Trade group launches technology incubator
This month, the National Association of Realtors (NAR) launched REach™, the new real estate technology incubator which seeks companies at all stages of growth, noting that the accelerator program “will be particularly useful to those just now turning a focus to the real estate ecosystem.” The nine monthprogram will accept six to 10 companies per year, is accepting applications through January 10, 2013, and begins in March.
NAR emphasizes that “while other Accelerator programs provide some similar functions and many significant benefits, REach™’s differentiating factor is a focus on education, mentorship and market exposure around access to the trillion-dollar real estate market and the strategic expertise NAR can bring. In the process, NAR will also bring added value to its membership and continue to fulfill its core mission by identifying those technologies, resources and companies that will most benefit the industry.”
The program’s marketing fees
According to the REach™ website, “Participants will be responsible for providing a nominal marketing fee and small percentage of common stock. Contact us for more details.” We asked for clarification from Constance Freedman, Founder, Managing Director at REach(TM) and Managing Director, Second Century Ventures; Vice President of Strategic Investments, NAR. “We are asking that companies reach out to us for details so we can best communicate the value for both sides and answer any questions accordingly,” Freedman said.
When asked for a ballpark figure, Freedman said, “The program is set up so that all parties are aligned. For any further details please just direct questions back to us. I’m not trying to evade the question but purposefully not publishing fees so that we can have a discussion with all qualified applicants to ensure cost/benefits are communicated clearly.”
Outline: the value of the program
Freedman explains the fees in terms of advertising dollars. “The cost is less than what we estimate [for a vendor to have a booth] to go to one show, and the value is equivalent to going to two shows, NAR Annual and NAR Mid-Year, and we are including them in offline as well as online ads for exposure on various channels. We offer access to 150 mentors and 500 beta testers.” Additionally, they “help locate other investors, help startups with their pitch decks.”
“This program puts the $4.5B NAR brand behind [the participants], the most powerful force in the industry, as well as gives access to mentors that are entrepreneurs and CEOs within the industry, collecting $1B in revenue in real estate alone. Also, participants get exposure to potentially 12 million customers, 1 million of which are Realtors.”
Freedman says this program is different than traditional incubators. “It is opening up a market, and we work with the startups to pull out all the stops in that market, it’s a strategic play. It is a longer program than traditional incubators, allowing for real market penetration, whereas traditional incubators’ end game is different, focusing on the value of the company,” and less on market penetration.
How the marketing fees work
When do applicants have to contribute their marketing fees, and is it negotiable? Can they opt out of the NAR Expo, is it based on their current stage and funding status, or is it flat fee? Freedman told AG the fees are non-negotiable, and are a flat fee, due up front.
“After several months of research prior to launching REach,” Freedman said, “we are confident that fees will not be a barrier to entry for qualified companies. There is no opting in/out of things, we’ve built a program that we believe can provide the best opportunities for companies to accelerate their potential growth in this market. The fees are not meant to be a money making element of the program – they are going towards promoting the companies and providing further exposure for them to the market place. The equity component aligns our interests long term. Ultimately the value the companies will receive should far surpass the fees charged from the program; we will have conversations with all qualified applicants to help them assess whether that is the case for them – we only want to work with companies where we have a mutual belief that this is true.”
So why no transparency?
“It is not a figure made public because we want to be able to have a conversation with these companies, and avoiding the gut reaction they may have in response. We would much rather have them direct questions to us in order to make a more informed decision. We don’t want to turn people away,” Freedman said.
REach™ does not offer up front investment in the companies participating in the accelerator program, but Freedman said that “the goal is to graduate them into Second Century Ventures [NAR’s investment arm].”
Dale Stinton, CEO of NAR said, “I think we could better describe it as a program participation fee which is calculated to cover our costs including marketing, our time, and our administrative expenses.”
