We’ve covered Transferwise several times over the past couple of year, documenting how the U.K.-based firm is shaking up the international bank transfer market. The company maintains reserves across multiple countries, which it uses to allow transfers at much cheaper rates than those levied by traditional banks.

One of Transferwise’s early angels was PayPal co-founder Max Levchin, so it’s not hugely surprising to see Thiel join in the company’s $6 million Series A round. Other participants include Levchin again, IA Ventures, Index Ventures, TAG, Seedcamp, former Betfair CEO David Yu and Xavier Niel’s Kima Ventures.

Transferwise does seem to be growing at a very healthy clip indeed. At the end of February 2012, it had done £10 million ($15 million) in transactions. By the end of 2012 the total was £50 million, and now it’s apparently £125 million – growth is between 20-30 percent a month. And it’s not hard to see why. I used the service myself once, and it does what it says on the tin: save money.

As Thiel said in a statement:

“Innovation in the banking industry typically involves rent-seeking or unsound derivatives, which offer marginal benefits to consumers. TransferWise demonstrates true innovation in banking by enabling its users to retain their wealth across borders.”

According to Transferwise co-founder Taavet Hinrikus, the fresh funding will help the firm add a dozen new currencies (it currently does euros, pounds, dollars, Polish zlotys and Danish, Swedish and Norwegian krone) and push into the German, Spanish, French and Italian markets.

The company will also hire about another 20 people, on top of its current 35, and will start “taking a look at traditional marketing” too, Hinrikus said.

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Amazon Web Services, which has focused a ton of resources on wooing enterprise developers with higher end services is apparently staffing up a broader mobile development effort as well, as evidenced by job posts signaling the creation of a new group to be based in Palo Alto, Calif.

The new group appears to be dedicated to building client-side functionality — but observers say it’s likely that it will do more than that. Most developers access their AWS goodies from their PCs, but we’ve seen more users of all types supplementing or even replacing their laptop and desktop PCs with smartphones and tablets so it makes sense for Amazon to respond to that trend. (It already lets folks access the AWS management console with Androidand iOS devices. 

And, as GigaOM PRO analyst Janakiram MSV had already noted in a post (subscription required) last month, AWS already offers many of the building blocks– Amazon EC2, S3, DynamoDB, and RDS – needed to expose mobile backend services. And its Android and iOS software development kits (SDKs) make it easy for developers to consume these services, he said.

Google inks patent non-aggression pact

In hopes of staving off the sort of patent litigation that has embroiled the mobile phone market, Google last week unveiled a sort of nonagression pact – a patent pledge under which it says developers  can use or sell the technology described in the patents without fear of future lawsuits, as GigaOM’s Jeff Roberts reported. The pledge includes a controversial patent issued last year that covers a form of parallel processing known as MapReduce. That particular patent provoked concern that Google could monopolize tools like Hadoop, which is an integral part of the “big data” revolution.

PayPal caught in cross fire

The notion that any large company will completely rip-and-replace one technology stack for another came under the microscope this week after reports surfaced that PayPal was doing just that — yanking out VMware technology in favor of OpenStack. As it turns out, PayPal, a unit of eBay is building out a big project with OpenStack, with help from OpenStack integrator Mirantis, but stressed that it would also continue to use VMware — whether that’s vSphere and associated management tools; vCloud Director; or just VMware’s hypervisor.

It’s interesting that the clarification came via a VMware blog post by a VMware executive quoting a PayPal exec. Let’s face it — companies rarely yank any technology that’s working. They usually launch new projects with new technologies and keep running whatever works in tandem. But clearly these reports hit a nerve at a time when VMware is struggling to show that its new “hybrid public” cloud strategy has legs and when OpenStack appears to be gaining momentum as a cloud platform.

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The statement VMware ran (with permission) from Nat Rajesh Natarajan, PayPal’s VP of platform engineering and operations, appeared two days after stories surfaced here and here about PayPal dumping VMware in favor of OpenStack. That juicy tidbit was part of stories outlining Mirantis’ plans to open source some of its own OpenStack technology. Mirantis is the integrator implementing the OpenStack project at VMware. It didn’t take long for the backtracking to begin.

