GigaOM » New York City

NYC tech boosters say city doesn’t need a big IPO; beating Boston is enough

Jeff John Roberts — Thu, 21 Feb 2013 18:09:33 +0000

New York City doesn’t need a Google or Facebook-type public offering to show the world it’s a major technology hub. That’s the view, anyways, of a group of city boosters and entrepreneurs engaged in Gotham’s latest PR blitz to burnish its tech creds.

Speaking at Bloomberg LLC headquarters on Thursday morning, Alan Patricof of Greycroft Partners rejected the idea that New York needs a “big win” to show it can be a real rival to Silicon Valley. Patricof noted that New York companies like Buddy Media could have gone public but were acquired instead; he added that tech giants like Facebook, Google and AOL all employ thousands in the city.

Other speakers touted New York’s recent climb in relation to other cities.

“New York has surpassed Boston as the clear number two,” said Jonathan Bowles of the Center for an Urban Future. Others said that, outside of biotech, Boston has “lost luster” as a tech hub.

Ann Li, an economic advocate for the city, added that, unlike Silicon Valley, New York is not just about “tech” but instead “dash tech” — for example, “ad tech,” “fit tech” and “fashion tech.”

The boosters did concede, however, that New York still doesn’t offer the same financial support for tech as the west coast.

“There’s a dearth of B-round funding,” said Patricof. “There’s not enough $10 million or $15 million rounds.”

Patricof attributed the money deficit to the presence of too many angel investors and too many copycat startups. But he noted that, unlike venture capitalist Fred Wilson, who famously didn’t make a “single new investment “ last year, Greycroft invested in 18 companies. Patricof also predicted that several New York ad tech companies would go public in 2013.

As for whether New York will ultimately displace Silicon Valley as the pre-eminent tech hub, that seems unlikely — and it’s not just a question of venture capital or talent. Like Hollywood, which other cities have tried to replicate for decades, the Valley has an intangible people quality that defies duplication.

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New York City replaces 250 public pay phones with iPad-like screens

Jeff John Roberts — Tue, 20 Nov 2012 11:00:24 +0000

In the wake of Hurricane Sandy, the humble phone booth took on renewed importance as cut-off New Yorkers used pay phones to connect with each other in an emergency. Now, this quaint but reliable form of public technology is getting a major facelift.

Starting today, New York City is officially launching a plan to transform pay phones into giant touch screens that provide city information, emergency broadcasts and local business deals. Located in the same locations as existing phone booths, the new platforms look like this:

The platforms are run as a partnership between New York City and two companies, Cisco and City 24/7. The smart screens were tested in a pilot project for a while but now they are officially live across the city, including at 12th & Broadway and 3rd Ave & 10th street. Soon, there will be 250 of the newfangled devices in all five city boroughs. “We’ll average a couple of installs per day. With the holidays approaching, they won’t all be in for a couple of months,” said City 24/7 by email.

Get a coupon or instructions in an emergency

To understand the new program, it’s useful to recall how the business of old school pay phones works. In New York, 14 different companies rent pieces of sidewalk from the city to sell telephone calls and advertising. Like a hot dog stand, they have to abide by certain conditions and pay the city to set up shop — the New York Post reported this year that the city has 12,800 outdoor phones and earns $18 million a year from coins and ads.

In the age of WiFi and smartphones, however, a coin-based telephone business is not a great use of city real estate. That’s why New York is turning traditional phone booths into a much broader form of communication that offers information about weather, transit, parks and more. And instead of coins, the smart screens make money through advertising — including coupons from nearby merchants.

In practice, this means that a person strolling through Greenwich Village might tap on the public screen to find information about the subway or a city park. While there, she might also tap on the “deals” icon to bring up a list of coupons for nearby shops and restaurants. To store the information or coupons, she would hold up her phone and retrieve it via bluetooth, QR code or another mechanism.

“There’s a reason we started with pay phones. They’re legacy infrastructure that the city can utilize and revitalize quickly,” said City 24/7 CEO Tom Touchet in an interview, adding that the goal of the project can be summed up by the words “inform, protect and revitalize.”

