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Top News in the A.M.
By Paying Employees to Be Closer, Startups Take a Risk
Paying employees to live closer to the office may seem like a smart idea, but employment attorneys say startups should steer clear of the small but persistent practice.
Before it was acquired by Microsoft in 2008, semantic search engine Powerset offered financial incentives to employees to live close to its office. At one point, Facebook also reportedly offered a housing subsidy to employees who moved nearer to its Palo Alto headquarters.
Among the venture-backed startups that continue to provide location-based financial incentives is San Francisco-based Famo.us, whose Javascript framework is helping to fuel faster smartphone, tablet, and PC applications; and Imo, a messaging company in Palo Alto, Calif.
It’s easy to understand the companies’ rationale. Employees are more accessible when they’re nearby. Presumably, the less time that employees have to spend commuting, the happier and more productive they are. There’s also a strong case to be made that proximity to the office is better for the environment. If your employees are walking or biking to work, they aren’t polluting the air with car exhaust.
Still, attorneys say that dangling proximity-related incentives is risky for numerous reasons.
Though DLA Piper attorney Margaret Keane doesn’t think there is “a person alive who thinks it’s life-enhancing to spend time commuting,” she can envision, for example, a “scenario where you’re [viewed as] favoring one [economic] class over another.”
It’s a concern echoed by Dan McCoy, an employment attorney with Fenwick & West. He observes that offering incentives to employees to live closer to a company, particularly in an expensive city like San Francisco, could be seen as having a “discriminatory impact” on those who live in cities such as Freemont or South Jose, where housing prices are lower.
The appearance of age discrimination is another potential pitfall.
“San Francisco tends to have a younger population as older workers get married, have kids, and leave the city for the suburbs,” says McCoy. “You can imagine an age claim by someone who says, ‘You’re better compensating a twenty-something than me — who has more experience — because they live in this loft by the ballpark.”
Even if it’s impossible to prove that a company’s policies have an adverse impact, startups should probably think twice about anticipating what’s in their employees’ best interest.
Assumptions about people and their commutes will inevitably “be misleading or partly inaccurate, just because that’s life,” says McCoy. Think of the person who lives farther away but gets to work faster because of public transportation, he says, or the couple that likes to drive into the city together.
“Unfair doesn’t necessarily equal lawful,” McCoy notes. “But at a minimum, you’re going to engender a lot of bad will.” And why take that risk?
New Fundings
PubNub, a San Francisco-based startup that provides real-time messaging to Web and mobile apps, has raised an $11 million Series B round of funding led by Scale Venture Partners, with participation from existing investors Relay Ventures and TiE Angels. The company raised a $4.5 million Series A round from Relay and TiE Angels in March of last year.
Apptus, a seven-year-old, San Mateo, Calif., based company, is announcing a $37 million Series A round this morning from investors that include Iconiq Capital, K-1 and Salesforce.com. Apptus develops payment-related cloud software that’s used by hundreds of enterprise customers, including Google and Salesforce.com.
Upworthy, an 18-month-old, New York-based news curation startup, has raised $8 million in fresh funding from Spark Capital, Catamount Ventures, the Knight Foundation, and Uprising. The site, cofounded by Eli Periser, the former managing editor of MoveOn.org, and Peter Koechley, the former managing editor of the Onion, had raised $4 million in 2012 from New Enterprise Associates, Reddit co-founder Alexis Ohanian, and Chris Hughes, owner of the New Republic.
OnDeck, a seven-year-old, New York-based lending platform that focuses on small and mid-size businesses, said yesterday that it has received commitments for new credit facilities of more than $130 million, including Deutsche Bank, Key Bank and Square 1 Bank. Earlier investors in the company include Google Ventures, RRE Ventures, Khosla Ventures and SAP Ventures. In 2012, OnDeck raised $100 million in debt from Goldman Sachs and Fortress Investment Group.
TPG Growth, a unit of TPG Capital, has invested 1.45 billion rupees ($22.9 million) in Sutures India Pvt Ltd, Reuters reported yesterday. The Bangalore-based company produces surgical sutures, meshes, tapes and gloves, mostly for India-based hospitals.
Intel plans to spend $1 billion over the next four or five years on Linux and related open-source technologies, reports the Wall Street Journal.
Exits
Google has acquired the mobile startup Bump Technologies, based in Mountain View, Calif. A source tells AllThingsD that it was worth at least $30 million and perhaps as much as $60 million. The mobile apps of the five-year-old company allow users to transfer contacts and other information simply by tapping two phones together. The company had raised roughly $20 million from Sequoia Capital, SV Angel, Felicis Ventures, and Andreessen Horowitz, among others.
People
Andreessen Horowitz has parted ways with two members of its team. Tristan Walker, a former VP of biz dev at Foursquare who joined the firm in the summer of 2012 as an EIR, has moved on to start a new venture. Walker isn’t publicly discussing his next move just yet, but details to come.
Louis Beryl — a quant hired as a partner by Andreessen Horowitz in 2012 — has also left the firm to launch a new startup. Beryl had worked previously as an associate with Deutsche Bank, Lehman Brothers, and Morgan Stanley, where he traded energy derivatives. Beryl did not respond to a press request yesterday, but his new outfit, tentatively called Earnest, appears to be a new banking offering, one that promises to use data and “forward-looking” algorithms rather than credit scores to identify customers and lend to them at low rates.
Rhapsody, the digital music service, has laid off 30 workers, or 15 percent of its staff, reports The Verge.
New Fund News
Noro-Moseley Partners, the 30-year-old Atlanta-based venture capital firm, has raised roughly $47 million for a new fund titled Noro-Moseley Partners VII, L.P , according to an SEC filing. Noro-Moseley invests in early- and growth-stage healthcare and IT companies and is primarily focused on investment opportunities between Texas and Washington, D.C. According to its new Form D, the firm began officially raising its newest fund on August 30.
Job Listings
Boston-based Third Rock Ventures – which invests in biotech drug, device, and diagnostic companies – is looking to hire a senior associate with three to five years of work experience in the life sciences industry. Applicants should have an MBA; an undergrad degree in life sciences is “strongly preferred.”
Essential Reads
When it comes to revenue, the simplicity of Twitter’s products is also a weakness, say Vindu Goel of the New York Times.
The L.A. Times asks: Could Apple’s next ‘special event’ be Oct. 15?
Seizing on the conflicts of the bulge bracket banks, boutique banks are booming.
Detour
How you can help with the devastating floods in Colorado.
Can emotional intelligence be taught?
Retail Therapy
Looking to buy a fully functioning shoots-you-5,000-feet-in-the-air jetpack? Here it is. (You’re welcome!)