And then, VMware weighed in, on behalf of itself and Paypal, in a blog by Bogomil Balkansky, VMware SVP of cloud infrastructure platform, with a quote from Natarajan:

 “PayPal is focused on delivering agile platforms that seamlessly scale across multiple cloud environments. Our initiative with OpenStack is intended to enable agility, innovation and choice. We’re not interested in a “rip and replace’ approach. In fact, this collaboration will help us utilize robust virtualization technologies such as VMware. They are a valued PayPal partner, and we intend to continue leveraging their core strengths in our cutting edge cloud environment.”

Oooookayyyyy. Does anyone else find it odd that a VMware senior vice president felt the need to quote a customer saying that VMware remains “a valued partner?”  This just shows how fraught the notion of technology changeovers can be for incumbent vendors. I’ve asked PayPal again for further comment on the VMware blog — which was sent to me by PayPal, by the way — and will update when it comes.

Balkansky went on to write: “Yes, PayPal has given us permission to post Nat’s words. We’d never speak on their behalf … this is their story to tell.”

So now I guess we’ll have to wait for PayPal to tell it.

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Mirantis CEO Adrian Ionel

Mirantis, a startup which has made a name for itself by mixing and matching the best OpenStack components from multiple vendors into cloud solutions for customers, is now making its own library of configuration and deployment tools available to the masses, under the Apache 2.0 license.

“We are releasing the secret sauce — the automation library — that we used to set up some of the largest OpenStack adopters — Paypal, Webex, The Gap and others,” Mirantis CEO Adrian Ionel said in an interview.

According to Mirantis VP Boris Renski, the big automated payment provider has massive infrastructure of about 15,000 physical nodes and another 65,000 or so physical nodes for parent company Ebay.

“They have a very large VMware vSphere footprint but, at this, point they want to go beyond just vSphere virtualization and implement orchestration – [they want] agile, cloud infrastructure to accelerate their time-to-production cycle on new apps and website features and they want to standardize across the board,” Renski said.

PayPal, like other companies in the same boat, can go in one of two directions, he said. It can invest more in VMware and standardize on it — by buying vCloud Director — or it can go the open-source, open-standards route.

“With the project we are involved in, they are making giant strides towards the latter. The work is not 100 percent done and there is still a chance that it won’t succeed. They have several thousand instances running on OpenStack and several production workloads today. The plan is to go to 10K physical nodes by summer time.”

If everything continues to track well, he said, they’ll roll OpenStack across all of Paypal and possibly eBay infrastructure and do away with VMware, he said.

Paypal itself was more circumspect on its plans. Asked about its OpenStack plans, Saran Mandair, senior director of platform engineering and operations, said via email that the company is committed to collaborating with the open-source community to drive innovation:

“It is working with Mirantis to leverage OpenStack to help transform our global infrastructure into an agile and open cloud platform … Our OpenStack project uses the Fuel library by Mirantis, which has dramatically accelerated our OpenStack deployment with robust, production-grade architecture while giving us the flexibility to tailor OpenStack to our needs.”

But a spokeswoman, unsurprisingly, said the company will continue to use VMware as well.

VMware, which is actually now a member of the OpenStack Foundation, will, of course, also continue to plug the vSphere- and-vCloud-Director tandem to companies with existing workloads. And, earlier this month, it also said it will host its own public cloud infrastructure, which is also based on its existing vSphere code.  The company said it is committed to customer choice.

Most onlookers, however, still see VMware vCloud Director as a closed and expensive ecosystem that OpenStack itself was set up to depose.

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Levchin co-founded PayPal and then sold his second company, Slide, to Google for hundreds of millions. Slide came out of MRL Ventures, a similar type of R&D lab, that also produced Yelp as one of its companies. The Ukraine-born founder first pitched his idea for the new lab in Munich in January of this year, and explained the idea behind it to Om:

“As we become more connected, we can make things a lot more efficient around us,” he said at the time. “There is a lot of change that is going to happen.” Levchin explained that the companies coming out of HVF would revolve around the importance of data and how we use it. He said at the time that he was almost ready to launch two different ventures from the self-funded lab.

