Tech boom coming to an end?

For the last few years Silicon Valley has been the darling of venture capitalists looking for the next big thing. The result has been huge investments and valuations for companies that often come with whimsical names (Think Twilio and Sprinklr). The rise of mobile has contributed to the belief that there should be and “app for that”, and paved the way for companies less than 10 years old to become part of the billion dollar startup club. But that seems to be coming to an end.

At least, that is what the data shows anyway. Since the end of 2015, venture capital has been pulling back on investing in Silicon Valley unicorns. Unicorns are Silicon Valley companies with valuations of a billion dollars or more. Funding fell 8 percent to $25.5 billion, extending a steep decline that began the quarter before, according to a report released Wednesday by KPMG, an accountancy, and CB Insights, a venture researcher.

“There’s a lot of cautiousness out there,” says Kerry Wu, an analyst at CB Insights. “It’s reflected in the data.”

What that data shows is the rate of new unicorn companies is slowing. In Q3 of 2015 there was a new unicorn showing up in the valley every four days. But by the end of 2015 that had tricked down to just 1 new unicorn that quarter. The report by KPMG points to a few key reasons for the slow down in venture capital funding.

  • Too many unicorns A unicorn is a unicorn because its rare, but there have been so many lately that it may have driven the value down. When the value goes down, the money starts to slow because investors don’t see the next app as the best way to make money fast.
  • Startups are still growing The unicorns that have received funding are continuing to get more, such as Uber. This is helping them to grow larger quickly. And spreading the money thinner for the new comers on the block.
  • American funding is cooling off  The total number of venture deals flatlined in the first quarter after plunging 15 percent a quarter earlier. The stagnation suggest that venture capitalist aren’t the excited to invest in this market.
  • California startups aren’t as exciting Funding has fallen by 1.5 percent. It’s down almost half from the $12.2 billion raised in the September quarter. Although these numbers don’t indicate trouble, it does confirm the latest data that suggest that the tech economy is slowing down.

Article via CNET, 13 April 2016

Photo Startup by Dennis Skley [Creative Commons Attribution-NonCommercial-NoDerivs]


Bitcoins could buy energy for less

Researchers discovered the technology behind Bitcoin that could help cut energy bills.

Technologists of Accenture have created a blockchain-based smart plug that can track power consumption and search for cheaper energy sources minute-by-minute. The current blockchain serves as the automated ledger that oversees Bitcoin and keeps tracks of where coins are spent.

The plug modifies the basic Bitcoin blockchain technology to make it actively look for cheaper power suppliers, which could help people living on low earnings who use prepayment meters that operate on a “pay-as-you-go” basis. Accenture has also adapted the blockchain to allow customers to actively negotiate deals, rather than simply signing contracts and confirming transaction records.

“It’s about how we put more business behaviour or logic into the blockchain,” said Emmanual Viale, head of the Accenture team at the firm’s French research lab.

The prototype works with other appliances in the house so when demand for energy is high, it searches for different suppliers and uses the modified blockchain to switch to the cheaper source. According to Accenture research, the modified blockchain would be able to save individuals using prepayment meters in the UK up to £660 million annually.

Although the Accenture system is still just a concept, it has huge potential to make energy use more affordable.

Article via BBC, 19 February 2016
Photo: Bitcoin by Chris Pirillo


Alphabet, worlds most valuable company

On Monday, Alphabet, the company that owns Google, overtook Apple by becoming the most valuable company in the world.

The most valuable companies in America are nearly all tech companies. Google and Apple are leading the pack with market values of $543 billion and $535 billion respectively. Behind those two companies sits Microsoft at $433 billion. Facebook, at $328 billion, took fourth on Monday, surpassing Exxon Mobile at $318 billion. The revenues of the top leaders (Google and Apple) are higher than any other company in corporate history.

Just last quarter Alphabet reported revenues of more than $21.3 billion, blowing past estimates by roughly half a billion dollars. Traders are expecting Alphabet to keep the title of most valuable company for some time to come. Revenue for the company saw $74.5 billion in sales for all of 2015, up from $66 billion in 2014. The good news keeps coming as Monday their stock rose another 5 percent.

