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Money flows as Aussie honey startup cracks $5.5 million mark on Indiegogo

3:27AM | Tuesday, 3 March

The Australian father-and-son duo who raised more than $1 million within three hours on crowdfunding platform Indiegogo have now broken the $US4 million ($A5.1m) mark.   Cedar and Stuart Anderson, from Byron Bay in New South Wales, have developed a way to harvest honey without opening a hive and disturbing the bees.   The pair’s invention, called Flow, allows beekeepers to simply turn on a tap to retrieve honey instead of having to smoke the bees and take apart the hive.   The Andersons’ initial target was $US70,000 – however, that goal was smashed in a matter of hours.   The invention has now raised more than $US4.3 million to become the third most-funded project in Indiegogo’s history, with more than 10,000 people backing the invention.   Co-founder of Flow, Cedar Anderson, told StartupSmart the crowdfunding campaign has been “a wild ride” so far.   “We’re amazed and so proud of how well Flow has been received,” he says.   “That we’re now the most successful-ever crowdfunding venture ever launched outside of the US is just incredible. The response has been humbling and has already far exceeded our expectations.”   Anderson says the project’s success came down to the fact that people love bees.   “We’re blown away and really hope this leads to increased bee numbers and better bee health around the world.”   The most-funded project on Indiegogo to date was a device called Ubuntu Edge, which raised $US12.8 million in August 2013.   Coming in at second place is the An Hour of Code project, which aims to give students in the US the opportunity to learn foundational computer science skills. The campaign raised just over $US5 million, with even a donation from Facebook founder Mark Zuckerberg.   Flow, however, could easily surpass An Hour of Code as the invention’s crowdfunding campaign has more than 30 days left before it expires.   Riding off this success, Anderson said in a recent post on the company’s Indiegogo page that it will be able to negotiate up to 50% off their backers’ shipping costs due to the groundswell in support from around the world.   “Expanding manufacturing to the US will also reduce shipping costs for those in America or close by,” he said.   “Where possible we will source the wooden hive boxes and frames closer to you to reduce shipping costs and support your local beekeeping suppliers. We will add some estimates of shipping soon. Once again thank you all so much for being a part of this project.”   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Meet the deep learning tools that can beat you at classic arcade games – without reading the manual

2:43AM | Thursday, 26 February

Think you’re good at classic arcade games such as Space Invaders, Breakout and Pong? Think again.   In a groundbreaking paper published today in Nature, a team of researchers led by DeepMind co-founder Demis Hassabis reported developing a deep neural network that was able to learn to play such games at an expert level.   What makes this achievement all the more impressive is that the program was not given any background knowledge about the games. It just had access to the score and the pixels on the screen.   It didn’t know about bats, balls, lasers or any of the other things we humans need to know about in order to play the games.   But by playing lots and lots of games many times over, the computer learnt first how to play, and then how to play well. A machine that learns from scratch This is the latest in a series of breakthroughs in deep learning, one of the hottest topics today in artificial intelligence (AI).   Actually, DeepMind isn’t the first such success at playing games. Twenty years ago a computer program known as TD-Gammon learnt to play backgammon at a super-human level also using a neural network.   But TD-Gammon never did so well at similar games such as chess, Go or checkers (draughts).   In a few years time, though, you’re likely to see such deep learning in your Google search results. Early last year, inspired by results like these, Google bought DeepMind for a reported UK£500 million.   Many other technology companies are spending big in this space.   Baidu, the “Chinese Google”, set up the Institute of Deep Learning and hired experts such as Stanford University professor Andrew Ng.   Facebook has set up its Artificial Intelligence Research Lab which is led by another deep learning expert, Yann LeCun.   And more recently Twitter acquired Madbits, another deep learning startup. What is the secret sauce behind deep learning? Geoffrey Hinton is one of the pioneers in this area, and is another recent Google hire. In an inspiring keynote talk at last month’s annual meeting of the Association for the Advancement of Artificial Intelligence, he outlined three main reasons for these recent breakthroughs.   First, lots of Central Processing Units (CPUs). These are not the sort of neural networks you can train at home. It takes thousands of CPUs to train the many layers of these networks. This requires some serious computing power.   In fact, a lot of progress is being made using the raw horse power of Graphics Processing Units (GPUs), the super fast chips that power graphics engines in the very same arcade games.   Second, lots of data. The deep neural network plays the arcade game millions of times.   Third, a couple of nifty tricks for speeding up the learning such as training a collection of networks rather than a single one. Think the wisdom of crowds. What will deep learning be good for? Despite all the excitement though about deep learning technologies there are some limitations over what it can do.   Deep learning appears to be good for low level tasks that we do without much thinking. Recognising a cat in a picture, understanding some speech on the phone or playing an arcade game like an expert.   These are all tasks we have “compiled” down into our own marvellous neural networks.   Cutting through the hype, it’s much less clear if deep learning will be so good at high level reasoning. This includes proving difficult mathematical theorems, optimising a complex supply chain or scheduling all the planes in an airline. Where next for deep learning? Deep learning is sure to turn up in a browser or smartphone near you before too long. We will see products such as a super smart Siri that simplifies your life by predicting your next desire.   But I suspect there will eventually be a deep learning backlash in a few years time when we run into the limitations of this technology. Especially if more deep learning startups sell for hundreds of millions of dollars. It will be hard to meet the expectations that all these dollars entail.   Nevertheless, deep learning looks set to be another piece of the AI jigsaw. Putting these and other pieces together will see much of what we humans do replicated by computers.   If you want to hear more about the future of AI, I invite you to the Next Big Thing Summit in Melbourne on April 21, 2015. This is part of the two-day CONNECT conference taking place in the Victorian capital.   Along with AI experts such as Sebastian Thrun and Rodney Brooks, I will be trying to predict where all of this is taking us.   And if you’re feeling nostaglic and want to try your hand out at one of these games, go to Google Images and search for “atari breakout” (or follow this link). You’ll get a browser version of the Atari classic to play.   And once you’re an expert at Breakout, you might want to head to Atari’s arcade website.   This article was originally published on The Conversation. Read the original article.

It's not 'what' but 'who' you connect with in metadata retention

2:30AM | Tuesday, 24 February

The purpose and implementation of the Australian government’s proposed metadata retention scheme is making less sense as political pressure mounts to get the legislation passed. So what’s going on?   The bill, as written, suggests it can be easy for criminals to “opt out” of data collection, while the remainder of Australians still have their personal communications spied on, retained for two years and kept in commercial data centres at taxpayers' expense.   The Australian Greens senator Scott Ludlam recently raised a number of such concerns about the bill which has already met opposition from privacy advocates.   But the bill’s worth as a tool to specifically fight terrorism, or any other serious crime, seems dubious if potential terrorists and criminals in Australia can easily “opt out” of having their data retained simply by choosing any internet messaging service where the persons operating the service do not own or operate “in Australia, infrastructure that enables” that service.   So what does that mean for the apps commonly used on smartphones today?   Whatsapp, the popular mobile messaging app with 700 million users, around 10% of which come from the Middle East, or Viber, a similar app with 20 million users in Pakistan alone, would both be excluded from data retention. These are some of the apps that the UK’s prime minister David Cameron recently mused about baning in the UK.   According to answers given by Australian Attorney General’s (AG) department staff during the Senate Legal and Constitutional Affairs Reference Committee, the “in Australia” provision also means that even Google’s web-based Gmail service is excluded from data retention. So what does the bill call for? With all the reports of what the bill leaves out and doesn’t do, no one seems to acknowledge what is actually in the draft bill, and how that language might affect policing, government and privacy. So what is at play?   One possible explanation is that Australia is carrying out its obligations as part of the “five eyes” network of English speaking intelligence partners. The logic here is that it makes economic and political sense to have Australian internet service providers (ISPs) such as Telstra and iiNet retain what originates in their infrastructure rather than have the US’s National Security Agency (NSA) collect it.   A more plausible explanation is that, contrary to the PM’s politiking, the data to be retained is not valued by the Australian government for its national security or anti-child abuse value.   Instead, Australians are to be spied on for data that will become valuable for other state functions including the expanded reach of civil litigation. The expanded value considers normal policing, civil subpoenas and even copyright disputes. A look inside the bill The Australian government is not explicitly interested in the internet protocol (IP) addresses that you visit. The bill in its current form states in section 187A that the government:   […] does not require a service provider to keep, or cause to be kept […] [information that] states an address to which a communication was sent on the internet, from a telecommunications device.   In more detail, the helpful “explanatory memorandum” codifies that:   Under proposed paragraph 187A(4)(b), the retention obligation is explicitly expressed to exclude the retention of destination web address identifiers, such as destination internet Protocol (IP) addresses or uniform resource locators (URLs).   So what are we talking about then? It’s all about the destination What the government does seem to be after is “destination” data that basically amounts to an assortment of dummy variables that help identify you, and who you are communicating with.   Instead of IP address or web pages, it is interested in retaining email accounts, Skype handles and phone numbers, etc. for the connections you have made.   The government’s “destination” is in many ways more invasive than IP addresses or web URLs alone. For instance, think about how each person in Australia connects to the IP address 69.63.176.13. That’s the IP for Facebook.com, and is physically located in the US.   Retaining the metadata of time spent at that address would not produce much actionable intelligence on you or the other 8 million Australians who browse Facebook each day. Nor would it be all that invasive to privacy.   “Destination” data is different. “Destination” data seeks to capture who, specifically, you’re spending time with online; who is the destination that you are messaging through email, Skype or possibly even Facebook’s real-time apps and services?   Think of it this way: two “destinations” pass data through the same communications service at a series of very specific times, again, again and again. No other two “destinations” share this unique pattern of time and connection.   The government’s definition of “destination” is multiple click here, search for “destination”), but we can isolate a key phrase:   This information can then assist with determining the subscribers who sent or received relevant communications.   That is to say, who you’re talking to online, not where you went.   Analysing how these “destinations” link together with other metadata (geo-location, device type/operating system, etc.) allows the government – or anyone else who snoops in on the retained data – to predict, for instance, that these communications were yours, and whether you targeted them to, let’s say, your spouse, or an “old friend” across town. And whether you meet up with that person from time to time. And where. And for how long.   Geolocation data alone is incredibly powerful when we all carry smartphone and other devices that connect to the internet in our pockets. People are just starting to learn how powerful this type of metadata is.   Retaining all of that metadata provides an incredible amount of information for civil litagants that can ask for it through a subpoena. As an former iiNet lawyer wrote:   The Data Retention Bill does not impose any limitation on access to the retained data by other legal avenues. This means there’s nothing stopping your ex-husband, your employer, the tax office or a bank using a subpoena to get access to that data if it is relevant to a court case.   All this data also creates a very valuable target for hackers, including “adversarial intelligence agencies” trying to infiltrate your identity, ransom you for your secrets, or run some form of economic espionage.   Can we trust Australian service providers can keep all the data safe once they’ve accumulated two years worth of intimate connections for each Australian who uses any sort of telecommunications device?   Sadly, recent security breaches at companies as diverse as Apple, Target, and the latest heist from “100 banks and other financial institutions in 30 nations” suggest otherwise.   The flawed explanations of what good the bill does, what privacy risks it creates and the reality of how our retained data will be used, offers many red flags on why this legislation should be reconsidered.   This article was originally published on The Conversation. Read the original article.