Affirm will allow merchants to convert mobile browsers to buyers by making purchases easier for people who don’t want to pull out their credit cards. The company’s website explains the concept behind it:

“The mobile shopping experience attracts a certain type of shopper – impulsive, time-constrained, exploratory. Retailers must evaluate how their purchase flow aligns with these motivations. Affirm greases the skids between intent and purchase for these shoppers.”

The concept sounds very much like PayPal or Square or any number of other payments startups on the market right now, but Affirm is looking to distinguish itself by acting as a digital charge card where users can add items to their tab and then pay later, according to the report. At launch, the company is just launching with one partner, 1-800-Flowers, but is allowing more interested merchants to sign up.

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Carr looked at a recent speech from PayPal co-founder Max Levchin at the DLD conference in Germany (one Om also attended, where he conducted an in-depth interview with Levchin) and clearly didn’t like what he saw. Levchin’s view of people, according to Carr, is that they are just resources that are not being utilized efficiently, and the technology of sensors and real-time information can be used to improve that, in much the same way that programmers try to optimize the clock cycles of a microprocessor. To take one example, Levchin said:

“How about dynamic pricing for brain cycles? We have been maximizing utilization of very high-value, very low-frequency specialists — today you can already rent the brain of a data-mining genius via Kaggle by the hour, tomorrow by brain-hour. Just like the SETI@Home screensaver ‘steals’ CPU cycles to sift through cosmic radio noise for alien voices, your brain plug firmware will earn you a little extra cash while you sleep, by being remotely programmed to solve hard problems.”

More efficient for users, or just creepy?

If you are a geek, this might sound like something with a lot of potential, but Carr describes it as “Clay Shirky’s ‘cognitive surplus’ idea taken to its logical, fascistic extreme.” Levchin goes on to paint a picture of a future in which his insurance company learns — via sensors in his car — that he is taking his children to work, and boosts his insurance premium by a few dollars for the extra risk (Note: we’ll be talking more about the potential of big data at our Structure:Data conference in New York).

Levchin no doubt sees this as efficient, but Carr sees the looming shadow of Big Brother: What if those same sensors detected that you were overweight, or had eaten too much pizza, he asks — would they report that to your insurance company? Maybe the company would boost your rates a little, or maybe you would be “scheduled for a brief re-education session down at the local office of the Bureau for Internal Resource Optimization.” As he puts it:

“This is the nightmare world of Big Data, where the moment-by-moment behavior of human beings — analog resources — is tracked by sensors and engineered by central authorities to create optimal statistical outcomes. We might dismiss it as a warped science fiction fantasy if it weren’t also the utopian dream of the Max Levchins of the world. They have lots of money and they smell even more.”

In a recent piece for Slate, Carr’s fellow digital skeptic Evgeny Morozov looked at the potential implications of banks and other credit-issuing agencies using big data to determine who deserves a loan. Although he says the idea of big data is “mostly big hype,” Morozov talks about several companies that are trying to use data from all kinds of sources — including social networks such as Facebook and Twitter — to figure out who is credit-worthy.

Hong Kong-based Lenddo and U.S.-based LendUp look at an applicant’s connections on Facebook and Twitter, Morozov says, and “the key to getting a successful loan is having a handful of highly trusted individuals in your social networks.” A British payday-loan company called Wonga even considers the time of day and how a user clicks around a website in order to determine whether they deserve a loan (although Morozov doesn’t mention it, PayPal uses similar methods to gauge credit-worthiness).

The key is who controls the use of the information

Morozov also mentions ZestFinance, founded by former Google chief information officer Doug Merrill (who we had at our Structure: Data conference in New York last year), whose company looks at more than 70,000 signals and 10 different models to assess credit risk. And he draws a direct link between this and Big Brother, saying: “If only East Germany’s Stasi — the true pioneers of ‘big data’ — had the same model for assessing potential dissidents!”

Despite that comment, however, in the end he (somewhat surprisingly) seems concerned mostly that these companies will use all this information to market things to people who don’t need them, rather than turning them in to the government or their insurance company:

“What happens once these firms, having figured out that all data are credit data, realize that all data are also marketing data? Given how much they know about their clients, it would be very hard for such lending companies not to use this information to sell their existing customers on yet another loan or, perhaps, encourage them to use the loan to take advantage of some unique online sales offer.”