Another part of the program that many have asked us about is the fact that the incubator will not sign a Non-Disclosure Agreement (NDA), nor a Non-Compete, and some criticize this, but it is actually normal not only for accelerator programs to not sign these documents, but angel investors, venture capitalists, and other programs don’t either.
“…a way for NAR to monetize its cabal”
Bencken added that “Most accelerators invest a mix of cash and intangible services into their accepted companies. I don’t know of any respected ones that charge a fee. Capital Factory invests $20,000 in the companies we accept, along with free office space, legal, PR, design, and access to the advice and networks of our mentors.”
“If history is any guide,” Bencken said, “a fee merely limits you to startups without better options. If your goal is to build a portfolio of sustainable, high-quality companies, hitting startups with fees is a major impediment to that, and historically, is a failed business model. For example, in the bad old days, the DEMO conference charged startups to launch at their show. In 2006, I was invited to launch TenantMarket.com at DEMO, but we declined when we discovered the fee was $20,000. TechCrunch Disrupt and LAUNCH were founded specifically to destroy that business model. And they did. Today, the best startups have their choice of free launch conferences.”
“…the market will decide if charging startups is a good idea”
Which brings us to today. “Many angel networks used to charge startups application fees up to $1,000 simply to apply to pitch. Today, the best companies and angel investors connect primarily via AngelList, and most angel groups have abandoned their application fees,” Bencken said. “Ultimately, the market will decide if charging startups is a good idea, but given that there are only 3-4 billion dollar companies founded each year, as an investor, you’re better off by opening your doors as wide as possible to ensure that you get a shot at them.”
Finally, Bencken said, “The cynic in me says this is a way for NAR to monetize its cabal. It’s not hard to read NAR’s pitch as, ‘Hey startup founder, want to sell your product to Realtors? Just pay NAR a small marketing fee, give up some equity, and you can join our ‘accelerator’ program. You’ll get the NAR stamp of approval, and all your sales will take care of themselves.’ Good accelerator programs offer a lot more than a brand name, and NAR would be foolish to devalue its brand in that way.”
“More like a marketing partnership than an incubator”
Jonathan Eyler-Werve, VP of Technology at MoxieJean.com which helps busy mothers reuse baby and childrens’ clothes, simply said, “this smells badly.”
Having recently graduated an accelerator program, Eyler-Werve said, “There are a lot of accelerators firing up right now, with no corresponding scale up of VC or angel funding, no sudden increase in the pool of qualified people willing to mentor. So there is a boom bust cycle to this. If I were signing, I would ask some hard questions of any accelerator. Questions about tone, about their track record, and of course about money.”
Regarding the REach program, he noted the program sounds “more like a marketing partnership than an incubator. “This place wants cash – which investors should be providing, not taking – committed to a marketing buy that may not have anything to do with the business model you commit to? If you have a product and marketing strategy locked in, what is the value add exactly?”
“It does not sound like an incubator to me”
ReachFactor CEO, Suresh Srinivasan has created numerous startups over 15 years, and has been an angel investor in tech startups for the last five. “I’ve never heard of the typical incubator asking for cash or marketing commitments up front,” he said. “Usually they put (very little) money into the company being incubated in exchange for early equity on merits of the idea & the founders’ willingness to grind it out. I can’t imagine how much cash is lying around an idea-stage company, but those booths at NAR are pricey!”
Srinivasan adds that the fees could be a way of vetting the field. Because they don’t put money into the company, he opines that “it sounds more like they offer the promise of guidance & access to the market. Asking for financial commitments from participants probably helps them vet the field a little and prevent a flood of applicants who’re not 150% committed.”
Under the current model of the accelerator, he says it is “more like a brand’s preferred alliance program with a dash of mentoring and advice to boot. It does not sound like an incubator to me.”
Incubator brings the most valuable assets possible to bear
Simon Justice Hall, Realtor and Branding/Multimedia Consultant at AustinCondoMania said that exposure, market penetration, mentorship, and beta users that are offered are “the most significant ways to support a budding company in the real estate business.”