THE NEWS WRAP: YouTube launches new platform for children and families

2:24PM | Monday, 23 February

YouTube has launched a platform for children with the aim of making it safer and easier for pre-schoolers to find fun and educational videos online.   The family-focused app, which is currently available on the Google Play and Apple stores in the US, also allows parents to limit their kids’ screen time and search settings.   YouTube’s kids group product manager, Shimrit Ben-Yair, said in a statement the new app will allow children to search for everything from maths tutorials to how to build a model volcano.   “For years, families have come to YouTube, watching countless hours of videos on all kinds of topics,” she said.   “Now, parents can rest a little easier knowing that videos in the YouTube Kids app are narrowed down to content appropriate for kids.” Microsoft allows third-party developers for its fitness wearable Microsoft today announced updates to its Microsoft Band and Microsoft Health apps, meaning third party developers are now able to create apps for the company’s fitness wearable.   Matt Barlow, general manager of new devices marketing at Microsoft, said in a statement the updates were made in response to customer feedback.   “This feedback is at the heart of the decisions we make, and today we’re pleased to take our first steps in launching new features and functionality for Microsoft Band and Microsoft Health that address what we’re hearing,” he said.   The update was released today and will roll out on Windows Phone, iOS and Android devices in the coming days. Facebook data protection practices questioned: report Facebook’s data protection practices have come under fire in a report commissioned by Belgium’s data protection authority.   The report examines Facebook’s privacy policies and, in particular, slam’s the social network’s approach to “freely-given”, “informed” and “unambiguous consent” when it comes to customer data.   “Given the limited information Facebook provides and the absence of meaningful choice with regard to certain processing operations, it is highly questionable whether Facebook’s current approach satisfies these requirements,” the report reads.   A Facebook spokesperson told TechCrunch the company recently updated its terms and policies to make them “more clear and concise” in order to reflect new product features.   “We’re confident the updates comply with applicable laws,” they said.   “As a company with international headquarters in Dublin, we routinely review product and policy updates ­ including this one ­ with our regulator, the Irish Data Protection Commissioner, who oversees our compliance with the EU Data Protection Directive as implemented under Irish law.”   The report comes as the European Union is in the process of updating its data protection directive, which was made in 1995. Overnight The Dow Jones Industrial Average is down 0.14%, rising 25.01 points to 18,115.43. The Aussie dollar is currently trading at 78.03 US cents.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Five social media startups to watch in 2015

2:58PM | Monday, 23 February

Hardly a week goes by without a new social media platform launching, with one Melbourne founder suggesting social media startups need to carve out a niche if they are to survive in such a highly competitive environment.   With this in mind, StartupSmart rounded up five Australian social media startups we think you should keep an eye on in 2015.   1. Nabo   Sydney-based startup Nabo is a social networking platform for neighbours. The idea is to bring people in the same suburb together online so they can organise play dates for their children or even have their goldfish babysat while they’re on holiday. The startup has secured $2.25 million in funding from Seven West Media and Reinventure Group, and launched nationally in December last year.   2. Vent   Complaints have always thrived online. However, a Melbourne startup is looking to collate them in the one place and allow people to be supported by others if they need to get something off their chest and don’t want to pollute their Facebook or Twitter feeds. Vent has grown into a community of more than 10,000 users and to date the startup has raised $100,000 in funding.   3. TalkLife   Talk Life is a mobile phone app and social network designed to host important conversations about mental health that people might not necessarily wish to talk about on a general platform or share with family and friends. The Adelaide startup’s founder, Jamie Druitt, has received support from London’s Bethnal Green Ventures and is collaborating with Microsoft Research and the Massachusetts Institute of Technology in order to analyse real-time user data to predict high-risk mental health episodes in young people.   4. Mothers Groupie   Social network Mothers Groupie aims to reduce the isolation felt by young mothers by helping them meet face-to-face and talk to each other online. The site allows people to create or join groups based on a location – such as Melbourne’s inner northern suburbs – as well as other factors such as “young mums” or “new mums”. The platform also features a directory of “helpers” such as babysitters, cleaners and sleep consultants. Mothers can also post their own job ads and the startup is looking to expand into the US.   5. Mineler   Mineler is a professional social network for people who work in the mining industry. Based in Perth, the platform allows people to bid for work and contracts as well as connect with others in the mining industry. The startup currently has more than 60,000 members as far away as Colombia and Canada, and has raised $500,000 in seed funding.   Follow StartupSmart on Facebook, Twitter and LinkedIn.

What Australia’s economy will look like in 2050: report

2:48AM | Wednesday, 11 February

The Australian economy will drop out of the G20 by 2050, according to research published today by PwC.   And the slide will continue unless the nation’s leaders fundamentally change the way they think about investing in science, technology, engineering and mathematics (STEM) skills, says one of the country’s leading technology entrepreneurs, Matt Barrie.   The PwC The World in 2050 report predicts the Australian economy will drop 10 places in world rankings by the middle of the century, dropping from its current rank of 19 to 29.   This would put the Australian economy behind the likes of growing economies such as Bangladesh, Pakistan and the Philippines and far behind economic powerhouses China, India and the US, which are predicted to stay at the top of the rankings over the next 35 years.   According to PwC, the end of the Australian mining boom, and a lack of investment in other parts of the economy, will cause the Australian economy to fall behind.   The PwC rankings are determined by comparing the purchasing power parity of each economy and this year’s result shows a broad shift from developed economies to emerging economies.   While China is predicted to remain the largest economy by 2050, India is expected to overtake the US for second place, and Indonesia, Mexico and Nigeria could push the UK and France out of the top 10.   The Philippines, Vietnam and Malaysia are expected to shoot up the rankings, while Colombia and Poland will grow at a faster rate than the large economies of Brazil and Russia.   Read more: STEM is critical for Australia’s economy   PwC Australia economics partner Jeremy Thorpe told SmartCompany the research indicates the Australian economy will “revert to trend” and we “won’t see the mining boom in the same way”.   While Thorpe says PwC is not trying to predict exactly what the Australian economy will look like, the takeaway from the research is that “we know the economy is going to be different and STEM will be important wherever it goes”.   “The Australian economy is not going to be as large in relative terms and so our companies are not going to be competing on scale,” Thorpe says.   “They will be competing at the smarter end.”   Thorpe says this represents an opportunity for “smaller, nimble companies”, especially those built on digital disruptive technology, and that is why it is essential to make long-term investments in STEM capabilities.   “Many of these things don’t pay off immediately,” says Thorpe.   “You can’t cut the ribbon in the same way you can for a new bridge, you have to look beyond the political cycle. But as the events of the past week have shown, it can be heard to divert attention from the here and now.”   Freelancer founder Matt Barrie agrees with Thorpe’s analysis, telling SmartCompany he fears the Australian economy will follow the same path as the resource-rich Argentina, which saw a dramatic decline in its wealth because of government policies that did not alter the composition of the economy.   Barrie has spoken out regularly about the need for investment in STEM skills in Australia, including to Communications Minister Malcolm Turnbull last year.   “We have actually gone backwards in our thinking about the tech industry or science,” says Barrie, who lays the blame with “successive Australian governments”.   “There have been rampant cuts. I don’t think it would be possible to do more damage.”   Barrie points to cuts to funding for science research, declining university enrolments in STEM subjects and courses, the “dumbing down” of curriculum in primary and secondary schools, as well as the “screwing up” of remuneration schemes for technology companies, as just some of what he believes are damaging policies.   “It just goes on and on and on,” he says. “We’re at risk of becoming a shipwreck … It’s death by a thousand cuts.”   If given the chance, Barrie says the first thing he would change is the K-12 curriculum taught in Australian schools.   “Every little kid wants to design the next Facebook … the next mobile phone app but they don’t know how,” he says.   “We need to help them connect the dots.”   He would also encourage more people to work in STEM fields and appoint a national chief technology officer who would be responsible for setting longer-term goals.   But as long as the topic remains off the table in Canberra, Barrie says he “is at a loss”.   “There is fundamentally something wrong in the way our country is governed,” he says.   This article originally appeared at SmartCompany.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