The common thread in both of these dystopian visions is a world in which our data is transmitted without our knowledge, and/or used against us in some way. Where Levchin seems to see an efficient exchange of data between user and service, one with benefits for both — and presumably a level (and secure) playing field in terms of who has access to it — Carr and Morozov see companies and governments misusing this data for their own nefarious purposes, while we remain powerless.

What makes it difficult to argue with either one is that we’ve already seen the building blocks of this potential future emerge, whether it’s Facebook playing fast and loose with the privacy settings of a billion people, or companies aggregating information and creating profiles of us and our activities and desires. What happens when the sensor-filled future that Levchin imagines becomes a reality? Who will be in control of all that information?

Images courtesy of Shutterstock / Lightspring and Flickr / Thomas Leuthard.

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The entrepreneur behind tornado power is Louis Michaud, who is a Canadian engineer that has spent years “trying to be taken seriously,” as Toronto Star reporter Tyler Hamilton describes him (he profiled Michaud in his book Mad Like Tesla). Michaud’s startup is called AVEtec and his technology is called the Atmospheric Vortex Engine (AVE). Breakout Labs describes the technology as:

In his design, warm or humid air is introduced into a circular station, where it takes the form of a rising vortex, i.e. a controlled tornado. The temperature difference between this heated air and the atmosphere above it supports the vortex and drives multiple turbines. The vortex can be shut down at any time by turning off the source of warm air.

AVEtec says vortex-power can deliver energy that is carbon emissions-free, and super cheap at 3 cents per kilowatt hour (coal can be anywhere from 4 to 5 cents per kwh, and it’s got some of the highest carbon emissions).

The problem is that the tornado power has to be created in a large power plant, and that has yet to be built and tested at scale. The column of the tornado in a commercial-size plant would be 130 feet tall. Reporter Hamilton says Michaud’s plan eventually is to create tornadoes using waste heat from power plant or industrial factory and then harness those vortexes.

AVEtec will work with Lambton College in Ontario to build and study a prototype using the funding from Breakout Labs. Breakout Labs has also funded Modern Meadow, which combines in-vitro meat with 3D printing.

Thiel clearly has an interest in backing early stage research around new ways to use resources from energy to food to water. Despite that he was widely quoted as saying cleantech has been a disaster, he’s taking more of an ARPA-E style approach for cleantech through Breakout Labs. Thiel has also put money into LightSail Energy, a startup that makes a next-generation compressed air energy storage technology.

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Users can buy the new cards at 30,000 U.S. retail locations including CVS, Rite Aid, Fred’s Super Dollar and Dollar General Stores. They can buy card with fixed amounts of $50 and $100 or load any amount they want from $20 to $500 at a time. Then they just go to the My Cash Card website and move the funds into a new or existing PayPal account. PayPal charges a one-time activation fee of $3.95.

This gives people who prefer to pay with cash another way to make ecommerce purchases. They can just use their PayPal account when checking out and the money will get taken from their account. This also gives PayPal’s existing 117 million users another way to fund their account.

It’s a smart move by PayPal because it can get more people to put more money directly into PayPal accounts and pay from those accounts, which is cheaper for PayPal than paying for purchases through a credit and debit card on file. It also shows that more companies are seeing the opportunity in tackling the pre-paid and underbanked market. There are about 25 percent of consumers who don’t use credit and debit cards right now.

Walmart in April offered users the opportunity to make in-store cash payments for online goods.  PayNearMe (see disclosure below), another service for the underbanked, lets people pay for things online by using cash at a 7-Eleven. PayPal is working with pre-paid card provider InComm to offer the new cash cards and is looking to offer the cards in 60,000 locations by next year.

Disclosure: PayNearMe is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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Another change the company has made, despite being more significant, has received relatively little attention. It will add a clause that says it can now share your information with its affiliates. This underscores an important trend: Facebook is now one of several companies that shares your information among its various different services. As the range of services offered by consumer internet heavyweights like Facebook and Google continues to expand, this means that your personal data will end up being used by in ways you could never predict.

