June 14 — June 20,2010 Bloomberg Business week Why analysts are too optimistic \ t \ $135 million in funding from Digital Sky Technologies, the Russian investment Biotechnology firm that also owns as much as 10 per- cent of Facebook. The risk from disgrun- Can Cloning Save tled customers is lawsuits, says Jeremiah The White Rhino? Owyang, an analyst at research firm Al- timeter Group. "Imagine you're a con- sumer and you didn't get the manicure or pedicure you paid for," he says. "Who do you sue, the small business owner or someone who just got $135 million?" Mason says Groupon hasn't been sued for unfulfilled deals, and adds that the company offers customers full refunds if they're dissatisfied. In the coming months, he plans to add online market- ing seminars to better prepare small »•San Diego's Frozen Zoo stores business owners for spikes in demand. cells of endangered species "We say to businesses, the first day is going to be crazy," Mason explains. •"It gives me hope we can help save Mission Minis, a San Francisco bakery species from extinction" that opened in January, was bombarded Fora northern white rhinoceros, of the revenue. The local merchants with 72,000 cupcake orders after a Grou- Angalifu has a pretty sweet life. The two- can set a cap on how much they want pon offer in March. Owner Brandon Ar- ton rhino can roam freely through a 213- to sell. The trouble is, those businesses novick says his frazzled bakers couldn't acre habitat that resembles the African don't always make the cap low enough keep up, making some customers angry. savannah. Still, Angalifu and his pal Nola, and get overwhelmed by bargain-seek- Despite the chaos, he says the experi- an elderly female at the zoo, are two of ing hordes. A nail salon in Boston sold ence did have an upside: The shop has eight northern white rhinos believed to 4,000 manicures and pedicures before been baking as many as 1,700 cupcakes a be left on the planet. "These beautiful an- Groupon discovered the shop had just day, vs. about 800 before the offer. Plus, imals are on the brink," says Oliver Ryder, two stations to serve customers, says the ordeal taught employees how to deal the chief geneticist at the San Diego Zoo's Andrew Mason, Croupon's founder and with disgruntled customers and work Institute for Conservation Research. chief executive officer. under pressure. "It was fun," he says. "There are a few left, but it's not clear Privately held Groupon, which de- "Kind of."—Joseph Galante they're capable of reproducing." clined to comment on its financiáis, says Ryder oversees the Frozen Zoo, a The bottom line Groupon's popularity could backfire it aims to double its U.S. coverage to 100 if it doesn't help small business clients deal with lab where skin cells and DNA from 12 cities this year. In April the startup got customer surges from its promotions. white rhinos and 8,400 other animals- a total of some 800 species-are stored at -280F. The hope is that scientists can Drawing Board use the cells to create cloned animals and replenish endangered species. The lab was founded in 1972, but tech- nology needed to make use of the cells is Just now being developed. This winter researchers at the Scripps Research Insti- tute used tissue from the Frozen Zoo to create stem cells from the silver-maned drill, Africa's most endangered monkey. Onjune 1 the stem cells morphed into brain cells. "I thought, 'We've done it!' " says Jeanne Loring, who led the re- search. "It gives me hope we can help save species from extinction." The next step will be to use the stem cells in some variation of the method used to clone Dolly the sheep. In 1996, Scottish scientists made Dolly by trans- ferring the nucleus from an adult sheep cell into a developing egg cell that had its nucleus removed. They used June 14 — June 20,2010 Bloomberg BusinessWeek Technology hnovator embryonic stem cells in that process; Luring would use the stem cells she de- veloped from the drill's skin since embry- os from endangered animals are hard to come by. Loring and her team may also try mixing the drill cells with a three- to four-day-old embryo for a similar animal that's in plentiful supply, like a baboon. Unlike anticongestion programs in Otfspring from this mix could be selec- London and Singapore, which rely on tively mated to breed out the nondrill cameras and in-car devices called tran- genes, in theory leaving a pure drill. sponders to bill drivers as they enter The cell-transformation technique, crowded areas, Dykstra taps streets for developed three years ago by Shinya Ya- data. Low-power magnetic sensors about manaka of Japan's Kyoto University, uses the size of a palm are