It’s not just your TV listening in to your conversation

2:24AM | Wednesday, 11 February

Be careful what you say in front of your new television, following reports that Samsung’s new Smart TVs are now being programmed to listen to every word you say and send it over the internet to a third party cloud service.   The news was originally reported by the The Daily Beast but soon spread far and wide, with some making comparisons to George Orwell’s novel 1984, which depicted a nightmarish world of a state listening into its citizens.   Left: Samsung SmartTV privacy policy, warning users not to discuss personal info in front of their TV Right: 1984 pic.twitter.com/osywjYKV3W— Parker Higgins (@xor) February 8, 2015 Given Samsung’s reputation for sometimes shady practices, there was notably some concern. But how much should we really be worried?   After all, the idea of computers listening to your speech is not a new concept – in both fact and fiction.   Back in the 1970s, the producers of Star Trek decided that one of the preferred communication mechanisms for computers in the future (the original show was set in the 23rd century) would be for people to simply say “computer” and then make a natural language enquiry about the state of the ship or the location of the Klingons.   The computer would dutifully respond giving Captain Kirk or some other crew member all the information they required. The computer was listening and ready to respond at all times and no one seemed concerned about privacy. It all seemed to work perfectly well, except when the Enterprise crew travelled back in time, of course.   Talk to the technology   In the real world, voice recognition and phrase detection systems have existed for some time, going all the way back to the original Dragon Dictate software for the PC in the 1990s (and now available for Macs), and the Mac Dictate software on the equivalent Mac platforms.   The latest smartphones have also started to integrate this concept of voice activation with Apple introducing “Hey Siri” in its latest operating system update (iOS 8).   Google also has the “OK Google” feature for both their Android smartphones and its Google Glass headset (if ever Google Glass makes a comeback).   With both these features, the smartphone begins to act just like the computer in Star Trek, listening all the time for a certain phrase and then responding back when it hears you address it.   Try it for yourself. On your iPhone, find “Hey Siri” in the settings and turn it on, then shout “Hey Siri” from across the room to ask a question; it’s amazing to set a timer or check the weather hands free! Similarly, on your Android device open the Google search and say “Ok Google” and then speak your request.   So, given that these features have existed for a while, why are people now becoming concerned about technology listening in to what they say?   It’s all about privacy and the cloud. All your data are belong to us   This issue arises because of a key difference between those early phrase detection systems and today’s implementations.   In those early systems, before the invention of the modern internet, all of the voice processing was done locally, on the machine that was listening to your voice. No data about what you said was transmitted over a network.   But, in recent years, voice recognition systems have changed. To deal with the limited processing power present in smartphones (and TVs), and to increase voice recognition accuracy, many voice recognition systems now record what you have said. They then upload this to a server in the cloud for analysis, before returning the result to your smartphone for action.   Those with an iPhone will have noticed this due to the fact that Siri cannot take your commands when you are not on the internet, even if the request is a local one (like setting a timer).   While this does increase accuracy and saves your phone’s processor, it also means that any request you make is being sent over the cloud, possibly to a third party organisation.   Combined with the ability of devices to listen all the time, this may cause some people to worry that the machines are keeping track of everything we say.   With the integration of this listening technology into more devices over time (such as the upcoming Google and Apple smartwatches, as well as recent deals to improve voice recognition in cars), there could potentially be a machine in many places listening to your conversations.   So, what to do? Stop talking so loudly, the Internet might hear   Currently, just like the issue with Facebook Messenger last year – when some users were worried about what information the new app would tap into on their devices – it comes down to privacy policies.   Based on the above, it’s reasonable to assume that many devices will now be listening, so it’s worth checking the privacy policies of the various organisations involved to make sure they have stringent controls on the way that your data is shared and stored.   In the case of Samsung, the company has made it clear that the data in question is encrypted and is only used to interpret your commands as issued to the television.   Google and Apple have similar privacy policies as well. So far all these organisations' machines that are listening are bound in what they can do with the data.   It’s worth noting though that all these privacy policies are subject to change at any time. Until we have global policies that deal with the privacy of our data and how it is used, it is possible that in the future anything you say could be used in a different way than you originally thought.   So, perhaps for now, it’s worth watching what you say in front of your TV … and your smartphone … and also your new smartwatch.   This article was originally published at The Conversation.

