Philippa Kaur

Listen to this story. Enjoy more audio and podcasts on More

Investors looking to cash in on India’s growth have typically focused their attention either on the sprawling conglomerates run by the country’s tycoons or the buzzy tech firms transforming the way Indians shop, learn or move around. How, then, to explain the excitement over Cello World, a 61-year-old company of middling size that listed its shares on the two local bourses on November 6th? It produces the “tiffin” boxes Indians use to carry their lunch to school or work, along with inexpensive pens and moulded furniture—hardly exciting stuff. Yet on the first day of trading its shares soared by 29%, sending its market value above $2bn. That is nearly 60 times the net profit it made in the last fiscal year. Its initial public offering (IPO) was roughly 40 times oversubscribed.Cello World does not have bold plans for reinvesting the $230m raised in the offering; all of it will go back to the family that controls the firm, which still owns 81% of the equity. Nor is the business unique. At the end of last month another company making pens, Flair Writing Industries, received approval for its IPO. Several furniture companies are lined up to offer shares in the near future, too. Cello World is, in short, rather boring.Few venture capitalists would line up for a stake in such a business. Foreign portfolio managers, many of whom have settled on a strategy of entering India through slivers of holdings in the country’s mightiest conglomerates, would probably pass it over, too. Recent months, however, have shown that one of the most appealing corners of the Indian economy may be the companies like Cello World, which are benefiting from the country’s growth story without trying to write it.Beginning late last year, valuations in India’s private markets collapsed as investors lost patience with loss-making startups such as OYO, a hotel chain, and Byju’s, an online-learning business. Public markets sagged, too. Shares in Delhivery, a logistics startup that listed to much fanfare early in 2022, tumbled. In January this year a report by Hindenburg, a short-seller, into the accounting practices of the business empire of Gautam Adani, an Indian tycoon, rocked the confidence of foreign investors and brought attention to the anaemic profitability of a number of the country’s conglomerates. (The Adani Group denied any wrongdoing.)The first hint of a shift in mood came in April with the listing of Mankind Pharma, a manufacturer of condoms and pregnancy tests. The firm lured investors with its steady revenue growth, from roughly $750m in 2020 to $1bn in 2022, and healthy profits. It quickly became apparent that attractive opportunities abounded in ordinary areas of an economy experiencing extraordinary growth.image: The EconomistA flood of listings followed. As of early November, 194 companies had gone public this year, up from 144 for all of 2022 (see chart). Jefferies, an investment bank, calculates that 72% of recent Indian IPOs have been at least ten times oversubscribed. Alongside consumer-goods companies like Cello World and Mankind Pharma, investors also snapped up the shares of newly listed companies in other usually uninspiring industries, such as construction, steel and electrical components. Though not at the technological frontier, many of these firms are benefiting from the Indian government’s efforts to bolster the domestic manufacturing sector (at China’s expense) and improve the country’s infrastructure. RR Kabel, a maker of cables that listed in September, is one such firm. On November 6th it reported that profits in its quarter from July to September had doubled year on year.The listings boom shows no signs of slowing down. A further 29 applications for public offerings have been approved by India’s securities regulator, and an additional 46 are currently under consideration. Among the companies in the process of offering shares are a producer of sledgehammers and a maker of car parts. All hope to go public before India’s general elections next May. Nipun Goel of IIFL Securities, an investment bank that helped finance many of this year’s listings, notes that the pipeline of IPOs for the next 12 to 24 months is looking strong; he is betting that the boom could continue for five to seven years. Indeed in October, in anticipation of all this, his firm moved to new offices with three times the space. