Daily Tech Snippet: Thursday, February 18

• Zenefits Scandal Highlights Perils of Hypergrowth at Start-Ups: Zenefits may be among the first of several cautionary tales to highlight a sobering lesson: For a start-up, growing too quickly can produce just as spectacular a failure as growing too slowly. Zenefits is a three-year-old company that makes software for small businesses. In its short life span, it has been called both the most unsexy company in tech, and one of the most promising.Its investors have argued that Zenefits, which makes money by acting as a health-insurance brokerage firm for its customers, has the potential to cut the red tape that small businesses have to battle to provide benefits for their employees.These grand promises were bolstered by Zenefits’ early growth. Its annual recurring revenue — an accounting measure preferred by subscription-based software companies — reached $1 million by the end of 2013, the year Zenefits was founded. Recurring revenue hit $20 million by late 2014, and was projected to reach $100 million by late 2015. The exponential growth was catnip to investors. The start-up raised $500 million last year at a $4 billion valuation, one of the largest financing rounds in a year of mega-fundings. At one point, Andreessen Horowitz, Silicon Valley’s pre-eminent venture firm, had invested more in Zenefits than in any other company. In total, Zenefits has raised about $581 million. Then, last week, poof. Zenefits announced that Parker Conrad, its co-founder and chief executive, had resigned. In emails to employees, David O. Sacks, the former chief operating officer and new chief executive, explained that Mr. Conrad had overseen a company that had become derelict in its culture and ethics. Zenefits has sought to paint the executive changes as a new beginning. One person close to the company said when Mr. Sacks briefed employees on Mr. Conrad’s exit last week, there were celebrations and tears of relief at the San Francisco headquarters of Zenefits.  Yet the story is more complicated than the single instance of a founder’s misdeeds. Zenefits’ recklessness seems to have been merely the worst symptom of a larger sickness that infected the company, according to investors, former employees and others who worked with the management team (and who all requested anonymity because no one in Silicon Valley wants to be seen as kicking a start-up when it’s down).  That sickness: Zenefits was a company consumed by impossible expectations. In return for fund-raising at a stratospheric value, Mr. Conrad promised the moon to investors. Then, to reach the moon, he began to transform a tiny start-up into a mighty rocket ship — only to watch it careen out of control as it stretched to accomplish the impossible. Though many noticed trouble, neither Mr. Conrad, nor the board of directors, nor anyone else in management could afford to stop, take a breath and fix the problems. Growth was the only imperative.

• Cybersecurity concerns - Why US Naval Academy students are learning to sail by the stars for the first time in a decade: batteries run out, systems get hacked, and even advanced technology can be balky. In a pinch — or in a war — sailors need something to fall back on. And stars and sextants have been working pretty well for hundreds of years. So the Naval Academy started teaching its sailors how to navigate ships by looking to the heavens again this academic year. The training was dropped altogether in 2006. “I thought that we had computers and all that for navigation,” Hogan, 20, a Charleston, S.C., native said this week during a class on the subject. But amid concerns about cyberattacks and new weapons that can shut off the electricity of a ship or a plane, the Naval Academy made celestial navigation a requirement for third-year students. “Redundancy is the best policy,” said Lt. Alex Reardon, who taught three sections of the class. Especially because, when it comes to a Navy ship on the open seas, “we’re typically alone in what we do.” That could be a major problem in the event of a cyberattack, said Salvatore Mercogliano, an assistant professor focused on naval history at Campbell University and a former merchant mariner. During World War II, the U.S. began using land-based radio beacons known as the LORAN system to help guide ships. And the space race helped further celestial navigation’s decline: The Navy sponsored the development of the first operational satellite navigation system, dubbed TRANSIT, which went into active service in 1964 — providing navigation assistance for naval submarines and surface vessels. But TRANSIT was retired in the mid-’90s after the Air Force completed the modern GPS system, which uses dozens of satellites circling the globe.

• Amazon expanding deliveries by its 'on-demand' drivers: Amazon.com Inc (AMZN.O) is quietly inviting drivers for its new "on-demand" delivery service to handle its standard packages, as the online retailer known for low prices and razor-thin profit margins looks to speed up delivery times and tamp down its growing multi-billion dollar logistics bill.The move, which has not been announced publicly, is the latest sign that the world's biggest e-commerce company wants to control more of its own deliveries. Media reports have said the company plans to lease its own fleet of jets, and CEO Jeff Bezos eventually wants to use drones to get packages to customers. Amazon outlined details of its latest plan over the last few weeks in an email to contract drivers who deliver parcels for Amazon Flex, a program launched last year to handle speedy deliveries of common household goods to customers using Prime Now, a mobile app that comes with Amazon's popular $99-a-year Prime membership. They are not Amazon employees. If the gambit works, industry analysts said it could help Amazon contain its shipping costs, which grew more than 18 percent to $11.5 billion last year. It might also create a logistics network to compete with UPS and FedEx.

• Blippar’s New Augmented Reality App Is Supposed to Recognize Any Object You Point It At. Augmented reality app Blippar has been around since 2011, but until recently it focusedmostly on advertising and content for brands: Point your Blippar smartphone app at a bold “B” embossed on the pages of a magazine or a bottle of ketchup and more information would pop out on your phone’s display. But it’s safe to say that augmented reality is coming into a new phase: The contextual information being supplied is getting smarter, and people are gradually becoming more aware of the capabilities of AR and virtual reality (some are even excited to wear headsets, if you can believe it). So Blippar, in an effort to evolve along with the rest of the AR world, has just launched a new version of its smartphone app that is supposed to recognize literally any object you point at it — whether it has been “tagged” with an AR code or not. Blippar co-founder and CEO Ambarish Mitra showed off the new version of the mobile app today at the Code/Media conference at The Ritz-Carlton, Laguna Niguel in Dana Point, Calif. He pointed the app at a variety of random objects — a magazine, a salad and an apple — to demonstrate how the app’s image recognition capabilities work. “This is a really big change in our business model,” Mitra had said in an interview before the conference kicked off. “Initially, AR was about very static image recognition. You store images of Starbucks or Coca-Cola or General Mills in our database, and the images match. But now you’re able to analyze any environment in the world in real time, over a 3G connection.” Mitra said over the past year and a half he has moved his technology team from the U.K. to Mountain View, Calif., to focus on machine learning, which is all the rage in Silicon Valley right now, with everyone from small upstarts to behemoths like Google trying to crack the code on how to make accurate predictions from large sets of data. (Google, actually, has an app that works similarly called Google Goggles, but it works when you point the app at a QR code or a famous landmark or something else recognizable — not necessarily everyday objects.) In short, this is not an easy thing to do. In fact, ahead of the event, one of our staffers tried it out by pointing the app at his dog, and it thought the pup was a goat. Mitra has said that, right now, the technology has elementary capabilities, like the brain of a six-year-old; it can recognize “car,” but not “Prius,” or it can recognize an item of clothing, but not the label. However, with machine learning, the app should be able to get to the level of an 18-year-old pretty quickly, Mitra said, in terms of its recognition abilities. And during the onstage demo, it did properly identify a pug named Milton as a dog.