The taxation of employee share schemes explained

2:12AM | Tuesday, 10 February

  Building a technology company isn't easy; a huge range of specialist skill sets are needed – software developers, data scientists, designers, product managers and engineers to name a few.   However in the Western world we have a crisis in education with declining enrolments in science, technology, engineering, and mathematics (or STEM for short). This is remarkable given we are in one of the greatest economic gold rushes of all time, thanks to the internet and software eating the world.   So startups and technology companies everywhere are scrambling for talent and they increasingly need to offer a variety of incentives to attract and retain that talent; the most powerful of those incentives is giving employees the chance to earn a part of the company and become owners themselves.   To understand how this works let’s step back and consider how shares are divided up in a company from the very beginning.   Companies are started by founders, who are the people who originally come up with a great idea to start a business. Typically, this group numbers somewhere between two and four people. Even though one person might originally come up with that idea, they will still need a founding team around them with complementary skill sets to turn this idea into a real company. Two people in a founding team is ideal. Greater than four people founding a company starts to become unwieldy in figuring out who is in charge. So founding teams will usually be between two and four.   The founders are the people who take all the risk in a venture, they are the people that put everything on the line. They quit their jobs, work for no pay, and have to risk being thought of as a fool. In fact, the bigger the potential opportunity, the bigger the fool you can look as a founder, because the biggest potential ideas are ones that no one has thought of yet, that go against the prevailing wisdom.   The vast majority of startups will fail miserably, and these founding teams might spend years with no income toiling away for no result. But if the idea works out and becomes a huge success, they receive the lion’s share of the reward. They took the biggest risk, and therefore they share the biggest reward.   So let's say we have a startup with four founders: Alice, Bob, Carol and Dave. If we look at the equity pie, the easiest way to start a business is to divide all the shares equally between the four founders, so they each get 25%. Vesting A huge number of complications can occur in early stage businesses. Alice might lose interest in the business and quit after only a few weeks, Bob and Carol might have a fight and one of them walks out, or Dave might not pull his weight and the three others might want to replace him. Well if you just gave the shares out without some sort of agreement to deal with these situations then you might have someone who leaves after a few weeks, doesn't put any effort in, who still keeps their 25% years down the track. That wouldn't be fair on the others, so startups usually put in place an agreement between each other to deal with what happens when something goes wrong. This agreement is called a vesting agreement, and it is designed to deal with all the tricky situations startups get themselves into when something goes wrong. And believe me, with early stage companies a lot of things can go wrong.   A typical Silicon Valley-style vesting agreement lasts for four years with what is called a one-year cliff. Under a vesting agreement, instead of automatically being granted all your shares where you can do whatever you like with them straight away, a vesting agreement instead restricts your shares so you are granted them over time, in this case over four years. At time zero, all the shares are unvested, and nobody can do anything with them if they leave the company.   With a four-year vesting agreement with a one-year cliff, nothing happens for a year. This is what they call the cliff. If you leave the company before a year, you get nothing. This is fair because if you are meaningfully going to contribute to a company you should be at the company for at least a year. If for some reason you quit or are asked to leave, the company can still continue without an unworkable share structure where all the people left working hard are resentful that a large shareholding is owned by someone who isn't doing any work.   On the anniversary of the original grant date, 25% of the shares will vest. At this point you own them and can do whatever you want with them, even if you leave the company for whatever reason – the shares have been earned. After the first year, vesting typically proceeds, so that every month 1/36th of the remaining unvested stock vests. So after two years, 50% of your stock will have vested; three years, 75%; and after four years, your stock is fully vested.   Vesting is not just a good idea; it solves a whole bunch of messy problems for when things go wrong. And believe me, a lot of things go wrong in startups! So if you're going to start a company, it's really important you put a vesting agreement in place.   So let's look at what happens to the capital structure when investors start to come in. Let's say along the way our startup finds an early stage angel investor who is willing to invest $500,000 for 20% of the company. This means he thinks the company is worth $2.5m after he invests, because his $500k is worth 20%. We call this the post-money valuation of the company, because it is the valuation after the money is invested.   The pre-money valuation of the company is the valuation before the money goes in. Since $500k was invested this means that the pre-money valuation of the business was $2 million. Everyone, all four of the founders and the new investor in the company, now owns 20%. Taxation At this stage our company probably wants to start hiring its first employees. It finally has some money in the bank and can afford to pay some salaries, but it's not a lot of money. The market for hiring staff is tough and it’s a very competitive and global market. The company has to compete with very well-funded companies who can offer much more than what our startup can afford, and this is in addition to all the other perks big companies are offering like free food, a great office and free gym membership. Not only that but Silicon Valley is even more desperate for talent, and companies like Google and Facebook are paying even more and have even better perks. On top of all that our startup is very risky and based on statistics, more likely than not is going to fail. So the only way it can attract staff to join such a risky and low paying endeavour is through stock; it’s something that the startup can hand out today, and even though it might not be worth a lot right now, it could be worth a fortune later on if the company is successful down the track. This is why equity is the primary means in which startups attract and retain talent, and this is why it is so important.   So our company wants to make its first hire, and given it’s such a risky proposition, the cost in terms of equity will be high, maybe a few percent. As time goes on and the company gains traction, the risk involved with the business will become lower, and as such, the equity compensation decreases. At the same time, the company becomes more and more valuable, so the dollar value of the equity already granted will increase.   Typically, an early stage startup might reserve 10% or 15% of its stock in a special pool for employees. So let's carve out this pool in our capital structure; 15% is reserved for the staff, and each of the four founders and investors each end up with 17%.   At this point you might think it's all very straight forward. But if only it was! The big problem we've neglected so far is the issue of taxation. While these shares are actually worth real money – we're giving out 15%, and remember our seed investor paid $500k for 17% of the business. So they're worth a little under half a million dollars right now. If you gave out the shares directly as stock grants, that means the staff in total would have to treat those shares as income, and pay income tax on almost half a million dollars in this financial year!   Can you see the problem here? You're trying to attract people to join your company by handing out shares because you can't afford to provide a good salary, but by doing so you're burdening them with a huge tax bill! Not just that, but those shares you are handing out won't be worth anything if the company isn't a success. On top of that there's no active market in which they can be sold because it's a private company – a market won't exist until the company goes public or gets bought out in a trade sale. Who in their right mind would want to be given stock then? Stock options Fortunately there's a way in which this problem can be solved, and that's by handing out a stock option rather than the stock directly. An option is a contract which gives the owner the right, but not the obligation, to buy or sell an underlying asset, which might be a share, at a specified strike (or exercise) price on or before a specified date. A stock option is what's known as a derivative, which means that it derives its price from something else, in this case the value of the stock. As the value of the stock goes up, the value of the stock option goes up as well. As the price of the stock goes down, the value of the stock option goes down as well. But for the option to have any value at all, the underlying share must be worth more than the strike price, because this is the amount of money someone has to pay to exercise the option, which grants them the underlying shares.   So our payoff diagram looks a little like this: if I buy an option while the stock is trading below the strike price I'm down the purchase price of that option, but once the underlying stock reaches the exercise price, the value of the option steadily rises in a straight line. Once the underlying stock reaches the value of the strike price plus what I paid to purchase it, I'm making money – and my ability to make money is limitless, if the stock keeps rising, I keep making money. This means that by owning an option I share in the upside of the company. If things go really well, I make money as fast as all the shareholders do, but if the stock doesn't rise or it drops then not only do I not make any money but I'm only out of pocket what I paid to buy the option.   The reason why giving options to staff works out better than giving out shares is because if I grant options that only provide upside from today then basically the value of that option today is pretty much zero. This means if we hand out options then we don't have a big income tax problem because the value of the options are pretty close to zero. The way this is achieved is by the company setting the exercise price of the option to be the same as the fair market value of the shares as of the date of grant. So if for argument's sake each share is currently worth $1, then the company would set the strike price of those options to also be $1. This means that effectively the options are worth zero today because I would need to pay a dollar to exercise the option into a share which would also be worth $1. The great thing about having the options worth zero is I can give them away to staff without having them receive a big tax bill, because there's no value in the options today. The staff share in the upside success in the company as much per share as shareholders do, but the value of the company has to improve for them to become valuable. This is a great mechanism for attracting new staff – if the company does well, then they do well, but they don't get burdened with a tax bill upfront.   However, it's a little more complicated than that. Options actually have two components of value in them. They have what is known as intrinsic value as well as time value. Intrinsic value is the value you would normally think would be in an option – it's the difference between the market value of the underlying share and the strike price of the option. So let's say our share is worth $1 today and the strike or exercise price of the option is also $1. When the stock trades below $1, then the option is also zero. If the stock was worth $2 and the strike price $1 then the option would be worth $1, and if the stock rose to $3 for the same strike price, then the value of the option would be worth $2.   Now here's where the complication is – options also have a time value. The time value of an option is the discounted expected value of the difference between the exercise price and the stock price at expiration. In layman's terms, even though the intrinsic value of an option today might be zero, there is a probability that by expiration of the option that the stock might have risen. So even though the intrinsic value might be zero, the value of that option isn't exactly zero, it's instead worth a small amount, which is a reflection of the probability that at some time in the future it might be worth something.   It's fairly complicated to calculate the time value of an option. Companies usually use either one of two ways: the binomial method or the Black-Scholes method, although there are other methods, but all the methods use a lot of complicated maths (if you want to know the difference between the two, here's a great video). The main way is the Black-Scholes model. The development of this model by Stanford academics was so fundamental to the creation of modern financial markets that the economists that developed it won a Nobel Prize in Economics for it. The model takes into account something known as the volatility of the stock, which is a statistical measure of the variation of price of the stock over time. The more volatile the stock is, or the more it moves up and down, the higher the time value is of the option. This makes a lot of sense intuitively, because the more it moves up and down the greater than chance it might actually be above the strike price at the time of option expiry.   So it's important to remember that even though the company is giving out stock options to staff that has the strike price equal to the market price of the stock, even though the intrinsic value of the option is zero, the time value of the option will still be worth something, and as such the option will have some value which the staff will receive as income and have to pay tax on in the current financial year.   So let's now talk about taxation of employee stock and why it's so important to get this right. We know so far that when you're granted either a share, or an option, that you're going to have to pay income tax on the fair market value of that grant in the financial year in which you receive that grant unless the grant is subject to deferred taxation, that is, among other things, subject to vesting conditions. Not all shares in startups are the same Now the first thing to remember is that not all shares in a company are the same. Investors rarely buy common (or ordinary) stock in a company – they buy instead a class of stock known as preferred stock. The stock is called preferred because it comes with a number of special rights and privileges. A common right is something known as senior liquidation preference. Liquidation preference was originally designed to provide downside protection to investors that put hard cash into the business, as opposed to just the hard work that founders and staff put in. We call that hard work "sweat equity", because the equity is paid for in sweat, rather than hard cash.   Financial investors in startups like venture capitalists are not just smart, they are in a powerful position; there's a rule in startups called the golden rule – he who has the gold rules. These financial investors invented senior liquidation preference to ensure that if the company goes belly up that in a liquidation scenario that they get their money back before any of the people who earned sweat equity get anything. This is why it is called "senior" in a liquidation. So if a venture capitalist invests $2 million dollars in a company with a 1x liquidation preference, then if the company doesn't go very well and winds up, that the venture capitalist will take the first $2m out of what's left before any of the people with sweat equity see a cent.   Now this was originally supposed to only provide downside protection, so that if a company didn't set the world on fire that the investor could get first claim on the assets, but if the company did well that in a distribution of returns in a sale of the business for a lot of money they would have to convert their preferred stock to common (or ordinary) stock and share like everyone else. So in a trade sale there are two options – you either chose to be paid out as a preferred stockholder, who only gets back their money up to the terms of the liquidation preference in the case of a wipeout, or you could convert to common and share with everyone else if the company did well. This is called a non-participating liquidation preference.   However, over time, and because of the golden rule, venture capitalists twisted liquidation preference to become participating preferred stock. What this means is that in a sale of the business they got both the liquidation preference and after that they get to share with everyone else.   So let's say our venture capitalist invests $2m in a company giving it a $6m pre-money valuation, so that they take 25% of the stock, but their stock is preferred stock with a 1x participating liquidation preference. This means that if the company sells for $8m, they first get their $2m liquidation preference and then they get 25% of the remaining $6m, for a total of $3.5 million! So you can see that even though the venture capitalist owns only 25% of the company, they get almost 50% of the returns in a sale of the business!   So you should be able to see right away that the taxation of the common stock on par with the preferred stock in the case of liquidation preference is quite unfair because the returns are not equally distributed between the two classes of stock.   It can get much, much worse than this. Sometimes the multiple on the liquidation preference for participating preferred is more than 1x, sometimes it's 2x or 3x, or more. If we go back to our VC's $2m investment in a company at a pre-money valuation of $6m to get 25% of the shares outstanding, that if the multiple is 3x then the VC would get $6m off the top before anyone else got anything. So if the company sells for $8m, then the VC takes $6m and then they share in 25% of the remaining $2m so they end up with $6.5m of the $8m which is over 80% of the returns even though they only had 25% of the shares outstanding.   These egregious terms are more common than you think. The US law firm Fenwick & West publishes a quarterly survey on financing terms in venture deals and for example in Q1 of 2013, 23% of senior liquidation preferences were multiple liquidation preferences, and of those 29% were between 2x and 3x and 14% were over 3x. Right before I floated Freelancer.com, one of the term sheets I received from a US late stage venture capitalist had a 3x liquidation preference.   To make matters even worse, liquidation preference stacks; later investors will always want at least the multiple that the earlier investors got. So if the company takes in $2m at a $6m pre-money with a 2x liquidation preference, then $5m at a $20m pre-money and finally $50m on a $200m pre-money, all with a 2x multiple, then the total amount of liquidation preference in the company is $114 million dollars. That's right, in a sale of the business, the investors take $114 million right off the top, and if the company sells for less than that, the founder and staff get nothing at all. If it's participating preferred, then on top of this they get to share in the rest.   Sometimes there might be a cap on the total amount of liquidation preference that can be received, but in the latest Fenwick & West survey for Q3 2014, 63% of participating liquidation preferences were not capped. Participating preferred liquidation preference, senior multiples and uncapped liquidation preferences are common tricks of the trade that venture capitalists and other financial investors use to bridge valuation gaps between what the valuation that founders place on their business and what investors are willing to pay. Taxation of grants So again you can see it's grossly unfair to tax grants to founders and staff as if the value of the common and preferred stock are the same. The problem is that when your startup is still a private company that there is no active market price for your stock, in fact, the only price you'll typically have is the last price that an investor bought preferred stock at. That's why in the US it is common in the treatment of taxation of common stock to discount the market price of the preferred by 90%. It's illiquid, it's subordinated, there might be a tonne of liquidation preference on top, and I'm not going to even get into all the other rights and privileges that VCs will have as a result of owning preferred stock – including the ability to pretty much fire you at will.   Now let's look at how the taxation of grants works with respect to vesting. Let's say for arguments sake that an early employee is granted 200,000 shares which at the beginning of the life of the company, when there is no value in it, are worth 1 cent per share. Let's say these shares vest with our standard Silicon Valley-style vesting agreement, which is over four years with a one-year cliff. On the one-year anniversary of the grant, 25% or 50,000 shares vest, and after that each month, 1/36th of the remaining or 4,166 shares vest until the four years are up and the grant is fully vested. Let's say that after the first round of investment in the company, or the Series A, happens sometime in the first year and that the shares are now worth 20 cents each. On the one-year anniversary 50,000 shares vest which is worth $10,000 at 20 cents a share. On that date, the early employee would have to pay income tax on $10,000 in that financial year. Let's say the company then goes through another round of funding and the shares are now worth $1 each. Each and every month now, the employee would have additional income of $4166 that they would have to pay tax on – and there are 12 taxable events in that financial year! Let's say the company does really well and the shares end up being worth $20 each – that would be 12 taxable events per year on income of $83,320 each! Granting options where the strike price of the option is equal to the fair market value of the stock at the time of grant might be slightly better, but remember that the value of this option will never be zero due to the time value of the option.   If the company does really well, this rapidly becomes a nightmare from a taxation standpoint! If the company is still privately held, the staff member might not be able to sell any stock to cover their tax bill because there is no active market for the shares. The company might not even be generating any revenue – just think of how Snapchat is valued at over $10 billion and not making any money yet. 26 U.S.C. § 83(b) In the US, luckily the IRS has realised the problem of vesting of employee stock, and has created a special exemption called an 83(b) election. 83(b) allows founders and employees to decide at the start of your vesting agreement to be taxed for the entire amount that will eventually vest at the present value. Rather than paying tax each year then, you pay all the tax up front based on the value of the stock or options as and when it is granted to you. The two important conditions of 83(b) is that the stock or options granted to you need to be at risk, that is to say be subject to a vesting agreement, and that you have to file a 83(b) election within 30 days of receiving the grant.   If we go back to our example of the early employee receiving 200,000 shares at 1 cent each under a standard Silicon Valley vesting agreement, then under 83(b) the employee could just elect to pay income tax on the total value at the start, which is $2,000. This is significantly better than the nightmare scenario I talked about before, when you have to pay tax as and when each share vests. Of course, if the company ends up being valuable, the employee will still pay capital gains tax when they sell the shares down the track on the difference between what the stock is worth then and now. If they've held for more than a year they'll pay long term capital gains rather than short term, which is a bonus. At the end of the day, the tax department still gets their tax, it just gets their tax when the stock has crystallised real value and the employee can actually sell the stock to pay for the tax bill.   Click here to read part two.   This story originally appeared on SmartCompany.