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Since it was founded in 2010, WeWork has not once turned a profit. For years its cash-torching ways went unchallenged, thanks to the reality-distorting powers of its flamboyant founder, Adam Neumann, who succeeded in convincing investors, most notably SoftBank, that it was not an office-rental business but a zippy tech firm on a mission to “elevate the world’s consciousness”. At the height of the silliness in early 2019, in the lead-up to an initial public offering (IPO), the company was valued at $47bn.The unravelling began soon after, as outside investors balked at its frothy valuation and questioned an unorthodox governance arrangement that gave Mr Neumann an iron grip on the company. The IPO was shelved, and Mr Neumann was offered $1.7bn to leave. Sandeep Mathrani, a real-estate veteran brought in to run the company, did his best to right the ship by cutting costs and renegotiating leases. In 2021 he succeeded in listing the firm through a special-purpose acquisition company, at a valuation of $9bn. Yet his efforts were undone by the slump in the office market brought on by the pandemic and an enduring shift towards remote working. On November 6th WeWork, which leases office space in 777 locations across 39 countries, filed for bankruptcy.It is not the only property business in turmoil. Days earlier, on the other side of the Atlantic, René Benko, a once celebrated Austrian property magnate, was ousted from Signa, the €23bn ($25bn) property empire he built. Its portfolio includes the Chrysler Building in New York; the KaDeWe, a posh department store in West Berlin; and a stake in Selfridges, another ritzy temple of consumption in London; as well as luxury hotels, high-end developments and a grab-bag of other retail businesses.The two cases are not identical. Unlike WeWork, Signa has not declared bankruptcy, though it faces a liquidity crunch, and has brought in a prominent German insolvency expert, Arndt Geiwitz, to take the reins. And unlike Mr Neumann, Mr Benko, a self-made high-school dropout who started his career converting attics into penthouses in his hometown of Innsbruck, was involved with Signa right up until his weekend ousting. After a conviction for bribery in 2012, he stepped back from day-to-day operational duties, but continued to sit on the company’s advisory board. He gave his blessing to the appointment of Mr Geiwitz, who helped steer Lufthansa, Germany’s national airline, through an insolvency. (Mr Neumann, meanwhile, has been reduced to sniping at WeWork’s collapse from the sidelines, complaining that the company “failed to take advantage of a product that is more relevant today than ever before”.)Yet the rise and fall of the two empires share similarities. For one, both relied on risky bets that went sour in a world of higher interest rates and slumping property markets. As he built his empire, Mr Benko accumulated a mountain of debt in order to purchase new assets while maintaining juicy dividends. That model worked only as long as interest rates were low and the value of prime property continued to rise. In WeWork’s case, the risk stemmed from a model of taking out lengthy leases on properties, sometimes for as long as 20 years, splashing out on snazzy refurbishments, then renting the space for periods as brief as a month at a time. When the office market turned, the company was stuck paying for leases that cost far in excess of what it could charge tenants, given the cheaper alternatives on offer.Nonetheless, both empires could just come out the other side stronger. Leonhard Dobusch of Innsbruck University reckons Mr Geiwitz will break up the sprawling Signa portfolio, selling off assets to bring in cash and pay down debts. The privately held business, comprised of hundreds of holding companies, could do with some simplification. WeWork, for its part, has already gained backing from most of its creditors to convert its debt pile of $3bn into equity, giving its balance-sheet something close to a fresh start. It will also use its bankruptcy to break more than 60 leases in America and renegotiate others. Mr Neumann and Mr Benko may be gone, but the companies they built may well endure. ■ More

Since it was founded in 2010, WeWork has not once turned a profit. For years its cash-torching ways went unchallenged, thanks to the reality-distorting powers of its flamboyant founder, Adam Neumann, who succeeded in convincing investors, most notably SoftBank, that it was not an office-rental business but a zippy tech firm on a mission to “elevate the world’s consciousness”. Its slick office spaces, complete with free beer and table football, sprung up around the world. At the height of the silliness in early 2019, in the lead-up to an initial public offering (IPO), the company was valued at $47bn.The unravelling began soon after, as outside investors balked at its frothy valuation and questioned an unorthodox governance arrangement that gave Mr Neumann an iron grip on the company. The IPO was shelved, and Mr Neumann was offered $1.7bn to leave. Sandeep Mathrani, a real-estate veteran brought