embedded in roads a harmless virus to carry genes into skin to detect cars in parking spots or driving. cells-and change them into stem cells. Those data are wireiessly transmitted to Although the technique worked for the devices on top of streetlamps or traffic- drill, it fell short when used with white signal boxes, which send the data to park- rhino cells, so Loring is hoping to map ing authorities. If a street has high traf- the rhino's genome to get clues about fic and no parking spots, San Francisco's which of its genes may reprogram cells. SFpark agency plans to raise meter rates Scientists have harvested stem cells up to $6 an hour. The prices will show up from embryos for more than a decade, The Berkeley MBA is selling on meters and the city's website. but Yamanaka's technology is important traffic-control technology that The system also sends expired-meter because embryos aren't always avail- data to smartphones carried by officers able for endangered species. Attempts targets the most annoying who can issue tickets. Each Streetline to clone endangered animals, though, drivers: those who clog streets sensor costs $300 for installation plus a have led to aborted pregnancies and de- in search of cheap parking $I20-per-year software license fee. San formed offspring, [n 2000, cells from Francisco, where drivers feed meters only the Frozen Zoo were used to clone two 55 percent of the time, says it's planning to endangered types of cattle-a gaur and a Tod Dykstra looks out from his down- buy 8,000 sensors. According to the city, banteng-using the Dolly method. Two of town San Francisco office window every an early test nailed so many scofflaws, the the three calves died shortly afrer birth. day and sees waste. While a parking system paid for itself vnthin two months. The surviving banteng lived at the San garage next door sits empty, roads are "The ultimate hammer will be the parking Diego Zoo for seven years, less than half clogged with cars in search of cheap- ticket," says Dykstra. its normal life span, and died in April. er metered spots on the street. "Thirty Streetline's technology grew out of a Some scientists say those examples percent of driving in cities is made up of Pentagon-funded project Dykstra worked show the moral complexity of clon- people who have gotten where they want on while serving on the boards of Bay Area ing. The benefit may be limited if only a to go and are looking for parking," Dyk- nonprofits focusing on environmental sus- handful of animals are created and live stra says. "Think about all those carbon tainment efforts. The research looked into In zoos, says Autumn M. Fiester, a senior emissions. It just doesn't seem right." sprinkling "smart dust"-millions of tiny fellow at the Center for Bioethics at the Dykstra, founder of Streetline Net- sensors that measure temperature, pres- University of Pennsylvania. "There has works, a San Francisco company that sure, sound, and other factors -over hun- been a lot of suffering with these early makes traffic-control technology, wants dreds of square miles. Then a computer deaths and malformations," Fiester says. to make it tougher to park cheaply or would gather the data and analyze it in Ryder acknowledges the problems. get away with not feeding the meter. real time. That project ended in 2001, "We would only engage in these efforts Streetline's system lets parking author- and Dykstra, 48, founded Streetline four if there were no other way to prevent ities identify crowded streets and jack years later. extinction," he says. For Ryder, the only up parking-meter rates block by block. A self-described environmentalist rationale for cloning is to create new The idea is to encourage drivers to stop who grew up in the Bay Area, Dykstra animals that could mate with existing circling and get off the streets-either says he plans to sell sensors that monitor ones, boosting their population and ge- paying for a municipal garage or head- city water pipes for leaks. "Once you get netic diversity. With the white rhino, ing to a less crowded neighborhood. San things instrumented," he says, "you find though, he and Loring are up against a Francisco and Los Angeles are now in- you can do all sorts of interesting things to deadline: Angalifu is pushing 40, and stalling Streetline technology. help save the planet." O—Cliff Edwards rhinos generally don't live past 50. —Rob Waters Battle cry ?> "The ultimate hammer will be the parking ticket" The bottom line Clones made from skin cells may Background *> Worked on a Pentagon-funded "smart dust" project help revi\/e endangered species, but some experts say cloning is the wrong solution to the problem.