Logging out? Why young people love to hate Facebook

2:17AM | Monday, 9 February

Researchers, journalists writing about research, and young people themselves have been writing about the perceived decline of Facebook for a while now. Young people are leaving Facebook in droves; Facebook is no longer hip with the kids; Facebook is dead.   As 19-year-old Andrew Watts described it, Facebook is:   … an awkward family dinner party we can’t really leave.   The great tension in Watts’ account of his own use of Facebook – which, as social media researcher danah boyd has already pointed out, appears to be a privileged one – is that while Facebook is dead, it’s also essential to have.   If you don’t have Facebook, that’s even more weird and annoying.   While it might no longer be “cool”, young people still use Facebook. It is still very much at the heart of the social web, even if new forms of social media are emerging around it. According to one of the authors' (Ariadne’s) research, more than 90% of 16-29-year-olds are on Facebook.   So why do young Facebook users love to hate it, even when it’s part of their everyday lives? The parental gaze Facebook is not “cool” because it is now widely used by parents and other adults, who – perhaps unwittingly, perhaps very deliberately – subject young users to the “familial gaze”. It makes sense that young people will want space for socialising and hanging out free of adult supervision and control.   This is certainly not new, but social media does complicate our understanding of presence. Presenting an “appropriate” version of oneself online, where multiple audiences and contexts are collapsed into a singular “performative medium”, is complicated.   In one of the authors' (Brady’s) previous research on when and why young Australian social media users moved from MySpace to Facebook, he found a group of participants in his qualitative sample who were still using MySpace back in 2010, two years after Facebook had overtaken it as the dominant social network site in Australia. One 16-year-old male participant explained:   … because I have family and stuff on there, I make sure I filter what I put on Facebook. I don’t want aunties seeing some things. It could be completely different to what I actually meant. So I’ll leave that for MySpace. Facebook I’m a bit more conservative.   In other words, some of what is shared with friends online relies on a pre-existing context, like in-jokes or references only friends would understand. For people outside that context – parents, aunties, teachers and basically anyone outside his network – the actual meanings behind disclosures were at risk of being decontextualised on Facebook.   Yet, for other young people, maintaining familial networks on Facebook is crucial, and not something to be avoided. For another of Brady’s participants, a 15-year-old female, Facebook served as an important link to her sisters after the death of her father. She explains why she started using Facebook:   My dad passed away … I got my boyfriend … and I sort of just became more family-oriented. I moved onto Facebook where they all were. I don’t live with most of my sisters.   In Brady’s current research on sustained Facebook use among twentysomethings, participants have also described the growing importance of using Facebook to stay in touch with family as they undertake rites of passage like moving out of home, entering into further education and employment, travel and building families of their own.   And yet, these positive stories about connectivity often run alongside and in tension with ambivalent accounts of Facebook being banal and a waste of time. Facebook isn’t just about friends and family though. Facebook and civic life It is clear that Facebook is important for young people to remain connected to their social networks; they continue to make use of its functionality.   Ariadne’s research found that Facebook is also a place for young people’s civic participation. Those actively involved in organisations or causes use Facebook to have political discussion, share information and organise events.   Facebook’s functionality means it is easily used in these contexts, often replacing traditional means of activist communication such as group meetings, postering and email lists. One young political party activist said:   … these days, you assume that everyone has social media as a given. That’s your go-to mechanism.   A young GLBTI activist said:   There’s no other way to invite 100 people to an event at once apart from Facebook. And also to remind me where I need to be at what time, it’s very useful.   Despite the ubiquity of Facebook and the usefulness of its simple organising affordances, many young activists in Ariadne’s project also felt unease and ambivalence about such things as the credibility of information shared and the erosion of opportunities for in-person political debate and action.   In Ariadne’s current project, online discussion groups and surveys of ordinary young people highlighted that most relied on Facebook for information about political news, but they were reluctant to share their opinions or post comments. When asked why, many were concerned about disagreements or being wrong. Others believed that social media needed to be kept as purely a social space, not a political one.   Our young participants were also very aware of who their Facebook audience was, expressing similar reservations to Brady’s research participants about the presence of family who may be more disapproving than their friends. For example, one young male said:   I do care who can see my opinions because even though I might have my own opinions about an issue, I don’t want to look bad in front of, let’s say, my aunts that I’ve friended on Facebook if they had an opposite opinion. I probably wouldn’t respond if I agreed or disagreed unless I’m close to that person.   Importantly, this post led to a lengthy discussion among four participants on how they actively used privacy settings to control who saw what they said on politics, and that Facebook was better than in-person conversations because you could post links to where information was from. One young woman pointed out:   Often, when there is a disagreement when face-to-face, I have to simply wonder where they’re getting their data or if they’re just making it up because it sounds good to go with the point they’re making.   Most young people use Facebook but they do not all view it in the same way. As boyd has cogently pointed out, often the views of the economically and technically privileged are given prominence.   In Ariadne’s data, politically engaged young people who were not from a privileged background were the most optimistic about using Facebook for politics. It is their voices in the conversation quoted above. Social media and diversification Facebook is just one piece in a broader social media landscape, which includes Reddit, Snapchat, Tumblr and Instagram. Each form of social media comes with its own set of affordances and audiences. But no matter what the platform, we need to be wary of all-encompassing generalisations in understanding young people’s use of social media in their familial and civic lives.   Instead, we should seek to focus on diversity in experiences. Young people can be both ambivalent and positive about Facebook (often at the same time), pointing out its wide array of uses.   At least for now, Facebook will continue to be the site young people love to hate, but can’t easily leave behind.   This article was originally published on The Conversation. Read the original article.

OneShift’s Gen George at SouthStart: Effective partnerships key to growing a startup

2:39PM | Thursday, 5 February

Building a two-sided marketplace is hard work but the key to scaling is forming partnerships and effective marketing, according to the founder of job matching platform OneShift.   Speaking at the SouthStart conference in Adelaide this morning, Gen George described how she started OneShift from scratch two-and-a-half years ago with the aim of saving businesses time and money in hiring candidates.   The platform now has 415,000 candidates and is growing by about 1500 candidates a day. Earlier this week the startup announced it had acquired mature age jobs platform Adage for an undisclosed amount.   Despite such enormous growth in such a short amount of time, George described how her initial marketing efforts involved flyers printed from her workplace and a lot of duct tape. And when she printed her first round of business cards, she even forgot to put her website on there.   However, these early efforts – coupled with a few mistakes along the way – are critical in building up a customer base, according to George. For example, she bought her company’s logo for $99 from design startup 99designs and still hasn’t changed it.   “Obviously the tech can be complicated and take a lot of time and you’re not sure of the bell and whistles you need from the get go,” George says.   “No matter what you’re trying to build – whether it’s car owners and people wanting to buy cars – you have to get the relationship going from the get go. Anything you have to do to keep it cheap and cheerful to get it off the ground, it all helps.”   George also encourages startups to hit the streets and go to industry events in order to build up brand awareness.   “We printed flyers, spoke to businesses and it was all about having conversations,” she says.   “What candidates are they looking for, what are their problems? Have a small business mentality, but a big business reach.”   George also says social media is critical for reaching new audiences, even though it requires constant effort.   “We’ve found some of our largest clients that way, like Jones the Grocer,” she says.   “The HR manager found our Facebook page because a lot of her hospitality friends liked it. As you keep testing, keep learning.” Gen George’s top three tips for building a two-way marketplace: 1. Look for partnerships in order to find new users 2. Make it work in one area before scaling 3. Build awareness and credibility through marketing and PR   StartupSmart travelled to Adelaide courtesy of Brand South Australia.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Facebook shapes women’s body image – just not as you’d expect