in to run the company, did his best to right the ship by cutting costs and renegotiating leases. In 2021 he listed the firm on the New York Stock Exchange through a special-purpose acquisition company, at a valuation of $9bn. Yet his efforts were undone by the slump in the office market brought on by the pandemic and an enduring shift towards remote working. On November 6th WeWork, which leases offices in 777 locations across 39 countries, filed for bankruptcy. Its equity will probably be wiped out.WeWork is not the only property business in turmoil. Days earlier, on the other side of the Atlantic, René Benko, a once celebrated Austrian property magnate, was ousted from Signa, the €23bn ($25bn) real-estate empire that he had built over the past two decades. Its portfolio includes icons such as the Chrysler Building in New York; the KaDeWe, a posh department store in Berlin; and a stake in Selfridges, another ritzy temple of consumption in London. It also includes luxury hotels, such as the Park Hyatt in Vienna; high-end developments, including the Elbtower, a 65-floor skyscraper in Hamburg; and a grab-bag of other retail companies. Many luminaries of European business hold shares in Mr Benko’s property group, among them Ernst Tanner, the chairman of Lindt & Sprüngli, a chocolate-maker, Hans Peter Haselsteiner, a construction entrepreneur, and Arthur Eugster, a coffee magnate.The two cases are not identical. Unlike WeWork, Signa has not declared bankruptcy, though it faces a liquidity crunch, and has brought in a prominent German insolvency expert, Arndt Geiwitz, to take the reins. Unlike Mr Neumann, Mr Benko, a self-made high-school dropout who started his career converting attics into penthouses in his home town of Innsbruck, was involved with Signa right up until his ousting. After a conviction for bribery in 2012, he stepped back from day-to-day operational duties, but later took over as chairman of the company’s advisory board. He gave his blessing to the appointment of Mr Geiwitz, who helped steer Lufthansa, Germany’s national airline, through insolvency, and formally handed over chairmanship of the advisory board to him on November 8th. The Benko family foundation will remain a major shareholder in the group. Mr Neumann, meanwhile, has been reduced to sniping at WeWork’s collapse from the sidelines, complaining that the company “failed to take advantage of a product that is more relevant today than ever before”.Yet the rise and fall of the two empires share similarities. For one, both relied on risky bets that went sour in a world of higher interest rates and slumping property markets. As he built his empire, Mr Benko accumulated a mountain of debt in order to purchase new assets while maintaining juicy dividends. That model worked only as long as interest rates were low and the value of prime property continued to rise. In WeWork’s case, the risk stemmed from a model of taking out lengthy leases on properties, sometimes for as long as 20 years, splashing out on snazzy refurbishments, then renting the space for periods as brief as a month at a time. When the office market turned, the company was stuck paying for leases that cost far in excess of what it could charge tenants, given the cheaper alternatives on offer.Nonetheless, both empires could just come out the other side stronger. Leonhard Dobusch of Innsbruck University reckons Mr Geiwitz will break up the sprawling Signa portfolio, selling off assets to bring in cash and pay down debts. The privately held business, comprised of hundreds of holding companies, could do with simplification. WeWork, for its part, has already gained backing from most of its creditors to convert its debt pile of $3bn into equity, giving its balance-sheet something close to a fresh start. It will also use its bankruptcy to break more than 60 leases in America and renegotiate others. David Tolley, WeWork’s new boss, has said he thinks it will remain in bankruptcy for less than seven months. Mr Neumann and Mr Benko are gone, but what they built may endure. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