Touchet, a former executive producer of the Today Show, also noted that useful information is key to making the platform a commercial success: “you have to give people content before you give them advertising.”

Maps and coffee coupons are just one dimension of the new platforms’ role. They will also, like traditional phone booths, serve as a communication tool during emergencies — but in a far more sophisticated way. In the event of another disaster like Hurricane Sandy, the screens will become two-way distress devices that let citizens call for help or receive instructions about how to find safety.

As Jeff Frazier of Cisco explained in an interview, his company is providing back-end tools that integrate both the emergency 911 system and New York’s 311 public information service. All together, the city’s new smart screens represent a powerful fusion of data and communications that are intended to stay secure and online even during a disaster.

Strong and easy to clean

As anyone who’s watched The Wire can attest, traditional phone booths have a dark side. They are not only a way to connect friends but also a place of business for pimps and drug dealers, and temporary shelters for hobos. And if New York’s new phone booths resemble giant iPads, could they also be the target of vandalism or the wave of “i-crime” sweeping the city?

In response to such concerns, Touchet says that the new platforms have been field tested for months and “not just in the Upper East Side.” He says they have been deployed successfully in high traffic areas like Penn Station and on the tough streets of Newark, New Jersey.

According to Touchet, wherever the screens have been tested, they’ve been treated like a valuable public good by all communities. But he notes the screens were “over-engineered for a reason” and that they can withstand anything New Yorkers throw at them. The platforms can also be easily sprayed clean.

Now that the machines are live, New York won’t immediately share in advertising revenue but will before long. The companies also plan to expand to other world cities in the future.

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Power unites: New Yorkers come together, charge together

Jeff John Roberts — Fri, 02 Nov 2012 00:01:51 +0000

In the wake of Hurricane Sandy, the teeming streets of lower Manhattan have become an eerie, empty wasteland. Amidst the cold and the dark, the most pressing need is not for food or water — but for power to charge phones and laptops.

Fortunately, New Yorkers are looking out for each other as they always do. Outside bars and bodegas, merchants with generators are sharing them with residents who need to charge up and contact the outside world. This was the scene near Avenue A in the East Village where Percy’s Tavern set up tables with dozens of power outlets to use free of charge:

Similar scenes played out in front of hairdressers and coffee shops around the blacked out part of the city. Strangely, for this week at least, the cell phone habits of many New Yorkers resemble those of rural Africans who regularly pay small sums to charge their mobile devices from a generator.

The situation in Manhattan also highlights how, in a crisis, the city’s post-industrial economy still ultimately depends on very industrial fuels like diesel. (To see how we might one day progress beyond this, see the excellent reporting by Katie Fehrenbacher earlier this week.)

Finally, this scene on 2nd Avenue shows that water is also an issue for some New Yorkers in the black out zone:

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Tweeting fake news in a crisis — illegal or just immoral?

Jeff John Roberts — Tue, 30 Oct 2012 20:17:46 +0000

When Hurricane Sandy battered their city on Monday night, New Yorkers looked after each with courage and generosity. Unfortunately, a few people behaved badly and one person was downright despicable.

That person was Shashank Tripathia, a hedge fund analyst, who began issuing false and alarming news reports on Twitter at the height of the storm. As hospitals lost power and a major power station exploded, Tripathia contributed to the chaos by falsely claiming that all of Manhattan had gone black and that:

BREAKING:Confirmed flooding on NYSE.The trading floor is flooded under more than 3 feet of water.

— ComfortablySmug (@ComfortablySmug) October 30, 2012

The tweet — which said a pillar of the world economic infrastructure was in peril — was finally refuted by the stock exchange, but not before it had been repeated hundreds of times, including on CNN and the Weather Channel. In short, Tripathia used a media platform at the height of an emergency to promote panic and anxiety.

Everyone agrees that his behavior was reprehensible. But there is also the question of whether tweets like Tripathia’s are (or should be) illegal.

