Google Eyes Dropcam, Company That Thinks Monetizing User Data is "Tricking the User"

May 27 2014, 6:15pm CDT | by

If Google is really going to buy Dropcam, the video camera startup might have to readjust some of its company values.

The Information reported Tuesday that Google is considering buying Dropcam, which makes $150 cameras that stream video to a computer or phone.

But there might be one ideological hurdle: Dropcam co-founder and CEO Greg Duffy doesn’t believe in Google’s main business model of offering free services in order to gather and monetize user data.

“I think if your business model is not straightforward, it veers into potentially being unethical, if you look at things that are quote-unquote ‘free,’” he told Xconomy a year ago. “None of the people who work here want to work on something that works like that.”

Dropcam employees view using user data to make revenue as “tricking the user,” Duffy said.

Google is making serious moves into hardware after acquiring smart-thermostat darling Nest in January. But while it’s branching out, its core business is still advertising — and new smart-home devices are not immune. In a letter to the SEC last year, Google said that “a few years from now, we and other companies could be serving ads and other content on refrigerators, car dashboards, thermostats, glasses, and watches, to name just a few possibilities.”

Nest CEO Tony Fadell quickly clarified that ads are not planned for Nest devices, which include a thermostat and a carbon monoxide-smoke detector that was recalled last week.

“Nest is being run independently from the rest of Google, with a separate management team, brand and culture,” he said last week in an emailed statement to Re/code. “For example, Nest has a paid-for business model, while Google has generally had an ads-supported business model. We have nothing against ads — after all Nest does lots of advertising. We just don’t think ads are right for the Nest user experience.”

Nest may be against ads, but it’s making a quiet side business of managing users’ energy consumption on behalf of energy companies. He told Forbes in December that the business will help fatten his margins.

But Duffy said he’s proud that selling hardware for a profit means the company has no incentive to try to monetize user data.

“People are attracted to this idea of making a product and selling it to people for a profit,” he told Xconomy. “More and more, people are starting to think that other types of business models are bullshit.”

While the idea of a video camera recording you and your family’s every move make may seem creepy, Duffy says Dropcam’s business model ensures they won’t want to capitalize on the data they record.

Facebook is also cataloguing your life, but you don’t pay them to do that, so their incentives are quite different,” Duffy said. “They want to use your data to sell things.”

That’s somewhat comforting. But companies are always evolving — and just because it’s not immediately clear how to monetize home surveillance data doesn’t mean it won’t be done eventually.

Business models aside, Dropcam also has a strong company culture — one that doesn’t quite align with Google’s. Duffy, who flies helicopters, takes new hires out on a ride, and as of last year, has never had an employee quit. Part of that culture, detailed in a long interview at Xconomy, might run up against some of Google’s most lauded perks: free meals (and the long hours that come with them).

Dropcam pays for breakfast and lunch, and adding dinner “would cost us nothing” and keep people working more hours, Duffy said. But instead, employees are booted out the door at 6 p.m. so they can enjoy some sunshine and a dinner with family. It keeps employees happier and more productive instead of burning them out. And, most importantly, it’s not “tricking” anyone.

“When you have a person who can work anywhere they want to, and you say, ‘We bring in breakfast, lunch, and dinner,’ you are really trying to trick them,” he said. “You are trying to get them to work until 10 p.m. or midnight every night.”/>/>

A Google spokesman said the company does not comment on rumors or speculation. Dropcam did not respond to a request for comment. The Information’s report did not have details on the status of talks between the two companies.

 
 

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