There is no “i” in team. But there is one in “autopilot”. Despite the growing importance of teamwork in organisations, the processes used to manage employees have carried on much as before. Bosses may wax lyrical about collaboration, but the way they reward, review and recruit has not caught up.People in organisations have always worked in concert with others. But the emphasis on teams is growing, for a variety of reasons. Technology has made the sharing of ideas and information easier, while hybrid working has made it more vital. (There’s a reason it’s not called Microsoft Silos.) The software industry has spread the gospel of teams—agile, scrums, OKRs and all the rest of it—into all kinds of places.Teams, it turns out, are better at solving complex problems, according to a recent paper by Abdullah Almaatouq of the MIT Sloan School of Management. Research also suggests that people have a greater attachment to their work group than to their organisation; you’re less likely to go for lunch with a logo.Knowledge is also accumulating as to what makes teams tick, the subject of this week’s episode of Boss Class, our new management podcast. Project Aristotle, a famous bit of research by Google into the characteristics of its best-performing teams, identified “psychological safety”—comfort to speak one’s mind—as the most important ingredient, alongside things like dependability, role clarity and meaningful work. Different teams excel at different things. Analysis by Lingfei Wu of the University of Chicago and his co-authors found a correlation between team size and types of scientific research: larger teams develop existing ideas and smaller ones disrupt the field with new ones.But a greater emphasis on, and understanding of, teams does not generally translate into matching management practices. Recruitment processes focus on the achievements of the individual rather than the collectives they have been in. Performance management is still largely a one-player sport. Reviews are usually based on individual targets, as are bonuses. Metrics are often confined to concrete outputs rather than softer team-based measures, such as how trusted people are. It doesn’t help that many bosses have little idea what their teams really do. Soroco, a software firm, and academics at Harvard Business School and the Wharton School of the University of Pennsylvania asked managers to describe the processes that they thought took up most of their teams’ time. On average they did not know or could not recall 60% of what their team members did, making them more like high-functioning goldfish than bosses.There are good reasons for much of this. People move jobs and get promoted one by one, not as battalions. Rewarding people on the basis of team performance can lead to unfairness: free-riders might get too much recognition or hard workers might be penalised for someone else not pulling their weight. It’s difficult to quantify team contributions. When teams are made up of people from different departments—or form for limited periods—managers find it harder to know what their direct reports are up to.But these problems are not insurmountable. When hiring people, it is possible to assess traits that make for good group members: scoring well on a test that asks participants to determine what people are feeling from a snapshot of their eyes is correlated with being a good team player, for example. Peer reviews can give a good sense of how people are seen within teams.The worry that team-based bonuses may encourage free-riding also seems to be overblown. A recent study by Anders Frederiksen of Aarhus University and his co-authors looked at the impact of introducing group-based incentives at a manufacturing firm, and found it sparked a big leap in performance. That jump was not just because the scheme incentivised existing workers to be more efficient, but also because it attracted more productive new hires.Employees are individuals; managers should never forget that. But if teams are where a lot of the magic happens, bosses should have better ways to get the most out of them. Working out what they do all day might be a good place to start.■Read more from Bartleby, our columnist on management and work:How to get the lying out of hiring (Oct 30th)Would you rather be a manager or a leader? (Oct 23rd)How big is the role of luck in career success? (Oct 19th)Also: How the Bartleby column got its name More

In early September New Yorkers may have noticed an unwelcome guest hovering round their parties. In the lead-up to Labour Day weekend the New York Police Department (NYPD) said that it would use drones to look into complaints about festivities, including back-yard gatherings. Snooping police drones are an increasingly common sight in America. According to a recent survey by researchers at the Northwestern Pritzker School of Law, about a quarter of police forces now use them.Even more surprising is where the technology is coming from. Among the NYPD’s suppliers is Skydio, a Silicon Valley firm that uses artificial intelligence (AI) to make drones easy to fly, allowing officers to control them with little training. Skydio is backed by Andreessen Horowitz, a venture-capital (VC) giant, and Accel, one of its peers. The NYPD is also buying from BRINC, another startup, which makes flying machines equipped with night-vision cameras that can smash through windows. Sam Altman of OpenAI, the startup behind ChatGPT, is among BRINC’s