Colin Gillis, senior technology analyst for BGC Partners, believes that Alphabet will become the world’s first trillion dollar company. Why? Sheer numbers, for one, Gillis said in an interview. “Think about the number of services they have with a billion users: Google Search, YouTube, Maps. Some of those are used multiple times every single day,” he said.

Some also think that the deciding factor between Google and Apple is all about China. Apple reported the slowest-ever sales growth for the iPhone and revealed that its business in China is facing trouble. In contrast, Alphabet makes very little money off hardware and does almost no business in China. Now that China’s economy is slowing down, Apple and their stock seem to be following suit.

It could be that Alphabet knows exactly how to show investors its future promise. Google has been famous for its moonshots, like the self driving car. The reorganization of Google, including the creation of the parent company Alphabet, has allowed transparency into its many services and what they offer. All that adds up to a lot of success and the number one spot for the tech company.

Article via The Washington Post,1 Febraurary, 2016

Photo: iPhone Alphabet by schnaars [Creative Commons Attribution-NonCommercial-NoDerivs]


Private Capital for Funding Law Firms Serving Low and Moderate Income Clients

By Richard Granat

One of the obstacles to the development of innovative software solutions that automate part of the legal service delivery process resulting in lower, more affordable legal fees is the absence of capital. Traditional methods of legal service delivery based on hourly billing rates out of reach for low and moderate income clients.  Capital investment is required to create innovative web-based software solutions that can enable low and moderate income clients to either solve legal problems on their own as pro-se litigants, or to enable law firms to offer legal solutions at a more affordable price point.

The major obstacle to making more capital available to law firms, is the prohibition on investment in law firms by nonlawyers enshrined in the ABA’s Model Rules of Professional Responsibility and replicated in the state rules of professional responsibility that regulate lawyers in their state. [ See Rule 5.4 – Professional Independence of a Lawyer ].

There has been little innovation within solo and smaller law firms to develop client-centered, web-based applications that provide a low cost solution to low and moderate income clients. Instead innovation is centered in the vendor community that provides tools to law firms, usually as a SaaS service for a monthly subscription fee. A good example is our own DirectLaw virtual law firm platform that provides a client-centered document automation application, and other tools that enables a law firm to unbundled legal services for a fixed fee to clients online. While the value of innovation outside of the law firm, within the vendor sector of the legal industry, is not to be minimized, it is the lawyer within the law firm that has the most nuanced view about what their clients need and want. The lawyer within the law firm also has the primary interest in figuring out how to develop and manage the delivery of legal services so that for certain kinds of legal problems a scalable, volume-based business model can be implemented.

Innovation requires capital. It is capital intensive to develop software applications and new delivery systems for legal services. Solos and small law firms that serve individuals and families do not have access to capital. Whatever innovation is taking place in the delivery of legal services is happening outside of the legal profession in organizations like LegalZoom financed by venture capital, or the within legal aid programs funded in part by the Technology grant program within the Legal Services Program, or outside of the United States. [See also, blog post from Lexicata – How Law Firms Can be More Like LegalZoom ].

There has been much controversial discussion with the legal profession on modifying the ownership rules that apply to law firms, with little result. For example, the American Bar Association created last year a Commission on the Future of Legal Services to address the access to justice problem, under the under the leadership of then ABA-President William C. Hubbard.   The Commission convened a National Summit on Innovation in Legal Services, in May 2015 where private investment in law firms as a prerequisite to innovation was on the agenda. But I have yet to see any progress on this issue within the American Bar Association. Unlike other countries, private investment in law firms as a way to develop new ways of serving a latent market for legal services is dead on arrival when it reaches the ABA’s House of Delegates, although 80% of the U.S. population can’t afford the cost of legal services and is unserved by the legal profession.

The evidence we have seen in the United Kingdom, where the legal profession has moved towards de-regulation, and where capital can flow freely into law firms, suggests that the United States will remain a laggard in innovation in the delivery of legal services until this problem can be fixed. In the UK, LegalZoom is taking advantage of this de-regulation by becoming an ABS [ Alternative Business Structure ].  As a private company, operating in the UK, LegalZoom can offer legal services directly to the public. LegalZoom plans to use this opportunity to develop and experiment with new end-to-end legal services for consumers with the idea that in the far distant future these innovations can be imported into the U.S. legal market.