2:11AM | Monday, 2 February

If you’re one of the world’s 1.3 billion regular Facebook users, you’ll know the feeling of being consumed by your news feed.   If you don’t use Facebook, you need only get on a busy train or bus to see countless people browsing Facebook on their phones, inspecting photos of their “friends” enjoying themselves. Young women in their teens and early 20s spend around two hours on Facebook every day.   When constructing a profile on Facebook, most people choose to present an idealised version of themselves. They upload only the best photographs of themselves to their profiles and remove any images that they find undesirable.   Facebook users post around ten million new photos every hour. This provides users with regular opportunities to compare their appearance with others.   We know that women who often compare their appearance with others are less satisfied with how they look, particularly when they compare themselves with others who they think are more attractive.   Decades of research also shows that viewing images from traditional forms of media, such as magazines or television, can cause young women to be dissatisfied with their body and put them in a more negative mood.   But our recent research shows that while spending time on Facebook increases some young women’s concerns about their face, hair and skin, it doesn’t necessarily affect how they feel about their body.   This could be because Facebook contains more images of people’s face than images of their overall body. So when browsing your news feed, you are likely to have more opportunities to compare with other people’s faces than with their weight and shape.   In our study, 112 female university students spent ten minutes browsing either their Facebook account or an appearance-neutral control website. We then asked them to rate their current mood and levels of body dissatisfaction.   We also asked participants to describe three things they would like to change about themselves and categorised these responses as being weight and shape-related changes or face, skin and hair-related changes.   One week later participants reported on how often they generally compare their appearance.   We found that spending time on Facebook did not impact how they felt about their body. Instead, after spending time on Facebook, women who compared their appearance with others more often were more motivated to change their facial features, skin, and hair than women who viewed the appearance-neutral website.   This is consistent with other research, which found no difference in weight and shape preoccupation between young women who spent 20 minutes on Facebook or a control website.   We also found that spending even a short time on Facebook put young women in a more negative mood. This may be because they were comparing themselves with others on other non-appearance aspects, such as how often they go out with friends or how much they have travelled. People will compare themselves with others on aspects that are important to them.   Despite rumours that Facebook usage is in decline, it remains the most popular form of social media. Rather than encouraging young women to avoid social media, parents and educators can talk to girls, from an early age, about the idealised nature of images and content posted on social media and the impact that comparing such content can have on their mood and appearance concerns.   We can also encourage young women to post less appearance-based content to their profiles and to follow or “like” pages that promote better self-esteem and more positive body image. This article was originally published on The Conversation. Read the original article.

THE NEWS WRAP: Facebook testing basic app for low-end Android devices

11:00AM | Wednesday, 30 November

Facebook is testing a new standalone app designed for low-end Android devices in emerging markets.   TechCrunch reports the app quietly launched in a number of countries in Asia and Africa over the weekend – including Vietnam, South Africa, Sri Lanka and Zimbabwe.   The app is believed to be aimed at fast-growing markets in Africa and Southeast Asia, and has been built to accommodate Android devices of 252 KB in size and those on poor internet connections. Oculus turns to making virtual reality movies Oculus has announced it is exploring “VR cinema”, with an internal team focusing on the potential of virtual reality storytelling.   The internal team, known as Oculus Story Studio, will aim to make the cinema experience even more compelling, according to The Verge.   The news comes as the group’s first movie, Lost, debuts this week. Pluralsight acquires online learning startup Code School for $36 million Online technology training platform Pluralsight has acquired Florida-based startup Code School for $36 million.   The acquisition is Pluralsight’s sixth in the past 18 months and part of an aggressive expansion into the online learning space.   Founder and chief executive of Pluralsight, Aaron Skonnard, said in a statement the acquisition will allow the company to reach developers at all stages of their careers – including those with limited coding experience.   “Together we will continue to help professionals remain relevant and ensure businesses stay on top of the latest trends and technologies,” he said. Overnight The Dow Jones Industrial Average is down 0.07%, falling 12.68 points to 17,659.92. The Australian dollar is currently trading at US0.79 cents.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

THE NEWS WRAP: Indian company lures female customers after alleged Uber assault

1:37PM | Tuesday, 20 January

An Indian taxi company is appealing to female customers worried about their safety following the alleged rape by an Uber driver in the country’s capital last month.   The Australian reports Meru Cab is now offering female customers in Delhi pink cars with female drivers and pepper spray.   The service, called Meru Eve, has an initial fleet of 20 vehicles fitted out with panic buttons. The company says it is rolling out the service in response to customer demand.   Earlier this month an UberX driver from Melbourne was arrested after allegedly sexually assaulting his teenage passenger.   Facebook to crack down on fake news stories and scams Facebook has announced it is cracking down on hoaxes in order to improve its customer experience.   The social media platform today rolled out an update allowing users to flag posts as a hoax, which adds an annotation to the post when it appears in other people’s timelines.   “We are not removing stories people report as false and we are not reviewing content and making a determination on its accuracy,” the company says.   Twitter acquires Indian startup ZipDial   Twitter has formally announced it is acquiring Indian marketing startup ZipDial for an undisclosed amount in order to grow the social media platform’s user base.   ZipDial allows customers to dial its number and hang up before connecting, in turn receiving free app notifications in exchange for advertisements. Twitter plans to use the service to reach users who do not have access to the internet.   The deal is the latest in a string of Indian startups acquired by US companies wishing to capitalise on one of the biggest and fastest-growing markets in the world.   Overnight The Dow Jones Industrial average is up 0.04%, rising 6.81 points to 17,518.38. The Australian dollar is currently trading at US81.73 cents.

Fake accounts won’t get you anywhere on Twitter

1:05AM | Tuesday, 20 January

Two of Scotland’s leading politicians illustrate an interesting phenomenon on Twitter. In the wake of the Scottish National Party’s surge in popularity following the independence referendum, Nicola Sturgeon and Alex Salmond have both gained large numbers of followers. Both have now amassed more than 100,000 each, with Salmond out in front with about 139,000. A high proportion of them are fakes, however.   These fakes might be what social media specialists call “sock puppets” – fake accounts of individuals pretending to be someone else. These online imposters often follow celebrities to make themselves look more authentic, along with other tricks that include constant automated re-tweeting and constantly following and un-following other users.   What is the point of these sock puppets, you may be wondering. One obvious advantage is that they can be parcelled up and sold in batches to people and organisations seeking extra Twitter followers. Make me popular! Social media is one of the fastest-growing areas of marketing. One study in which I was involved concluded that there is indeed no such thing as negative publicity if Twitter is used effectively.   Organisations and individuals realise that having a healthy social media following increases trust from prospective customers. You want everybody to know your business is popular. You can build a strong following by developing good content and relationships with other users, particularly those who will either help amplify your message or act upon it.   This takes time, however, not to mention the human resources required to plan and engage with your following. So people are sometimes tempted to take shortcuts, including buying Twitter followers, retweets, Facebook likes or YouTube video views. You name it, it can be bought. Sometimes they might do it themselves; sometimes it might be the social media agency that manages their account, or even a sub-contractor.   Nor does this cost a great deal. Visit some websites offering these services and you find that thousands of Twitter followers can be had for as little as £5.   Such shortcuts certainly seem to be popular. Data from the Google AdWords keyword research tool shown below reveals that on average, more than 40,000 searches are conducted per month that use the keyword “buy twitter followers”. Is it worth it? If the followers are simply accounts that do not have any human interaction or just re-tweet everything that your account says, they are of very little value. A number of studies suggest that simply having a large number of followers does not indicate that you have an influential Twitter profile.   What is more important is that viewers can see that the account has been recently updated and the content is not simply a monologue about the great things that the organisation offers. Twitter is a social platform and although there is room for sharing content, it is also about listening and engaging with others. If an account interacts and replies to its audience, it is usually much more useful and influential compared to an account with thousands of followers but does not tweet to them.   A number of tools exist that can help people analyse the value of their Twitter profile. For instance Sprout Social looks at engagement and influence. Here’s what it makes of Alex Salmond (139,000 follows) compared to Salford Business School (2,000 follows):   Salmond might have vastly more followers, but his account actually scores slightly lower than our business school. It is worth pointing out here that you would expect an account that has lots of fake followers to score badly on these metrics.   Another good analysis tool is FollowerWonk. Here’s what it has to say about David Cameron, Nicola Sturgeon and Salmond:   I’ve included the follower numbers for context, but you can see that criteria such as engagement, average followers per day, total tweets and average tweets per day are also used to show the success of an account’s performance. We can clearly see that Nicola Sturgeon is much more active compared to the other two accounts. David Cameron is still attracting more followers per day, however, which could be due to his high profile or because he is a more popular target for those celebrity-following sock puppets.   It is worth adding that fake accounts are not something Twitter encourages, as its spamming rules make clear. Twitter wants to remove and suspend these accounts, partly because it could undermine its own advertising-based business model. This is backed up by advertising regulators such as the UK’s Committee of Advertising Practice, whose non-broadcast-advertising code requires that any paid social-media endorsements be declared to the consumer of that information.   In short, purchasing fake Twitter followers is both a waste of money and considered spam. It is not about your number of followers but how engaged they are and how useful these are in pursuing your objectives.   On the other hand just because an account is not behaving as expected by the norm – not tweeting, for example – it is not to say it is a fake. The vast majority of internet users are “lurkers” – interested to read content but don’t want to share their views. If you are one of these lurkers, beware. Your account might be suspended or blocked if you don’t change your image from an egg to your profile and you don’t attempt to engage with others!   This article was originally published on The Conversation. Read the original article.