Hall added, “Fortunately, unlike the restaurant business, you don’t need $100k in restaurant equipment and a physical location to start cooking grandma’s recipes in real estate. I would consider mentorship the most valuable contribution in the arsenal.”
Incubators are typically run for the good of the entrepreneur ecosystem
Cannon said, “I cannot recall ever seeing “fees” as part of the requirement to be in an incubator, those are more program styled groups and should not call themselves incubators. If they want to charge fees, then have a class or specific marketing program to assist the industry.”
“It has been my experience that those involved in incubators like myself, do it because we are passionate about entrepreneurs,” Cannon added. “We are not in it for money and the vast majority of the time, we never see any money! We do it because it is the right thing to do for the entrepreneur ecosystem. The hope is that over the years of incubated companies, that one might actually rise to the top and if not, then we are still satisfied with what we have all done to impact entrepreneurs.”
Degree holders are shifting tech hubs and affordability
(TECH NEWS) Tech hubs are shifting as degree holders move, but it’s causing some other issues and raising some interesting questions about the future of jobs.
Bloomberg recently announced their annual “Brain” Indexes. The indexes are an annual reckoning of STEM (Science, Technology, Engineering and Mathematics) jobs and degree holders. The “Brain Concentration Index” approximates the number of people working full time in computer, engineering, and science jobs (including math and architecture.) It measures the median earnings for people in those jobs. It also counts how many people have a bachelor’s degree in a STEM field, or an advanced degree of any kind. It blends those things together to determine how “brainy” a city is.
Since they started in 2016, Boulder, CO has been at the top of the list. This year it’s followed by San Jose, CA, which many people might expect to be at the top. Many of the more surprising cities, like Ann Arbor, MI, Ithaca, NY, and even Lawrence, KS, are bolstered by the presence of a strong university.
It’s an interesting methodology. It’s worth noting that anyone with an advanced degree, whether it’s an MBA, a law degree, or a Ph.D. in literature, contributes to which city is a “tech hub.” It’s also worth noting how expensive many of these places are to live.
If you follow this kind of national data collection at all, you may also know that Boulder is one of the least-affordable cities in the country. So is the San Jose/Sunnyvale/Santa Clara metro area, with a median home price of 1.25 million dollars and a median household income of $117,474. (That means that the average mortgage is more than half of the average paycheck). However many people tech hubs like San Jose and San Francisco attract, they’re also hemorrhaging talent. Every day, 8 Californians move to Austin. Of the people who stay, more than half are thinking of moving.
They aren’t doing that for fun. As much flak as Californians get for gentrifying places like Austin, they’re being megagentrified out of their own homes. As salaries rise and CEO gigs attract the wealthy (and turn them into the Uberwealthy), the people who wait on tables or teach their children can’t afford to stay there anymore.
Speaking of people leaving, Bloomberg also measured what they call “brain drain,” the flow of advanced degree holders out of cities. They pair that with a decline in white-collar jobs and a decline in STEM pay to come up with their annual list. It includes places like Lebanon, PA and Kahului, HI.
All in all, it’s interesting information. But there are other factors at work that it can’t speak to. What does wage stagnation in the U.S. mean for the flow of education workers? If San Jose and San Francisco can be tech hubs based on the number of people with degrees, but people are still fleeing, what does that say about rankings like these? What human stories get lost in the shuffle? And is “tech hub” even something a city wants to be if that means running out of teachers (or making them sleep in garages)? Where does the next generation of tech hub workers come from?
Knowing the people behind the numbers makes it clear just what a mixed bag this is. Maybe we need more tech hubs like Lawrence, Kansas. Or maybe we need rent control. Or maybe we need to embrace remote work. Maybe there are no answers. As interesting as data like this is, there’s something sort of wistful about it, too.
New Apple Watch is awesome, but past watches could be just as good for cheaper
(TECH NEWS) The Apple Watch Series 6 is a ridiculous display of self-flattery—but that doesn’t mean people won’t line up to buy it in droves.