Keep in mind that Twitter is not just an online gab fest, it is also a newswire. During the hurricane, a phone-based Twitter feed was the last and best source of news for some of us who had lost access to TV and the internet. It was at this very time that Tripathia chose to make mischief with his fake news reports, knowing full well his lies would be picked up by other news sources. It’s as if the local TV channel began broadcasting fake hurricane news just for fun.

Criminal mischief or Free speech?

Should he be punished? As others have pointed out, the damage he caused is limited because Twitter operates much like a self-cleaning oven by disinfecting false news. And Tripathia himself is likely to face the wrath of angry New Yorkers and possibly lose his job, now that BuzzFeed exposed his identity.

This doesn’t mean, however, that the state or city shouldn’t consider criminal charges against Tripathia — or anyone else who uses a broadcast channel in an emergency to endanger or incite. But any government action would, of course, be subject to the law of free speech.

“Lies are constitutionally protected except in very rare exceptions. Someone recklessly tweeting is beyond the reach of the law except in rare exceptions,” said Ken Paulson, a lawyer and former USA Today editor at the First Amendment Center, in a phone interview.

Paulson added that Twitter is typically so much loose talk and that “anything you want to outlaw on Twitter, you’d have to outlaw in conversation.”

Paulson’s reasoning is appealing, especially to a journalist, but may be hard to square with situations in which a Twitter feed becomes a de facto emergency broadcast channel. After all, the government already regulates rumors related to the SEC and the stock market, and courts say they will draw a line at protecting speech that gives rise to “imminent lawless action.” Should there be limits on social network speech in emergencies too?

At GigaOM, we’re fond of highlighting Twitter’s role as a source of freedom and public media tool. For now, my instinct is to leave Twitter alone. But future emergencies may test that position.

Update: it looks like at least one city official in New York thinks Tripathia’s tweets amount to a criminal act:

City Councilman Peter Vallone says he’s going to DA over @comfortablysmug ‘s false tweets : bit.ly/W3ojOe #VALLONEZONE

— KateNocera (@KateNocera) October 30, 2012

Update 2: Tripathia has apologized for the tweets and resigned as campaign manager for a Republican candidate for Congress. Respected Reuters columnist Felix Salmon isn’t in a forgiving mood.

I wish to offer the people of New York a sincere, humble and unconditional apology. twitter.com/ComfortablySmu…

— ComfortablySmug (@ComfortablySmug) October 31, 2012

.@comfortablysmug if your apology is so sincere, why didn’t you put your name to it?

— felix salmon (@felixsalmon) October 31, 2012

And if you have any sympathy for @comfortablysmug at all, Google “I’m satisfied by the thought this will probably leave her with bruises.”

— felix salmon (@felixsalmon) October 31, 2012

(Images by Benjamin Simeneta and Zacarias Pereira da Mata via Shutterstock)

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Uber closes down taxi service in NYC

Eliza Kern — Tue, 16 Oct 2012 16:44:55 +0000

Updated: Uber, the San Francisco-based town car reservation service that has recently moved into lower-cost taxis rides, announced Tuesday that it has shut down its New York taxi hailing operation, only months after launching the service. The difficulty in breaking into New York demonstrates the hurdles that startups face working against city regulations for transportation, and especially Uber’s challenges in cities that already have strong taxi cultures.

The company wrote in a blog post that user demand far outstripped available taxis, making it hard to meet the number of requests, and the company was unable to work with the city and get more taxis on the road:

Unfortunately, as many of you have noticed, there haven’t been enough available TAXIs. Demand far out-stripped supply, making you feel pretty lucky when you got a yellow from your iPhone. We did the best we could to get more yellows on the road but New York’s TLC (Taxi and Limousine Commission) put up obstacles and roadblocks in order to squash the effort around e-hail, which they privately have said is legal under the rules. We’ll bite our tongues and keep our frustration here to ourselves.

In September, Uber launched its taxi hailing service in addition to the existing black car service, a major risk in a city that leans heavily on its famous yellow cabs and has a strictly regulated taxi system. Uber had hoped that customer adoption and support of its taxi system would keep it going, but The Verge first reported that taxi drivers have been told Uber will no longer operate in New York and is encouraging them to become town car drivers instead.