Babysitting platform Kindy acquires Melbourne startup Social Hands

1:08AM | Thursday, 15 January

Sydney-based babysitting app Kindy has acquired Melbourne startup Social Hands for an undisclosed fee, in a bid to expand its customer base.   Kindy launched last year and is looking to disrupt the childcare industry by allowing users to find and contact trusted babysitters and nannies in their area. The aim is to give busy people more choice as well as reduce childcare costs.   Since its launch the startup has grown to accommodate around 3200 users. Chief executive and co-founder of Kindy, Hugh Podmore, told Private Media he has seen “very sustained growth” except for the two weeks over Christmas, which was to be expected.   “It’s not so much the amount of people that registered, it’s the engagement – using messages and the chat app,” he says.   “Anyone can spend a lot of money and get people [onto their platform], but if you don’t have a product that works nobody will use it.”   The startup has seen users send almost 10,000 messages to one another, and Podmore says the acquisition of Social Hands will help drive engagement because of the startup’s popularity in Melbourne. Podmore would not reveal the details of the acquisition.   “We looked at Social Hands and said we could build in some of his [the founder’s] code,” Podmore says.   “It made sense for us to acquire them because he hit on a good idea but didn’t quite have the experience we had.”   Social Hands requires users to log in to the platform via Facebook, and Podmore says Kindy will be looking to integrate with the social network so that parents can easily see what they have in common with potential babysitters.   “Anything you can do to engender trust in the person you’re talking to speeds up the vetting process,” he says.   The next step for Kindy is to roll-out an on-demand babysitting service. The startup is currently trialling this in Sydney.   “We have a pool of careers where we’ve stepped up their levels of checks and verifications,” Podmore says.   “The parent goes into the app and books a job – for example looking for someone on a Saturday night for five hours – and we put that job out to this pool of qualified careers for them to accept.”   “The parents know they’re going to be matched with someone great, they [the babysitters] turn up and do the job, and we earn a small commission.”   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Out with the keyboard as talk takes over typing

1:01AM | Thursday, 15 January

With the recent acquisition by Facebook of voice-recognition company Wit.ai, all four major players in the post-PC market (Apple, Google, Microsoft and Facebook) now have a significant infrastructure for hands-free communication with your device.   But what will that mean for our communication with our devices? Is voice just another method to talk to your computer, or are we on the cusp of a revolution in computer communication? How old is your keyboard, anyway? The humble computer mouse was created in the 1960s by engineer Doug Engelbart. The keyboard, through its ancestor the teleprinter, is even older, having been developed in the 1900s by mechanical engineer Charles Krum and connected to a video display terminal that owes its ancestry to a device developed in the 1930s.   Despite the age of these devices, they still remain the main input devices for your personal computer on your desk or laptop.   Sure, they have more buttons, or more colours, or higher resolution, but the basic input mechanism for the average home computer is the same now as it was in 1984 when the Macintosh became the first commercially available computer to provide a graphical user interface and mouse and keyboard input.   Even the multi-touch screen, made famous by the iPhone and other devices in 2007, could be considered a direct descendant of the mouse, simply moving control of the pointer from an indirect method on your desk to a more direct method on the screen.   But perhaps that is all about to change, with voice-recognition technology finally becoming important to the main players and other technology changing the way we interact with computers. Your voice is your password to a world of possibilities Like the mouse and keyboard, voice-recognition technology has been around for a number of years. Commercial voice-recognition software has been available for computers since the early 1990s.   But it was only with the advent of technologies such as Apple’s Siri and Google’s Voice Search around 2010 that voice recognition became part of many people’s lives.   Through a natural language, context-aware interface that is always connected to the Internet, technologies such as Siri allow users to address a vast range of needs while skipping touching their device altogether. Instead, they rely on their voice to set timers, check the weather, find movie times and even query where to hide a body.   In 2014, Microsoft introduced Cortana, a Siri-like competitor, meaning that all three leading smartphone platforms had voice recognition. Also in 2014, Apple introduced the “Hey Siri” feature in iOS 8, allowing users to “hail” a smartphone from across the room (as long as it’s plugged in) and ask it a question without touching any buttons at all.   Finally, in 2012 Google released Google Now, an extension to Google Voice Search that provides users with contextual information prior to them requesting it, such as providing traffic information as you leave the office or a list of good restaurants to eat at when you arrive in a new town.   And it’s widely rumoured that both Google and Apple have plans for voice-recognition technology in their television products as well.   While these solutions sometimes have a way to go (John Malkovich surely remains the only person in history to get Siri to correctly interpret “Linguica”), they present a starkly different view from the mouse-keyboard combination of old.   It surely won’t be long before users can have a standard conversation with their device, talking it through a problem rather than frantically tapping the on-screen keyboard or clicking the mouse. Blending the digital and the physical world The revolution extends beyond our voice to other devices as well. It would appear that along with replacing old-fashioned input devices, output devices like the monitor are slowly being phased out.   Earlier this year, before it acquired Wit.ai, Facebook made news for acquiring pioneering virtually reality company, Oculus VR for a staggering $US2.3 billion. The major product of Oculus VR is the Oculus Rift, a virtual reality headset that immerses you fully in a 3D virtual experience.   Using positional sensors, the Oculus Rift can track your head movements to allow you to look around the environment. The device is still in development. Given the cost of the development kit at around $A400, it’s expected that the final product will retail for less than $A500, bringing virtual reality to the everyday consumer.   Even if you don’t want full immersion, new output products are making it easier for us to step in and out of a digital world without needing a computer monitor.   Google Glass, still in development but having been in beta for a number of years, provides a small display that you can view while wearing the glasses. Products such as the new Android Wear watches from Motorola and others, as well as the Pebble smartwatch and upcoming Apple Watch, provide us with small, customised views into the digital world.   These can all put notifications, music control, sleep and activity monitoring and all the power of those voice-control systems literally at our fingertips, all without the need to use a full input or output device.   Even in your car, Android Auto and Apple’s CarPlay provide a glanceable, touchscreen and voice-controlled interface to your smartphone to ensure you’re always connected to the cloud. Sensors everywhere Beyond these standard options, input devices and data-gathering devices are continuing to pop up in places that we don’t expect, making it easier to interact with your devices and control your digital world.   At the Consumer Electronic Show (CES) this year, gadgets using Bluetooth Low Energy for communication with your home network abound, from a smart chair that helps you work out to a pot for your plants that monitors their vitals and allows you to apply water with a touch of a button.   These add to items from the last year such as the connected toothbrush that monitors your brushing time and style and reports on how you’re doing and the Vessyl cup, a smart cup that can tell you the calorie and caffeine content of your beverages as well as keep track of your daily water intake.   No longer are we tied to our keyboard and mouse to look up and record this data. Our devices will now do it for us automatically and let us know when something needs to be changed.   This trend towards the Internet of Things has been brewing for a number of years, but if the CES is any indication, this year shows a real explosion in external input devices that collect data about us and feed it into the cloud.   It will be interesting to see what the future brings. It could be argued that the new ways of communicating with your computer are already here, although just beginning.   As the year progresses and these models mature, perhaps it won’t be long before we are speaking to our device using natural language while wearing a VR headset and being instantly alerted about the status of our plants and how much activity, sleep and caffeine we’ve had so far today.   With all of these solutions, perhaps finally the old mouse and keyboard are looking mighty old-fashioned.   This article was originally published on The Conversation. Read the original article.

Facebook launches pilot trials of Facebook at Work

1:55AM | Thursday, 15 January

Facebook has begun trials of its Facebook at Work service, a cloud-based platform that allows business to create social networks for staff, with the project led by an engineer who launched one of Sydney’s most successful startups.   Development on the project is being led by Lars Rasmussen, who was the cofounder of a Sydney-based mapping startup called Where 2 Technologies that was subsequently acquired by Google and rebranded as Google Maps.   After his success with Google Maps, Rasmussen went on to lead the development of Google’s ill-fated Google Wave project, which was intended as a real-time collaborative document editing platform.   TechCrunch reports an app for Facebook at Work has appeared on the iTunes app store, with an Android version set to go live shortly and another version accessible through the Facebook’s website. News of the service first leaked in November last year.   Facebook at Work will also give employees the option of either using a single login for both their work and personal accounts, or the ability to keep both separate.   Facebook at Work is set to compete against collaboration platforms such as Microsoft’s Yammer. Microsoft announced it is combining its business-focused Lync video conferencing and instant messaging app with Skype to create a new package called Skype for Business late last year.   This story originally appeared on SmartCompany.