The Apple Watch has been the subject of everything from speculation to ridicule during its relatively short tenure on this planet. While most have nothing but praise for the most recent iteration, that praise comes at a cost: The Apple Watch’s ghost of Christmas past.
Or, to put it more literally, the fact that the Apple Watch’s prior version and accompanying variations are too good—and, at this point, too comparatively cheap—to warrant buying the most recent (and expensive) option.
Sure, the Apple Watch Series 6 has a bevy of health features—a sensor that can take an ECG and a blood oxygen test, to name a couple—but the Series 5 has almost everything else that makes the Apple Watch Series 6 “notable.” According to Gear Patrol, even the Series 4 is comparable if you don’t mind forgoing the option to have the Apple Watch’s screen on all of the time.
More pressingly, Gear Patrol points out, is the availability of discount options from Apple. The Apple Watch Series 3 and Apple Watch SE are, at this point, budget options that still do the job for smart watch enthusiasts.
Not to mention any Apple Watch can run updates can utilize Apple’s Fitness Plus subscription—another selling point that, despite its lucrative potential, doesn’t justify buying a $400 watch when a cheaper option is present.
It’s worth noting that Apple is no stranger to outdoing themselves retroactively. Every year, Apple’s “new” MacBook, iPhone, and iPad models are subjected to extensive benchmarking by every tech goatee around. And the conclusion is usually that buying a generation or two behind is fine—and, from a financial perspective, smart.
And yet, as the holidays roll around or the initial drop date of a new product arrives, Apple invariably goes through inventory like a tabby cat through unattended butter.
The Apple Watch is already a parody of itself, yet its immense popularity and subtle innovation has promoted it through several generations and a few spin-off iterations. And that’s not even including the massive Apple-specific watch band market that appears to have popped up as a result.
Say what you will about the Series 6; when the chips are on the table, my money’s on the consumers making the same decisions they always make.
Microsoft acquires powerful AI language processor GPT-3, to what end?
(TECH NEWS) This powerful AI language processor sounds surprisingly human, and Microsoft has acquired rights to the code. How much should we worry?
The newly-released GPT-3 is the most insane language model in the NLP (natural language processor) field of machine learning. Developed by OpenAI, GPT-3 can generate strikingly human-like text for a vast range of purposes like bots and advertising, to poetry and creative writing.
While GPT-3 is accessible to everyone, OpenAI has expressed concerns over using this AI tech for insidious purposes. For this reason, Microsoft’s new exclusive license on the GPT-3 language model may be a tad worrisome.
First of all, for those unfamiliar with the NPL field, software engineer, and Youtuber, Aaron Jack, provides a detailed overview of GPT-3’s capabilities and why everyone should be paying attention.
Microsoft’s deal with OpenAI should come as little surprise since OpenAI uses the Azure cloud platform to access enough information to train their models.
Microsoft chief technology officer Kevin Scott announced the deal on the company blog this week: “We see this as an incredible opportunity to expand our Azure-powered AI platform in a way that democratizes AI technology, enables new products, services and experiences, and increases the positive impact of AI at Scale,” said Scott.
“Our mission at Microsoft is to empower every person and every organization on the planet to achieve more, so we want to make sure that this AI platform is available to everyone – researchers, entrepreneurs, hobbyists, businesses – to empower their ambitions to create something new and interesting.”
OpenAI has assured that Microsoft’s exclusive license does not affect the general public’s access to the GPT-3 model. The difference is Microsoft will be able to use the source code to combine with their products.
While OpenAI needs Azure to train these models, handing over the source code to another party is, to put it mildly, tricky. With the earlier GPT-2 model, OpenAI initially refused publishing the research out of fear it could be used to generate fake news and propaganda.
Though the company found there was no evidence to suggest the GPT-2 was utilized this way and later released the information, handing the key of the exponentially more powerful iteration to one company will undoubtedly hold ramifications in the tech world.
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