The bottom line is that you can’t really innovate without access to capital – it is the fuel of innovation. For solo and small law firms that serve people, rather than large corporations, capital is not available for innovation unless the lawyer or law firm has generated capital from their practice and makes a conscious decision to invest in software automation and web-based solutions.

An example of a law firm that has accumulated capital (because of litigation against the mortgage servicing companies and the banks in the robo-signing scandal during the U.S foreclosure crisis) is IceLegal, P.A., a small law firm based in Florida. IceLegal, under the leadership of Thomas Ice, is launching its own access to justice initiative.  The firm has also created its own LegalYou video channel for educating pro-se litigants.  This is a project of the law firm (not of a private company), and will  provide low cost legal solutions to Florida residents. If LegalYou is a success it will serve a new latent market ignored by most of Florida’s law firms. LegalYou is the exception rather than the rule.

One would think that Internet-savvy, recent law school graduates would be motivated to serve a latent market for legal services by developing innovative solutions, but handicapped by large student loans they are forced into career roles that provide sufficient cash flow to amortize those loans. Risk-taking is not an option for them.

A Proposal: Safe Harbor for Law Firms Serving Low and Moderate Income Clients

To increase the flow of capital to law solos and small law firms who wish to serve only low and moderate income clients with automated legal solutions, I propose that:

  • The American Bar Association amend Rule 5.4 to permit private investment in just those law firms that serve low and moderate income clients exclusively.
  • Personal injury and other contingent fee practices would be excluded from this exception as capital is self-generating for successful firms in these practice areas.
  • To comfort those who are concerned that the independence of the lawyer is compromised by this proposal, the law firm must remain at least a 51% owner of the law firm. Private investors can be minority shareholders only.
  • It is relatively easy to create an income generation screen to capture just low and moderate income clients for the law firm, and exclude those of higher income. The data from this intake process can be archived and audited to comply with the exception to the rule.

Creating this exception opens up the opportunity for smaller law firms to take advantage of crowd-funding opportunities, the angel investor community, and the new SEC rules that permit crowd-funding investment. Further, the rich relatives and friends (if they exist) of a young lawyer could fund the new lawyer’s law firm, and get a return on investment, without the lawyer risking disbarment because of violation of the 5.4.

An argument can also be made that enabling law firms that serve primarily corporate entities can create capital on their own without additional incentives and should not be able to take advantage of this safe harbor. Most large law firms represent corporate entities (banks, insurance companies, health care organizations, drug companies,  manufacturers, financial organizations) whose legal positions are opposed to many consumer interests.  These firms should have to use their own capital to become more efficient so as not to tip the balances against the consumer even more than it is.

One would think that this modest proposal to enable innovation designed to increase access to the legal system for clients who can’t afford the high cost of legal fees would be an idea that that American Bar Association and state bar associations might entertain or even discuss.

However, given that the structure of regulation of the legal profession is controlled by the legal profession, this idea will probably be dead on arrival.

Article via eLawyering Blog, 4 December 2015

Photo: the shadow of justice via Jack [Creative Commons Attribution-NonCommercial-NoDerivs]


Will you #VoteHou for City Controller?

The Houston Controller Debate on Technology took place early this October at the Houston Technology Center, which was hosted by The League of Women Voters.  The topic of discussion was how technology could be used to bring the city’s controller office out of the 90’s and make spending transparent for the citizens of Houston. The city controller is similar to a chief financial officer for city government. The current city controller, Ronald Green, is not seeking re-election due to term limitations. There are currently 6 candidates running to take his place.

The room is filled with an array of people and there is a clear mix of older professionals and younger technologists. The candidates are all seated along a long table, facing outwards to the audience. This group is all male and appear to be ranging in age and experience. From left to right they start to answer questions posed from the moderator.

The first to respond is Jew Don Boney. He has a history of working on the Houston City Council and seems clear on how to integrate new technology into the system. Boney also served as mayor pro-tem under Mayor Lee Brown and represented District D, a predominantly African-American district. Currently he is an administrator at Texas Southern University.

The next candidate is Chris Brown. He is currently Deputy City Controller for Houston. Brown, the son of former City Councilman and mayoral candidate Peter Brown, has stated that his experience in the private sector working for an investment bank and his 11 years of service at the City of Houston make him the right person for the job.