Uber has been widely hailed as disrupting the existing taxi and city transportation system, and while it’s not the only such service, it’s been popular with techies and early adopters in cities like San Francisco and London. The company allows users to hail a car with the tap of a finger on a smartphone, take the car to their destination and leave without ever surfacing a credit card or cash. The company bills riders’ credit cards for the rides, which are typically more expensive than taxis. Expanding into taxis and lower-cost rides has been a recent move by Uber to capture a greater portion of the market.

Uber has run into regulatory hurdles in many cities, especially those where the taxis and town cars are more strictly regulated. The company had earlier regulatory problems in New York, where drivers are prohibited from using electronic devices while driving, a key part of Uber’s technology. In Chicago, the company is being sued by taxi companies for pocketing 50 percent of driver tips, and even in California it’s faced opposition from state regulators over insurance issues.

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Your next NYC cab ride could be in a mobile office

Kevin C. Tofel — Wed, 04 Apr 2012 13:28:37 +0000

Nissan has a contract to deliver a fleet of new taxicabs to New York City starting in 2013, according to Bloomberg on Wednesday. The new model, dubbed the NV200 minivan, is less a traditional cab and more of a comfortable mobile office with more amenities and leg room than a standard cubicle. Safety features add to the package, which Nissan has priced at $29,700 in the city contract.

So what can a mobile professional expect in the new cab? There’s whopping 10-inch more leg room in the NV 200 than in a Ford Crown Victoria, which is helped by the fully flat floor. That should make it easy to work a laptop or tablet, even if you want to stretch out or cross your legs. Your mobile office will smell fresh and clean thanks to air-filtration — with a grape phenol-coated air filter – and cooling system controlled by the passenger. The fabric seats are made with an antimicrobial vinyl resin so workspace germs need not apply.

Perhaps the best functions — from a productivity standpoint, that is — are those to keep mobile device batteries topped off. Nissan included 12-volt electric outlets and a pair of USB ports to recharge phones, tablets and other portables.

The only problem I see with the new cabs is the transparent roof. Sure, you’ll get a nice view of New York’s architecture and sky, but that won’t help those looking down at their mobile device screen. We’ll have to get Ryan Kim, our mobile man in the Big Apple to get a test drive in one of these to check it out!

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Gidsy goes to Hollywood with its Airbnb for activities

David Meyer — Tue, 28 Feb 2012 18:00:06 +0000

When your most high-profile investor is a Hollywood star, it makes sense to branch out to LA. And that’s what Gidsy, one of the most intriguing companies in Berlin’s current crop of startups, is just about to do by launching a service for Los Angelinos on Wednesday.

Ashton Kutcher may be playing an internet entrepreneur on TV at the moment, but in real life he’s also one of the backers of Gidsy — a platform for hooking up consumers with people offering real-world experiences.

What does that mean? In practice, it’s a place where people sell their time giving tours, teaching, and much more. In Amsterdam, for example, a retired cop offers red light district tours. A London cab driver promises a tour of Harry Potter locations, and a course in Berlin offers to help people create their own sock monkeys. New York options range from walking tours to a lesson in “getting shit made in the USA.”

Basically, almost anything goes, and people seem to be lapping it up: the company only started operations in Berlin and Amsterdam around three months ago, and it’s already rolled out to San Francisco, London and New York.

Trust is crucial

Gidsy has a very simple business model, taking a 10 percent cut of what customers pay for their experiences. The rest goes to the person who’s offering up the activity, making Gidsy something of a micro-employment platform.

Like Airbnb and other services that bridge the divide between online and offline, Gidsy is largely based on trust. The service plugs into Facebook, making it reasonably identity-driven and the company holds fees in escrow — only releasing them to the seller after checking the customers got what they paid for. The flipside is that Gidsy also makes sure the vendor doesn’t have to collect the fees at the event. In theory, everyone’s protected.