THE NEWS WRAP: Founder of ShipYourEnemiesGlitter says site made five-figures in sales within 24 hours

1:08PM | Wednesday, 14 January

The founder of ShipYourEnemiesGlitter, an Australian startup that took the internet by storm yesterday, says his website is for sale after turning over five figures in less than a day.   Mathew Carpenter – who also founded the Bye Rupert web browser extension – took to Twitter to say he was willing to sell his website which allows people to send enemies glitter in the mail for $10.   Everyone from The New York Times to Mashable ran stories on the startup after the website was featured on Product Hunt and Reddit.   Carpenter claims the website received one million visits, 270,000 shares on social media and made six figures from glitter sales within one hour. ShipYourEnemiesGlitter with 1m visits, 270k social shares, $xx,xxx in sales, tonnes of people wanting to order. 24 hours old. For sale. — Mathew Carpenter (@matcarpenter) January 14, 2015 Facebook unveils Facebook At Work Facebook is making the leap into the enterprise market with the launch of its new Facebook At Work product.   TechCrunch reports the platform will allow businesses to create their own social networks among employees in a manner that looks and operates just like standard Facebook.   Facebook At Work is available on the iTunes and Google Play stores, and will also be accessible through the company’s main site. Employees can create separate accounts for the work accounts; however, they can then link this to their personal profile. Online education company Lynda raises $186 million Online education company Lynda.com has announced a $186 million capitals raise to accelerate acquisitions and new content initiatives.   The capital raise was led by global investment firm TOG along with existing investors Accel Partners, Spectrum Equity and Meritech.   Chief executive of Lynda, Eric Robison, said in a statement the investment was a “tremendous vote of confidence” in the company’s ability to empower people through learning.   Lynda.com offers thousands of online classes and video tutorials to its users in English, French, German and Spanish. Overnight The Dow Jones Industrial Average is down 172.43 points, falling 0.98% to 17,441.25. The Australian dollar is currently trading at US82 cents.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Videos and photos drive social media use: Facebook gets it as Twitter struggles

1:20AM | Tuesday, 13 January

With the pervasiveness of social media, it is still an unanswered question as to how fundamental a role it plays in everyone’s lives. Part of the complexity comes from the fact that we regard social media as being a uniform thing.   That may be true in as much as what we are doing on social media is sharing something with one or more others, but actually that is not the case for most people. A large number of people never share anything directly themselves. In the case of Twitter, 44% of users have never tweeted. Of those that had, a further 43% had not tweeted in the last year.   The situation with Facebook is similar, although as there are more ways to interact on Facebook, the number of people at least “liking” posts is higher than the number actually posting content themselves. Videos and photos drive our use Surveys carried out by the Pew Research Center all show that the majority of people, are consumers of content on social media platforms, not producers. Seeing photos and videos is given as the leading reason for women, and a major reason for men, for using Facebook.   In the Pew Research’s annual social media survey, picture sharing site Instagram grew the most of any social media platform in 2014. Instagram is now more popular than Twitter. For Facebook, Instagram’s owner, this is welcome news because its main platform has stopped growing in the US, sitting on 71% of the US population of Internet users.     % Adults using Social Media 2014   It is older Gen X that are leaving Facebook - not teenagers Although a large part of the growth in Instagram’s users has come from the 18 - 29 year olds, it is the 30 - 49 year olds who have abandoned Facebook, with a 6% decline over the previous year. This group seems to have moved to Instagram as well. Twitter hasn’t fared particularly well in another measure, that of the number of users who use the site daily. Whilst Facebook and Instagram have seen an increase in the number of users that use their sites daily, Twitter has seen a decline of 10% to only 36% of users admitting to using it daily.   Frequency of social media site use (Pew Research Internet) Facebook rules as Twitter struggles The overall takeaway from the Pew’s social media survey emphasises Facebook’s dominance when it comes to social media. On the flipside, Twitter continues to struggle, which is bad news for a company that has yet to find a way of making money that doesn’t alienate its users even further. Right now, Twitter has launched its “sponsored tweets” which appear regularly in a user’s stream, interestingly, more frequently in the mobile version of Twitter than the web one. It also has started “sponsored following” that makes it look like people are following specific brands. This has drawn fire from celebrities in particular who claim that this makes it look like they are endorsing specific brands by following them, when they haven’t.   The other key feature of the survey is the centrality of photos and videos as the favoured things people like to share and see. On this basis, a site like YouTube, which has 1 billion users would rival Facebook as the second most popular social media site. YouTube is not normally considered to be a social media platform, even though its purpose is to share content with other users. Facebook and Twitter turn to video Facebook is ramping up its efforts to compete with YouTube for video. Last year, it featured exclusively on its site, short films based on the “Twilight” story. It won’t be surprising to see Facebook compete with YouTube on the content production side as it continues to extend its platform into even more of a media site.   Twitter is also planning to release its own video service in the next few weeks. Given the nature of the network, this is still focussed on people sharing video that they capture and edit themselves and so will presumably not encourage people to use it as a general video streaming service with shows and films like YouTube. Social media, not quite as revolutionary as claimed Social media has stopped short of the revolutionary technology that was supposed to transform society and our daily lives. It has become embedded as a good platform for content and information which overall, is largely positive. With new platforms like ello failing to gain traction, it is unlikely that Facebook’s dominance will be challenged. Any changes in the social media landscape are likely to come from new features that Facebook implement rather than newer players in the market. Twitter’s future is much more precarious and it is hard to see them being able to continue for very much longer in their current form. This article was originally published on The Conversation. Read the original article.

An online ‘erasure service’ for California minors – but can it work?

12:20AM | Thursday, 18 December

Privacy is often thought of as the right to be left alone. Yet, our lives are embedded in relationships – with people, with corporations, with government, and with technological devices – that can’t be pursued without some amount of privacy loss.   Sometimes that loss is unexpected, large scale, and with unpredictable impact. Donald Sterling thought he was having a private conversation. Edward Snowden unveiled the government’s trove of corporate data. And everyday tech devices are ubiquitous collectors of our personal information - with analysts predicting 2.5 billion global smart phone users by 2015.   On the whole, consumers say they want their data to be left alone – but only sometimes. The New Yorker recently published a story about an artist who offered chocolate chip cookies during an arts festival in Brooklyn in exchange for personal information, such as a mother’s maiden name, home address, the last four digits of a Social Security number, or even fingerprints. Surprisingly, nearly 400 people gave up sensitive personal information in exchange for a cookie.   If our own behavior is inconsistent with preserving privacy, how can we expect laws to effectively protect it? This contradiction is particularly problematic for privacy laws that seek to balance the government’s interests in surveillance and protecting the country against terrorism with a citizen’s right to be left alone. And judges are noticing.   During a recent conference at Georgetown University Law Center, Judge Margaret McKeown of the US Court of Appeals for the Ninth Circuit reportedly offered the following view: “With much of US [Fourth Amendment] privacy law based on a reasonable expectation of privacy, it’s difficult … to define what that means when people are voluntarily sharing all kinds of personal information online.”   This contradiction is also problematic for privacy laws that seek to balance society’s interest in preserving and analyzing posted content with an individual’s right to information privacy.   The rules, regulations, and best practices for companies dealing with obligations to “erase” data are no less seamless than the imperfectly reconcilable desires of consumers. That is because there are different privacy requirements for different age groups under both federal law and state law. And even within state law, there are so many qualifiers around what content does not need to be erased that it’s unclear that the law will protect much privacy at all.   An “erasure service” for minors   Take, for example, the new California Rights for Minors in the Digital World Act, which comes into effect January 1, 2015.   This new law gives minors, defined as users under the age of 18, the right to remove or request removal of content and other information, including images, from online or mobile application postings. Although the new law protects only California minors, it applies broadly – including to companies outside of California.   More specifically, the law will apply to any company that owns a website or mobile application that is either: (i) directed to minors – meaning it was created for the purpose of reaching an audience that is predominantly comprised of minors; or (ii) directed to a general audience if the company has actual knowledge that a minor is using the site or application.   This new law, which essentially mandates an “erasure service for minors,” also requires that companies provide notice to minors that the removal service is available as well as clear instructions on how to use it.   Sounds straightforward. Yet, it’s not. Protecting 13 to 18 year olds   Longstanding privacy rules and regulations, such as the 1998 federal Children’s Online Privacy Protection Act (COPPA) have been designed to protect the privacy of minors within a certain age group – those under age 13.   COPPA gives parents control over what information is collected from their children online including, for example, by requiring that companies obtain verifiable parental consent before collecting personal information online and by essentially prohibiting companies from disclosing that information to third parties. COPPA also gives parents access to their children’s personal information so they may review or delete it.   The new California erasure law, however, is designed to protect the privacy of everyone under age 18. Former California Senator Darrell Steinberg, the sponsor of the law, proposed the extension of COPPA-like protections to teens under age 18 because he believed that these teens are more susceptible to revealing personal information online before they comprehend the consequences.   Information privacy laws have long been comprised of an irregular patchwork of federal and state rules and regulations. But the new California law will further complicate corporate compliance for those companies that want to balance a corporate or social interest in preserving and analyzing big data with an individual’s right to information privacy.   Come January 1, 2015, companies such as General Mills and McDonalds will have to continue to comply with COPPA for users under the age of 13 while simultaneously working with a different privacy regime under the new California state law for California users under the age of 18.   Under COPPA, for example, companies must provide parents a mechanism to access and delete personal information about their children under the age of 13. Under the new California law, companies must provide users who are under 18 a mechanism to remove or request themselves the removal of content and information – but only if they themselves have posted it.   Corporate compliance under the new California law is further complicated by several qualifiers around what content must be removed.   For example, the law does not require companies to remove content copied or posted by a third party. So if an Instagram user posts an embarrassing image of a fellow Instagram user who is fifteen years old, Instagram would not have to honor the fifteen year old’s request to remove the embarrassing image because she did not post the image herself. And even if the embarrassing image was originally posted by the fifteen year old and then reposted by another Instagram user, Instagram would still not have to remove the image.   Confusing? That’s not all. The new law does not require companies to remove content posted by a minor for which the minor was paid or otherwise compensated. It doesn’t make companies remove content if they are able to de-identify it so that the minor could no longer be identified with the content. It doesn’t ask companies to remove the “erased” data from their servers, so long as they delete it from their websites and/or mobile applications.   The California Rights for Minors in the Digital World Act is going to be, in other words, one difficult law to implement. And as applied it won’t necessarily always result in any meaningful erasure of content, let alone provide enhanced privacy rights for the minors it was designed to protect.   As The New York Times reported in 2013, there are certainly good reasons to provide enhanced privacy rights to users between the ages of 13 and 18. Take this case as an example:   The rash revelations by a Texas teenager, Justin Carter, on Facebook last February — a threatened school shooting his family insists was sarcastic, made in the heat of playing a video game — landed him in a Texas jail on a felony terrorism charge for nearly six months.   However, when privacy rules and regulations lead to inconsistent outcomes, privacy rights can, as seen in the Instagram example, be compromised — even for those who only sometimes want to be left alone.   This article was originally published at The Conversation.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

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