investors.It may seem odd that Silicon Valley is helping American law enforcement snoop on troublemakers. Supporting state surveillance sits awkwardly with the libertarian values espoused by many American tech luminaries who came of age in the early days of the internet. Although Silicon Valley got its start supplying chips for America’s defence industry in the 1950s, its relations with the state withered as its attention shifted from self-guided missiles to e-commerce and iPhones.Now, as the tech industry seeks out new frontiers of growth, selling to the state is coming back into vogue. Government is “the last remaining holdout from the software revolution”, wrote Katherine Boyle of Andreessen Horowitz in a blog post last year. Earlier this year the firm launched an “American Dynamism” fund to invest in government-related industries. Slowly but surely, the state is dragging itself into the digital age. At the end of 2022 the Pentagon awarded a $9bn cloud-computing contract to Alphabet, Amazon, Oracle and Microsoft, four tech giants. Last year 11% of the value of federal contracts awarded to businesses was for software and technology, up from 8% a decade ago, according to The Economist’s calculations.Surveillance is one government activity that is being upgraded. New technologies for observation and analysis are transforming the field. Conventional suppliers such as Axon Enterprise and Motorola Solutions, which sell cameras and sundry surveillance gubbins to police and other security organisations, are being joined by upstarts pushing whizzier technologies.The first of these is drones. That industry has been dominated by DJI, a Chinese manufacturer which last year provided nearly three-quarters of all drones sold in America. This has caused much hand-wringing in American government circles. On November 1st a bill was introduced in Congress that would ban all federal government departments from buying Chinese drones. Some states, including Florida, have already barred emergency services from doing so. All this is proving a boon for the likes of Skydio and Brinc.image: Travis ConstantineOther types of aerial snooping device are also in the works. Skydweller, another startup, is developing an autonomous solar-powered aircraft that will not have to land to recharge. That, says the firm, would allow for “persistent surveillance”.A second ascendant technology is satellites. SpaceX, Elon Musk’s rocket company, and its copycats have helped reduce the price of sending objects into space to around one-tenth of the level two decades ago. That has led to a carpeting of low-Earth orbit with satellites, around one-eighth of which are used for observing the planet. PitchBook, a data firm, reckons there are now nearly 200 companies in the business of selling satellite imagery—so many that the market has become commoditised, according to Trae Stephens of Founders Fund, another VC firm. BlackSky, one of those firms, says it can take an image of a spot on Earth every hour or so. Satellite imagery has come a long way since 2013, when police in Oregon used pictures from Google Earth to uncover an illegal marijuana plantation in a resident’s yard.Techies are also selling tools to help law enforcement make better use of the profusion of images and information now at their fingertips. Ambient.AI, another startup backed by Andreessen Horowitz, has developed technology that automatically monitors cameras for suspicious activity. Palantir, a data-mining firm that has injected itself into America’s military-industrial complex, sells its tools to the likes of the Los Angeles Police Department.Facial-recognition software is now used more widely across America, too, with around a tenth of police forces having access to the technology. A report released in September by America’s Government Accountability Office found that six federal law-enforcement agencies, including the FBI and the Secret Service, were together executing an average of 69 facial-recognition searches every day. Among the top vendors listed was Clearview AI, a company backed by Peter Thiel, a VC veteran.Silicon snoopsSurveillance capabilities may soon be further fortified by generative AI, of the type that powers ChatGPT, thanks to its ability to work with “unstructured” data such as images and video footage. Will Marshall, the boss of Planet Labs, a satellite firm, says that analysing satellite imagery with the technology will let users “search the Earth for objects”, much as Google lets users search the internet for information.For the newcomers, selling clever new surveillance technologies to the government is not easy. Rick Smith, the boss of Axon, notes that there are 18,000 police departments in America. One-fifth of them do not use electronic records. Until 2009, the NYPD