The moneymen seem to be impressed. Kutcher’s involvement came along with seed funding from Sunstone Capital, Index Ventures, former Nielsen Entertainment CEO Peter Read and Amazon CTO Werner Vogels, all in all totaling $1.2m.

Gidsy’s Dutch CEO, Edial Dekker, told GigaOM on Tuesday that experiences lined up for the LA launch will include a Cirque du Soleil veteran teaching you how to breathe fire.

“We’re super excited to be launching in LA and can’t wait to see for which activities Gidsy will be used. It’s really interesting to see that every city has unique offerings that show a glimpse of what the city itself is like,” Dekker said.

In the future, he added, Gidsy aims to go as global as possible, taking in whole regions and branching out to support more currencies. The company also wants to add geo-search capabilities, to make it easier for people to find interesting local experiences.

“Next to the city launches, we’ve been working on a new way for organizers to offer activities through Gidsy, and we’re incredibly excited about this one,” he said. “Launching in LA brings us one step closer to a global community.”

Other LA Gidsy experiences will include a Hollywood sign hike and a course in how to avoid buying processed condiments ever again. Would it be too much to ask to have Kutcher giving a $15 studio tour?

Photograph of Edial Dekker used under Creative Commons license courtesy of Flickr user Opendata Network

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Fancy turns social discovery into social commerce

Ryan Kim — Thu, 23 Feb 2012 12:00:36 +0000

Thingd, a quiet New York start-up founded by entrepreneurial wunderkind Joe Einhorn, is looking to become the biggest player in the nascent social commerce space with a blend of Pinterest, a huge database of objects and a new shopping model that combines discovery, demand and commerce.

Thingd, which has backing from Twitter’s Jack Dorsey and French luxury conglomerate PPR, has focussed its aspirations on consumer web project Fancy, a self-expression social destination similar to Pinterest that lets people “fancy” things they like. The site, which boasts about 250,000 users, launched a little over a year ago and has gotten praise for its slick look and style. It’s also struck deals with 400 retail and brand partners, who offer Fancy users discounts when they buy items they find on the site.

Now Fancy is set to launch a new demand-driven commerce model that will let brands and retailers sign up to be a seller on any item that’s been fancied on the site. They’ll be able to conduct the transaction right on Fancy, helping turn discovery and demand into direct sales. Merchants or brands who visit the site will now see a link on each object called “I want to sell it.” They can then bid to sell that object — and if they’re approved, they can set a price and a quantity and fill out the listing page. If the exact object can’t be sold, a brand or merchant can apply to sell a similar product. This will work for a number of verticals including travel bookings, which can also be booked right on the site.

A reverse Groupon

What Fancy doing is fusing the act of discovery, self expression and curation with a marketplace that can pop up on items that are suddenly popular. Consumers are increasingly looking to sites like Pinterest and Fancy to find ideas on products and get inspired. Now, as they rally around something they like, a vendor can come in and turn that interest into sales. It’s almost like a reverse Groupon, where instead of Groupon deciding what the deal is, consumers vote with their feet and merchants can decide if want to tap the momentary market.

Thingd founder Joe Einhorn

“We want to turn commerce on its head,” Einhorn told me in an interview. “Up until now buyers for specific stores and different websites tell us what we’re allowed to buy, how much it costs and when we’re allowed to buy. In this case, we’re going to fancy the product or hotels that interest us and we’re going to let the owners or brands or merchants come to us with the appropriate offer.”

Will take some getting used to

It’s an interesting idea that accelerates social commerce in ways that will be unfamiliar for many consumers and merchants. Instead of trying to take the interaction and relationships built through social networks and hope to steer people toward a brand, and potentially a sale, companies can act like AdWord advertisers, keying in on interest and intent from users. That may take some getting used to for merchants, but they will also be able to ignite demand as well by fancying their own stuff. But Einhorn said he’s careful about making sure the discovery process is organic and not altered through paid promotions: featured items, for example, are just products that have been highly fancied.

