TechStars

(photo: TheVerge)

The tech based interwebs typically go hog wild anytime Josh Topolsky and the crew at The Verge write about anything. It’s just about the same reaction when Michael Arrington suggests something on Twitter. 90% of the time both Arrington and the Verge are right about what they are writing about. But as far as I’m concerned, not this time.

An Amsterdam based startup called “Karma” was in the spring class of TechStars New York and presented on Thursday morning during TechStars NY Demo day.

Their product was actually pretty cool, and under a different set of circumstances, or maybe two years ago, it would have been a game changer. But really, it’s not.  Combine that with the fact that they lied on stage during their demo day presentation and we’re quickly called out by Uber’s CEO Travis Kalanick, and well, maybe they should just go back to Amsterdam.

But before we get into the lies, the cars and the planes… let’s talk about why fundamentally this is a stupid idea, in 2012.

Karma is a “hot spot” sharing startup. According to their pitch deck they promote what they are calling “social telecom”. It works like this. The actual user purchases a re-packaged Sprint/Clearwire Overdrive miff portable hotspot for $69 from Karma. They then pay as they go $14 per gig for internet.

Then, they share their wifi with complete strangers. Now it’s pretty secure that’s not the issue. When a sharer signs onto XX persons Karma mi-fi they are taken to an “about” page about the owner of the hotspot, perhaps you can do some of your own advertising or invite them to see pictures of your dog.

The “sharer” signs into the miff using their Facebook and they are given 100mb of internet on that particular mifi. The person who’s miff they are on is given a matching, free 100mb. So potentially if you let 10 people sign on per week through their Facebook you’re earning an extra GB in free internet from Karma.

Now statistics show that the average Joe uses 221mb of internet a month so it’s really not a bad deal on the surface.

Why don’t I like it? Well first off it’s Clearwire’s WiMax service. In June 2012 unless you live under a bridge in the arctic circle you know that Clearwire nor Sprint is taking on the daunting task of building out any more wi-max network. That faux G is over and making way for LTE.

Clearwire most likely has no interest in this partnership with Karma for their LTE product which is still a good ways away.

Now secondly, it may be against something you didn’t read in the Clearwire TOS, in fact it probably is, but there’s nothing that says you can’t sell your wifi/mifi password for say $2.00 or $5.00 to a colleague or friend. If you get a couple of those guys, then you’re paying your whole internet bill in no time.

Then there’s that whole issue of Facebook, and tracking and data going back to Facebook, Karma, Clearwiere and everybody’s partners.

Next is, how do you go about sharing this anyway. Do you sit down in Central Park and say “Hey Bro, you can get on my wifi, all you gotta do is sign in through Facebook”, yeah that doesn’t sound the last bit shady.

Now we may not have to worry about Karma. They lied on the stage at TechStars Demo day today and it didn’t slip past the great crew over at Betabeat.

Reportedly (and now admittedly), Karma’s CEO Robert Gaal, stood on the stage at Demo Day and said that they had already forged partnerships with ride sharing startup Uber and American Airlines. Whoops….

Apparently their partnership with Uber was a total lie and Kalanick quickly took to Twitter to correct Mr.Gaal with these tweets (source:BetaBeat)

Gaal failed miserably at trying to diffuse the situation and then eventually took to Tumblr to all but admit he was lying and not just about Uber about American Airlines too.  Gaal said on Tumblr:

We apologize profusely for claiming Uber and American Airlines are working with us – a statement we never received explicit permission to use. And we apologize to TechStars and the whole TechStars community. We did not mean to overstate anything or unfairly take advantage of the network and the opportunities it has opened up for us.