The trend towards internal data sharing

• Google’s unified terms of service (introduced on March 1) allows it to combine your data across products like Gmail, Google+ and Google Docs, as well as YouTube, Picasa and scores of other Google properties.
• Microsoft updated its services agreement effective Oct. 19 to allow it to use your content to “provide, protect and improve” all “Microsoft products and services.” The agreement had previously allowed the company to use your data only to provide the particular service in question.
• eBay and PayPal can share your data among all “members of the eBay Inc. corporate family,” which also includes Shopping.com.

Facebook’s ability to use customer data benefits users by allowing for innovation. Its existing Data Use Policy says that you allow the company develop “innovative features and services” by using “the information we receive about you in new ways.” But when its proposed revisions go into effect later this month, its ability to share users’ data will increase further. The following new paragraph will be added:

We may share information we receive with businesses that are legally part of the same group of companies that Facebook is part of, or that become part of that group (often these companies are called affiliates). Likewise, our affiliates may share information with us as well. We and our affiliates may use shared information to help provide, understand, and improve our services and their own services.

The Facebook affiliate that first comes to mind is Instagram. And one of the most immediate applications of this new provision could be that Facebook starts to serve ads on Instagram. But Instagram is just one of many Facebook affiliates. It has numerous subsidiaries, including one it created earlier this year to handle its payments business. And its publicly stated expansion plans mean that it will likely be acquiring other companies, forming new business units, and entering new markets in the near future.

How worried should we be about internal data sharing?

The ability of internet companies that operate in multiple verticals to share your data among their different services has potentially far-reaching consequences. Microsoft could use your Outlook.com email messages or your online Office documents to push targeted ads to you on Bing. eBay could use your shopping history to recommend financial services on PayPal. Facebook could use data you expose by taking Instagram snaps to customize your experience on its web or mobile apps.

Not all of these scenarios may be objectionable to everyone– and in fact, some people may find none of them objectionable. And increased internal sharing can be a good thing not only for the companies themselves but also for users. Being able to tightly integrate our experience across all Google products, for example, offers an efficiency as well as functionality boon. For the service providers, being able to increase the effectiveness of targeted advertising means that they can improve their bottom line (and ultimately invest in developing new services and improving existing ones).

But the point remains that we are increasingly allowing personal data to be used in ways that are not obviously related to the action we initially took in order to generate that data. To an ordinary Instagram user, it is not obvious that using the Instagram app will have any impact at all on their Facebook experience. When we think about data privacy, we normally think about a company giving or selling our information to someone else. But a single company using our information in ways that we did not anticipate raises privacy concerns that are just as significant.

What should we do about it?

Internal data sharing of some kind is for all practical purposes an inevitability. This need not be a bad thing if users are sufficiently well informed about how their data is being used and if they can opt-out of uses that they find objectionable. I propose three principles to guide us going forward:

• Better disclosure It should not be enough for a company to say that data can be shared across its services and among its affiliates. We should be given much more specific guidance. Whether disclosure is necessary should depend on how unexpected the sharing would be to an intended user. Some forms of internal sharing are obvious and need not be disclosed. We should assume that our data will be transferred to a company’s customer service department in order to handle our customer service inquiries. But if sharing is between unrelated products or services, users should be notified. This is especially the case if they are between separately branded services that do not reveal their common corporate affiliation (e.g. to an ordinary user, Instagram is not obviously owned by Facebook).
• More granular controls for users Users should be able to opt-out of internal sharing as a whole and also be given control to turn on and off particular kinds of sharing.
• Sensible defaults Despite the obvious benefit they offer, in practice many people simply won’t take the time to navigate through granular privacy controls. As a result, it is important for default settings to offer users a reasonable amount of protection.

As an increasing amount of the data we expose online is handled by a small number of companies that operate across multiple verticals, sharing between companies (external data sharing) could ultimately be less of a privacy concern than sharing within companies (internal data sharing). We should be concerned not only about who controls our data but also what they can do with it.

Andrew Nicol is an entrepreneur and attorney based in New York City. He runs Clickwrapped, a not-for-profit service that rates leading consumer technology companies according to how well they respect their users’ rights. Follow him on Twitter @aknicol.

Photo courtesy of Muellek Josef/Shutterstock.

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