However, Fancy is not on the tip of people’s tongue the way Pinterest is these days. And that raises questions about how successful it can be as a commerce platform without being a big destination. But there are a lot of smarts and assets that Einhorn is bringing to bear on his big plan.

First, a little about Einhorn himself: he started as the first employee at 16 for Capital IQ, a corporate information service, which was acquired by the Standard & Poor’s in 2004 for $200 million. He went on to found Inform Technologies, which helped publishers present their content. Now, he’s back with $18 million from some serious investors, including Marc Andreessen, Ben Horowitz, General Catalyst, Allen & Co. and PPR, the owner of a number of high-end brands including Gucci and Yves Saint Laurent brands. Board members include Twitter and Square founder Jack Dorsey, PPR Chairman Francois-Henri Pinault and Chris Hughes, co-founder of Facebook.

Powered by data

While Fancy only appeared a year ago, Einhorn has been working on thingd since 2009, building up a massive database of objects with hundreds of millions of items. Thingd trawls the Internet and captures all kinds of data on different products and objects, which is now powering Fancy’s commerce platform.

“If we know about as many products in the world as we can, we can be best served to connect people to those products. Collecting a product database is one aspect, another aspect is getting meaningful signals of what does that stuff mean to users. Fancy is all the products or stuff that can be bought with money that means something to users.”

But it’s not just about data. Einhorn has put it all to use creating a polished destination that appears on the web and on apps for the iPhone, iPad, Android phones and tablets. And despite no marketing push, Fancy has created a passionate following who are engaging at a feverish pace. He said users are fancying items more than a million times a week. Fancy also has some big name tastemakers, including Kanye West, who tweeted out some love for Fancy last weekend. And it’s got a stable of existing retail partners who are now being apprised of the new sales opportunity on Fancy.

Questions remain

Still, there are a lot of questions about the Einhorn’s big commerce play. Is there enough traffic to attract merchants, who will make this model take flight? How many fancys will translate into real sales? How will Fancy determine who gets to sell behind each object, and will a system like that scale? And will retailers and brands prefer to conduct business on Fancy, rather than get a referral to their own site?

Einhorn seems to revel in some of the questions, excited at plunging into the unknown. But he does believe that this will be a good bet for companies, who will take immediate sales over referrals. And he thinks that brands, spurred on in large part by PPR’s involvement, will want to get involved more deeply with Fancy as they explore its selling potential.

Einhorn has got a pretty ambitious plan but I like where it’s going. The company could try to rely on referral fees like Pinterest but he’s got a clear vision of what he wants to do. And this might be the way you can pull off real social commerce. By embedding commerce into the same place people go to find inspiration and discover stuff, Fancy can inject itself into the buying process ahead of Google or Amazon. Users have a new social way to find products that can prove effective in spurring on sales. Fab.com has also tried something like this with its Inspiration Wall, but it’s still primarily an ecommerce site. Fancy has a chance upend some preconceived notions of commerce… but only if it can attract enough consumers.

Amazon-sized ambitions

If it does, it will ultimately face a lot of challengers. Google, Amazon, Facebook and Pinterest would all like to have a say in how commerce evolves with social input. But Einhorn believes it takes a ground up approach to this, with a singular vision on providing things people can purchase. And he believes that by providing the best tools for self expression, it will continue to attract users and ultimately brands and merchants.

If it all comes together, Einhorn believes Fancy can ultimately can become Amazon-big with its model.

“People are finding and buying things they didn’t know about,” he said. “This is the holy grail, this is what commerce on the Internet will look like.”

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Fab.com takes big step toward becoming Amazon of design

Ryan Kim — Tue, 14 Feb 2012 19:00:21 +0000

A year ago, Fab.com pivoted toward its present model as a design flash sales site, and it’s been a stunning success, with 2 million members since launching eight months ago and a Crunchie award for best shopping app. But CEO Jason Goldberg envisions a much bigger future beyond flash sales for Fab.com as an Amazon-sized destination for design goods. Today, the New York City-based company is taking a big step toward that goal with the introduction of five weekly specialty shops for categories like fashion, pets and food that will more than triple the number of products Fab offers at any given time.