was still buying typewriters.For newcomers that do gain a foothold, the rewards can be rich. David Ulevitch, who runs Andreessen Horowitz’s American Dynamism fund, observes that word of mouth can spread fast, creating “virality”. Fusus, a startup that sells real-time crime-monitoring software, says its sales grew by over 300% last year, albeit from a low base. In 2017 Flock Safety, another startup, launched a licence-plate reader that is now used in 47 American states. What’s more, notes Paul Kwan of General Catalyst, another VC firm, relationships with government buyers, once established, tend to last a long time.The bigger firms are adapting. Motorola Solutions has made 15 acquisitions since 2019, including Calipsa, a video-analytics tool, and WatchGuard, which makes cameras for cop-car dashboards. Axon has also acquired startups and taken stakes in others, including Fusus and Skydio.The application of new technological wizardry to the job of watching citizens will make many uncomfortable. In 2020 Amazon, Microsoft and IBM stopped providing facial-recognition services to law-enforcement agencies because of worries about privacy. But surveillance is likely to remain lucrative, not least because governments are not the only customers for these technologies. Skydio’s drones assess cell towers and bridges for damage. Hedge funds use satellite imagery to count the cars in retailers’ parking lots, hoping to gauge their revenues ahead of market disclosures. SmartEye, a Swedish firm, sells eye-tracking technology to monitor the moods of pilots. It also sells its wares to advertising firms. The trend towards greater surveillance, whether by big brother or big business, looks unlikely to reverse. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

In early September New Yorkers may have noticed an unwelcome guest hovering around their parties. In the lead-up to Labour Day weekend the New York Police Department (NYPD) said that it would use drones to look into complaints about festivities, including back-yard gatherings. Snooping police drones are an increasingly common sight in America. According to a recent survey by researchers at the Northwestern Pritzker School of Law, about a quarter of police departments now use them.Even more surprising is where the technology is coming from. Among the NYPD’s suppliers is Skydio, a Silicon Valley firm that uses artificial intelligence (AI) to make drones easy to fly, allowing officers to control them with little training. Skydio is backed by Andreessen Horowitz, a venture-capital (VC) giant, and Accel, one of its peers. The NYPD is also buying from BRINC, another startup, which makes flying machines equipped with night-vision cameras that can smash through window panes. Among BRINC’s investors are Sam Altman, the boss of OpenAI, the startup behind ChatGPT; and Index Ventures, another VC stalwart.That Silicon Valley is helping American law enforcement snoop on troublemakers may seem odd. Supporting state surveillance sits awkwardly with the libertarian values espoused by many American tech luminaries who came of age in the early days of the internet. Although Silicon Valley got its start supplying chips for America’s defence industry in the 1950s, its relationship with the state withered as its attention shifted from self-guided missiles to e-commerce and iPhones.Now, as the tech industry seeks out new frontiers of growth, selling to the state is coming back into vogue. Government is “the last remaining holdout from the software revolution”, wrote Katherine Boyle of Andreessen Horowitz in a blog post last year. Earlier this year the firm launched an “American Dynamism” fund to invest in government-related industries. Slowly but surely, the state is dragging itself into the digital age. At the end of 2022 the Pentagon awarded a $9bn cloud-computing contract to Alphabet, Amazon, Oracle and Microsoft, four tech giants. Last year 11% of the value of federal contracts awarded to businesses was for software and technology, up from 8% a decade ago, according to The Economist’s calculations.Surveillance is one government activity that is being upgraded. New technologies for observation and analysis are transforming the field. Conventional suppliers such as Axon Enterprise and Motorola Solutions, which sell cameras and sundry surveillance gubbins to police and other security organisations, are being joined by upstarts pushing whizzier technologies.The first of these is drones. That industry has been dominated by DJI, a Chinese manufacturer that last year provided nearly three-quarters of all drones sold in America. This has caused much hand-wringing in American government circles. On November 1st a bill was introduced in Congress that would ban all federal government departments from buying