate around $6,400 in annual ad-revenue (undiscounted). 

The reason the kiosks can generate this revenue (and in reality a lot more) is because they have significant engagement from users. There are currently around 1,750 Links currently deployed across New York. As of November 18th, LinkNYC had over 720,000 weekly subscribers or around 410 weekly subscribers per Link. The kiosks also saw an average of 18 million sessions per week, or 20-25 weekly sessions per subscriber, or around 10,200 weekly sessions per kiosk (seasonality might even make this estimate too low). 

And when citizens do use the kiosks, they use it for a long time! The average session for each Link unit was four minutes and six seconds. The level of engagement makes sense since city-dwellers use these kiosks in time or attention-intensive ways, such making phone calls, getting directions, finding information about the city, or charging their phones.   

The analysis here isn’t perfect, but now we at least have a (very) rough idea of how much smart kiosks cost, how much engagement they see, and the amount of ad-revenue developers would have to believe they could realize at each unit in order to ultimately move forward with deployment. We can use these metrics to help identify what types of infrastructure have similar profiles and where an ad-funded project may make sense.

Bus stations, for example, may cost about $10,000 – $15,000, which is in a similar cost range as smart kiosks. According to the MTA, the NYC bus system sees over 11.2 million riders per week or nearly 700 riders per station per week. Rider wait times can often be five-to-ten minutes in length if not longer. Not to mention bus stations already have experience utilizing advertising to a certain degree.  Projects like bike-share docking stations and EV charging stations also seem to fit similar cost profiles while having high engagement.

And interactions with these types of infrastructure are ones where users may be more receptive to ads, such as an EV charging station where someone is both physically engaging with the equipment and idly looking to kill up sometimes up to 30 minutes of time as they charge up. As a result, more companies are using advertising models to fund projects that fit this mold, like Volta, who uses advertising to offer charging stations free to citizens.

The benefits of ad-funding come with tradeoffs for cities

When it makes sense for cities and third-party developers, advertising-funded smart city infrastructure projects can unlock a tremendous amount of value for a city. The benefits are clear – cities pay nothing, citizens are offered free connectivity and real-time information on local conditions, and smart infrastructure is built and can possibly be used for other smart city applications down the road, such as using locational data tracking to improve city zoning and congestion. 

Yes, ads are usually annoying – but maybe understanding that advertising models only work for specific types of smart city projects may help quell fears that future cities will be covered inch-to-inch in mascots. And ads on projects like LinkNYC promote local businesses and can tap into idiosyncratic conditions and preferences of regional communities – LinkNYC previously used real-time local transit data to display beer ads to subway riders that were facing heavy delays and were probably in need of a drink. 

Like everyone’s family photos from Thanksgiving, the picture here is not all roses, however, and there are a lot of deep-rooted issues that exist under the surface. Third-party developed, advertising-funded infrastructure comes with externalities and less obvious costs that have been fairly criticized and debated at length. 

When infrastructure funding is derived from advertising, concerns arise over whether services will be provided equitably across communities. Many fear that low-income or less-trafficked communities that generate less advertising demand could end up having poor infrastructure and maintenance. 

Even bigger points of contention as of late have been issues around data consent and treatment. I won’t go into much detail on the issue since it’s incredibly complex and warrants its own lengthy dissertation (and many have already been written). 

But some of the major uncertainties and questions cities are trying to answer include: If third-parties pay for, manage and operate smart city projects, who should own data on citizens’ living behavior? How will citizens give consent to provide data when tracking systems are built into the environment around them? How can the data be used? How granular can the data get? How can we assure citizens’ information is secure, especially given the spotty track records some of the major backers of smart city projects have when it comes to keeping our data safe?

The issue of data treatment is one that no one has really figured out yet and many developers are doing their best to work with cities and users to find a reasonable solution. For example, LinkNYC is currently limited by the city in the types of data they can collect. Outside of email addresses, LinkNYC doesn’t ask for or collect personal information and doesn’t sell or share personal data without a court order. The project owners also make much of its collected data publicly accessible online and through annually published transparency reports. As Intersection has deployed similar smart kiosks across new cities, the company has been willing to work through slower launches and pilot programs to create more comfortable policies for local governments.

But consequential decisions related to third-party owned smart infrastructure are only going to become more frequent as cities become increasingly digitized and connected. By having third-parties pay for projects through advertising revenue or otherwise, city budgets can be focused on other vital public services while still building the efficient, adaptive and innovative infrastructure that can help solve some of the largest problems facing civil society. But if that means giving up full control of city infrastructure and information, cities and citizens have to consider whether the benefits are worth the tradeoffs that could come with them. There is a clear price to pay here, even when someone else is footing the bill.

And lastly, some reading while in transit:

• How California’s Efforts to Prevent Wildfires Reflect a National Crisis on Climate Change – The New Yorker, Carolyn Kormann
• A’s Propose Crazy-Looking Howard Terminal Stadium, Financial Details Still Uncertain – Field of Schemes, Neil deMause
  
• Berlin’s Massive Housing Push Sparks a Debate About the City’s Future – CityLab, Feargus O’Sullivan
• Magnetic Levitation: The Return of Transport’s Great ‘What If?’ – The Guardian, Christopher Beanland
• Addis Ababa Has Overtaken Dubai as the World’s Gateway into Africa – Quartz, Abdi Latif Dahir
• Planning a Neighborhood Square – The Western Planner, Dr. Suzanne H. Crowhurst Lennard

Source: Tech Crunch