Next to speak is Bill Frazer. He is a past President of the Houston CPA Society and has served on the Board of Directors of the Texas Society of CPAs for the past 20 years. Frazer is concerned with making sure that the controller’s actions are transparent and easy for the public to understand. He is interested in cleaning up the budget and making sure that the controller’s office is orderly and functioning as any accountant would.

Seated next to Frazer is MJ Khan. As a councilman, Khan proposed “Zero-Based Budgeting” for All city departments. He focused on unfunded liabilities in Houston’s Pension Systems and Retirees’ Health Benefits. Khan is also focusing on fighting for more efficiency in city government.

The next candidate to speak is Dwight Jefferson. Mr. Jefferson left his position at METRO to run for city council. He is a former district court judge with a long history of working in city government and with Metro.

The last on the panel to speak is Carroll Robinson. Mr. Robinson is an associate professor at Texas Southern University. Mr. Robinson, like many others on the panel has a long history working on the Houston City Council.

Although many issues are brought up, it always comes back to the current financial problems the city is facing, and how this can be avoided in the future. The city has a big deficit, and this has caused problems with making pension payments and beneficial spending. Several of the candidates bring up ways that the city’s website can be improved to make spending more transparent. According to the panel of candidates, the public needs an easy way to see the current status of the budget. Should the website updates an online check to allow the public to keep track of spending? Maybe the site should use a dynamic spreadsheet? Several solutions are posed by the candidates, but none are detailed enough to truly envision implementing.

This begs the question, how can the public get more involved? Houston is the not first major city that has needed to find innovative ways to bring in more technology to their processes. New York City created a new position of CTO (chief technology officer) who runs the Mayor’s Office of Technology and Innovation. The sole purpose of this office is citywide collaboration on technology issues. The city of Chicago has a Department of Innovation and Technology who looks for ways to bring in innovation to their government system. Even the White House is embracing innovation through technology. They made headlines when the nation’s first Chief Data Scientist was announced.

Jayson White from Harvard’s Kennedy School says that the focus of innovation positions in government started with education reform and sustainability. But, once the recession hit, that focus shifted to budgets, economic development, and job creation. The true benefit of having Chief Technology Officers and Chief Innovation Officers is the data driven management that they employ. One example is Louisville-Jefferson County, Kentucky. By incorporating innovation and information officers into the city government, problem solving starts with rounding up data. In turn, they have come up with interesting solutions, such as cutting down on 911 emergency trips by having nurses in the dispatch room to help determine if there is really a medical emergency or if the caller may need to go to the drug store. Now the city is accessing the data on non-emergency calls to determine if there is a market for private-sector transportation service to drive people who call 911 for non emergency transportation.

Starting with the Houston Hackathon, technology innovation is beginning to become a reality. The opportunity to bring innovation to city government structures gives the public a chance to get involved directly with the local government. The City of Houston has created an open hackathon to get citizens involved in creating solutions to government problems. Groups like Open Houston have been putting on hackathons to bring out developers, designers, marketers and others to get unique solutions to some of our city’s problems. Houston’s Mayor, Annise Parker, has made data more open to the public to encourage citizen innovation.

During the Q&A, the audience seemed interested in bridging the gap between citizens and government. Although all the candidates have amazing depth of experience and knowledge of local government, none are experienced technologists. This election is an opportunity for Houston voters to make technology an important issue. So far, a clear plan has not been established for the city to incorporate new technologies that will solve finance and transparency problems. This leaves a huge opportunity for citizens to come up with their own solution. Make sure that you vote for Houston Controller on Tuesday, November 3rd.

Photo via Justin Conception


How to start a crowdfunding campaign for social good

Crowdfunding can be an incredible campaigning tool, especially for a good cause. Finances can be a problem when starting a nonprofit, but crowdfunding has the ability to reach millions of people who would back your cause through donations, via the Internet.

A crowdfunding platform for nonprofits and social good projects, CauseVox explains how to make crowdfunding work for your cause in the infographic below.

social-good-crowdfunding-causevox

 

Article via Mashable, 22 June 2015

Photo: Interactief seminar Crowdsourcing door Gijsbert Koren van Douw&Koren via Mediawijzer.net [Creative Commons Attribution-NonCommercial-NoDerivs]