Chinese drones. Some states, including Florida, have already prohibited emergency services from doing so. All this is proving a boon for the likes of Skydio and Brinc. Other types of aerial snooping device are also in the works. Skydweller, another startup, is developing an autonomous solar-powered aircraft. If it works, it will not have to land to recharge. That, says the company, would allow for “persistent surveillance”.A second ascendant technology is satellites. SpaceX, Elon Musk’s rocket company, and its copycats have helped reduce the price of sending objects into space to around one-tenth of the level two decades ago. That has led to a carpeting of low-Earth orbit with satellites, around one-eighth of which are used for observing the planet. PitchBook, a data firm, reckons there are now nearly 200 companies in the business of selling satellite imagery—so many that the market has become commoditised, according to Trae Stephens of Founders Fund, another VC firm. BlackSky, one of those firms, says it can take an image of a spot on Earth every hour or so. Satellite imagery has come a long way in the decade since police in Oregon used pictures from Google Earth to uncover an illegal marijuana-growing operation in a resident’s back yard.Techies are also selling tools to help law enforcement make better use of the profusion of images and information now at their fingertips. Ambient.AI, another startup backed by Andreessen Horowitz, has developed technology that automatically monitors cameras for suspicious activity. Palantir, a data-mining firm that has injected itself into America’s military-industrial complex, sells its tools to the likes of the Los Angeles Police Department.Facial-recognition software is now used more widely across America, too, with around a tenth of police forces having access to the technology. A report released in September by America’s Government Accountability Office found that six federal law-enforcement agencies, including the FBI and the Secret Service, were together executing an average of 69 facial-recognition searches every day. Among the top vendors listed was Clearview AI, a company backed by Peter Thiel, a VC veteran.Surveillance capabilities may soon be further beefed up by generative AI, of the type that powers ChatGPT, thanks to its ability to work with “unstructured” data such as images and video footage. Will Marshall, the boss of Planet Labs, a satellite company, says that analysing satellite imagery with the technology will let you “search the Earth for objects”, much like Google lets you search the internet for information.Silicon snoopersFor the industry’s upstarts, pushing clever new surveillance technologies to the government is not easy. Selling to law enforcement means getting to know a large and dispersed number of police chiefs. Rick Smith, the boss of Axon, notes that there are 18,000 police departments in America. One-fifth of them do not even use electronic records. As recently as 2009, the NYPD was still buying typewriters.For newcomers that do gain a foothold, however, the rewards can be rich. David Ulevitch, who runs Andreessen Horowitz’s American Dynamism fund, says word of mouth can spread fast, creating “virality”. Fusus, a startup that sells real-time crime-monitoring software, claims its sales grew by over 300% last year, albeit from a low base. In 2017 Flock Safety, another startup, launched a licence-plate reader that is now used in 47 American states. What’s more, notes Paul Kwan of General Catalyst, another VC firm, relationships with government buyers, once established, tend to be sticky.The bigger firms are not standing still. Motorola Solutions has made 15 acquisitions since 2019, including Calipsa, a video-analytics tool, and WatchGuard, which makes cameras for cop-car dashboards. Axon has also acquired startups and taken stakes in others, including Fusus and Skydio.The application of new technological wizardry to the job of surveilling citizens will make many uncomfortable. In 2020 Amazon, Microsoft and IBM swore off providing facial-recognition services to law-enforcement agencies over privacy concerns.But surveillance is likely to remain lucrative, not least because governments are not the only customers for these technologies. Skydio’s drones assess cell towers and bridges for damage. Hedge funds use satellite imagery to count the cars in retailers’ parking lots, hoping to gauge their revenues ahead of market disclosures. SmartEye, a Swedish firm, sells eye-tracking technology to monitor the mood of pilots. It also sells its wares to advertising firms. The trend towards greater surveillance, whether by big brother or big business, looks unlikely to reverse any time soon. ■ More

Listen to this story. Enjoy more audio and podcasts on More