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Two former Google employees, David Friedberg and Siraj Khaliq, founded WeatherBill, a seller of weather derivatives contracts for smaller companies. Such derivatives pay out if the weather reaches a chosen level of heat, cold, rain, or drought. Weather derivatives have been primarily available to very large companies for 10 years, but WeatherBill makes them available over the Internet to smaller firms affected by weather, including golf courses, restaurants, and hair salons. For instance, WeatherBill has quoted a price of $1,471.74 for a San Francisco golf course that wants to make up for slow business on rainy autumn days. The contract would pay $500 for each day with more than half an inch of rain between October 1 and November 30. WeatherBill's services will at first be restricted to companies with a net worth of $1 million or higher. Weather derivatives were devised by Enron as a small part of its business during its heyday before the collapse, and some observers warn that they are too complex and risky for the majority of small companies. While insurance companies offer policies covering catastrophic weather or large crop failures and cancellation of special events, WeatherBill contracts can also deal with less dramatic weather conditions, such as more than average rain in spring or a cooler than usual summer.
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