The shops will run for a week at a time on specific days and will refresh every week with new products. The Kids shop will launch this Wednesday at 7 p.m. ET followed by Pets Thursdays, Foodie Fridays, Vintage Mondays and Fashion Tuesdays. The fashion vertical will be powered through Fab’s recent acquisition of FashionStake. Users will be able to configure their email settings to customize which shops they want to receive notifications for. With the addition of the new shops, Fab.com will go from having about 3,000 products on the site daily to more than 10,000 items at a time. Ultimately, Goldberg wants to host tens of thousands of products on Fab.com.

Originally, Fab ran 3-day flash sales for a variety of items in categories such as jewelry, art, rugs and home accessories. It added month-long pop-up shops in September for specific themes and designers. Now, Goldberg said the company is trying to address the needs of consumers, who want to go deeper in specific verticals. And in the process, it’s moving away from being a flash-sales site to a more full-fledged e-commerce destination.

“We want to be where people go for design-oriented things, and it doesn’t matter if it’s a flash sale,” said Goldberg. “We think the opportunity is to build an Amazon-scale business in design.”

Goldberg said Fab doesn’t want to necessarily emulate the Amazon style of providing a huge catalog of products. It’s still committed to curating a smart list of items that users can discover through browsing. He said the site can support a lot more products without overwhelming the user experience.

It’s been an amazing year for Fab, which started out as Fabulis, a gay social networking site. The company had just four employees a year ago when it made the move to design sales. Last month, it zoomed past 2 million members, doubling from November, after launching in May. And it expects to hit 4 million members by the end of the year. It opened up to the public without an invite last month and is now rolling out internationally. The staff has grown to 128 employees in New York with another 40 based in India.

Goldberg said it will take years to reach the Amazon-sized scale he’s gunning for, but after the year Fab has had, it seems entirely possible that Fab will realize Goldberg’s dream.

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Wall Street gains an edge by trading over microwaves

Kevin Fitchard — Fri, 10 Feb 2012 18:42:58 +0000

McKay Brothers, a firm that sells high capacity links to trading firms, is connecting the financial districts of New York City and Chicago with a new network that aims to execute the fastest trades in the country. This new network, however, won’t be built on private fiber lines. Instead, McKay is taking to the airwaves, building a chain of tower-mounted microwave radios between the Big Apple and the Windy City.

Why is microwave faster? Electromagnetic waves travel at different speeds depending on the materials they traverse, said Gary Croke, director of product marketing for Aviat Networks, the vendor McKay selected to supply its Eclipse Packet Node radios. Optical fiber has a much higher refraction index than plain old air, thus slowing down light waves moving through it, Croke said in an e-mail interview. By sending microwaves over the air, McKay is able to cut down the round-journey of a packet by 4 milliseconds, Croke claimed.

That may not sound like much, but according to McKay and Aviat, those 4 ~~millionths~~ thousandths of a second can make all the difference in the world to a high-frequency trader. Executing a trade even the tiniest fraction of a second earlier than a competitor can lock in the smallest change in pricing, which, when applied over massive volumes of shares or commodities, can translate into millions dollars. Aviat estimated said that a single millisecond advantage could equate to an additional $100 million a year to large high-frequency trading firm.

McKay isn’t revealing the exact route or number of towers of radios used in the network, which is scheduled for completion this summer, though it is sure to use as few links as possible. The more times a transmission passes from radio waves to electronic components the more it’s slowed down. Fiber transmissions have the same limitations, passing through routers and repeaters many times along their journey. McKay wants to ensure its not only using the fastest medium for transport but also that it has the fewest hops.

Fiber also has to move burrow under streets and wind around obstacles, lengthening the overall distance over which signals must travel. Meanwhile, microwave, in most cases, can take the most direct path as transmitters must only be within each other’s line of sight. The only fiber components in McKay’s network will be in the end cities itself, completing the final mile link between the end-point transmission towers and McKay’s financial firm customers.

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