A Sydney startup is looking to make it faster and easier for people to book casual group fitness classes online. Fitness Calendar, launched in October last year by sisters Deborah Laurence and Abigail Holman, offers users discounted single-class visits to nearby fitness studios. Co-founder Deborah Laurence told StartupSmart the idea for the website came from wanting to help businesses promote their fitness classes, as well as remove as many barriers as possible for consumers. “We’re not into the traditional gym one-size-fits-all approach,” she says. “We love doing more boutique things like yoga and Pilates. However, we found it so hard to find all the information we were looking for with these specialist studios in the one place – you have to spend hours on Google trying to find them and their timetables. We also wanted to make it more acceptable for people, so that’s why we offer the discounted passes because some of the studios could be $35 for a single visit and through the website we might sell those for $10.” The startup currently has 60 suppliers signed up in Sydney, and that number is “growing every week”. “Obviously there’s Fitbits and things like that but in the online space there hasn’t been much change,” Laurence says. “We definitely see an opportunity for fitness and impacting the market and changing the way we workout. What we are also working on is a subscription model which will launch in 2015 and really shake up the Australian market.” As for what 2015 holds for the startup, Laurence says an expansion is being planned for later this year as well as a possible seed round. “We are already feeling out the Melbourne market and have made connections there, so this year we will be definitely growing into Melbourne and then other cities.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Building a technology company isn't easy; a huge range of specialist skill sets are needed – software developers, data scientists, designers, product managers and engineers to name a few. However in the Western world we have a crisis in education with declining enrolments in science, technology, engineering, and mathematics (or STEM for short). This is remarkable given we are in one of the greatest economic gold rushes of all time, thanks to the internet and software eating the world. So startups and technology companies everywhere are scrambling for talent and they increasingly need to offer a variety of incentives to attract and retain that talent; the most powerful of those incentives is giving employees the chance to earn a part of the company and become owners themselves. To understand how this works let’s step back and consider how shares are divided up in a company from the very beginning. Companies are started by founders, who are the people who originally come up with a great idea to start a business. Typically, this group numbers somewhere between two and four people. Even though one person might originally come up with that idea, they will still need a founding team around them with complementary skill sets to turn this idea into a real company. Two people in a founding team is ideal. Greater than four people founding a company starts to become unwieldy in figuring out who is in charge. So founding teams will usually be between two and four. The founders are the people who take all the risk in a venture, they are the people that put everything on the line. They quit their jobs, work for no pay, and have to risk being thought of as a fool. In fact, the bigger the potential opportunity, the bigger the fool you can look as a founder, because the biggest potential ideas are ones that no one has thought of yet, that go against the prevailing wisdom. The vast majority of startups will fail miserably, and these founding teams might spend years with no income toiling away for no result. But if the idea works out and becomes a huge success, they receive the lion’s share of the reward. They took the biggest risk, and therefore they share the biggest reward. So let's say we have a startup with four founders: Alice, Bob, Carol and Dave. If we look at the equity pie, the easiest way to start a business is to divide all the shares equally between the four founders, so they each get 25%. Vesting A huge number of complications can occur in early stage businesses. Alice might lose interest in the business and quit after only a few weeks, Bob and Carol might have a fight and one of them walks out, or Dave might not pull his weight and the three others might want to replace him. Well if you just gave the shares out without some sort of agreement to deal with these situations then you might have someone who leaves after a few weeks, doesn't put any effort in, who still keeps their 25% years down the track. That wouldn't be fair on the others, so startups usually put in place an agreement between each other to deal with what happens when something goes wrong. This agreement is called a vesting agreement, and it is designed to deal with all the tricky situations startups get themselves into when something goes wrong. And believe me, with early stage companies a lot of things can go wrong. A typical Silicon Valley-style vesting agreement lasts for four years with what is called a one-year cliff. Under a vesting agreement, instead of automatically being granted all your shares where you can do whatever you like with them straight away, a vesting agreement instead restricts your shares so you are granted them over time, in this case over four years. At time zero, all the shares are unvested, and nobody can do anything with them if they leave the company. With a four-year vesting agreement with a one-year cliff, nothing happens for a year. This is what they call the cliff. If you leave the company before a year, you get nothing. This is fair because if you are meaningfully going to contribute to a company you should be at the company for at least a year. If for some reason you quit or are asked to leave, the company can still continue without an unworkable share structure where all the people left working hard are resentful that a large shareholding is owned by someone who isn't doing any work. On the anniversary of the original grant date, 25% of the shares will vest. At this point you own them and can do whatever you want with them, even if you leave the company for whatever reason – the shares have been earned. After the first year, vesting typically proceeds, so that every month 1/36th of the remaining unvested stock vests. So after two years, 50% of your stock will have vested; three years, 75%; and after four years, your stock is fully vested. Vesting is not just a good idea; it solves a whole bunch of messy problems for when things go wrong. And believe me, a lot of things go wrong in startups! So if you're going to start a company, it's really important you put a vesting agreement in place. So let's look at what happens to the capital structure when investors start to come in. Let's say along the way our startup finds an early stage angel investor who is willing to invest $500,000 for 20% of the company. This means he thinks the company is worth $2.5m after he invests, because his $500k is worth 20%. We call this the post-money valuation of the company, because it is the valuation after the money is invested. The pre-money valuation of the company is the valuation before the money goes in. Since $500k was invested this means that the pre-money valuation of the business was $2 million. Everyone, all four of the founders and the new investor in the company, now owns 20%. Taxation At this stage our company probably wants to start hiring its first employees. It finally has some money in the bank and can afford to pay some salaries, but it's not a lot of money. The market for hiring staff is tough and it’s a very competitive and global market. The company has to compete with very well-funded companies who can offer much more than what our startup can afford, and this is in addition to all the other perks big companies are offering like free food, a great office and free gym membership. Not only that but Silicon Valley is even more desperate for talent, and companies like Google and Facebook are paying even more and have even better perks. On top of all that our startup is very risky and based on statistics, more likely than not is going to fail. So the only way it can attract staff to join such a risky and low paying endeavour is through stock; it’s something that the startup can hand out today, and even though it might not be worth a lot right now, it could be worth a fortune later on if the company is successful down the track. This is why equity is the primary means in which startups attract and retain talent, and this is why it is so important. So our company wants to make its first hire, and given it’s such a risky proposition, the cost in terms of equity will be high, maybe a few percent. As time goes on and the company gains traction, the risk involved with the business will become lower, and as such, the equity compensation decreases. At the same time, the company becomes more and more valuable, so the dollar value of the equity already granted will increase. Typically, an early stage startup might reserve 10% or 15% of its stock in a special pool for employees. So let's carve out this pool in our capital structure; 15% is reserved for the staff, and each of the four founders and investors each end up with 17%. At this point you might think it's all very straight forward. But if only it was! The big problem we've neglected so far is the issue of taxation. While these shares are actually worth real money – we're giving out 15%, and remember our seed investor paid $500k for 17% of the business. So they're worth a little under half a million dollars right now. If you gave out the shares directly as stock grants, that means the staff in total would have to treat those shares as income, and pay income tax on almost half a million dollars in this financial year! Can you see the problem here? You're trying to attract people to join your company by handing out shares because you can't afford to provide a good salary, but by doing so you're burdening them with a huge tax bill! Not just that, but those shares you are handing out won't be worth anything if the company isn't a success. On top of that there's no active market in which they can be sold because it's a private company – a market won't exist until the company goes public or gets bought out in a trade sale. Who in their right mind would want to be given stock then? Stock options Fortunately there's a way in which this problem can be solved, and that's by handing out a stock option rather than the stock directly. An option is a contract which gives the owner the right, but not the obligation, to buy or sell an underlying asset, which might be a share, at a specified strike (or exercise) price on or before a specified date. A stock option is what's known as a derivative, which means that it derives its price from something else, in this case the value of the stock. As the value of the stock goes up, the value of the stock option goes up as well. As the price of the stock goes down, the value of the stock option goes down as well. But for the option to have any value at all, the underlying share must be worth more than the strike price, because this is the amount of money someone has to pay to exercise the option, which grants them the underlying shares. So our payoff diagram looks a little like this: if I buy an option while the stock is trading below the strike price I'm down the purchase price of that option, but once the underlying stock reaches the exercise price, the value of the option steadily rises in a straight line. Once the underlying stock reaches the value of the strike price plus what I paid to purchase it, I'm making money – and my ability to make money is limitless, if the stock keeps rising, I keep making money. This means that by owning an option I share in the upside of the company. If things go really well, I make money as fast as all the shareholders do, but if the stock doesn't rise or it drops then not only do I not make any money but I'm only out of pocket what I paid to buy the option. The reason why giving options to staff works out better than giving out shares is because if I grant options that only provide upside from today then basically the value of that option today is pretty much zero. This means if we hand out options then we don't have a big income tax problem because the value of the options are pretty close to zero. The way this is achieved is by the company setting the exercise price of the option to be the same as the fair market value of the shares as of the date of grant. So if for argument's sake each share is currently worth $1, then the company would set the strike price of those options to also be $1. This means that effectively the options are worth zero today because I would need to pay a dollar to exercise the option into a share which would also be worth $1. The great thing about having the options worth zero is I can give them away to staff without having them receive a big tax bill, because there's no value in the options today. The staff share in the upside success in the company as much per share as shareholders do, but the value of the company has to improve for them to become valuable. This is a great mechanism for attracting new staff – if the company does well, then they do well, but they don't get burdened with a tax bill upfront. However, it's a little more complicated than that. Options actually have two components of value in them. They have what is known as intrinsic value as well as time value. Intrinsic value is the value you would normally think would be in an option – it's the difference between the market value of the underlying share and the strike price of the option. So let's say our share is worth $1 today and the strike or exercise price of the option is also $1. When the stock trades below $1, then the option is also zero. If the stock was worth $2 and the strike price $1 then the option would be worth $1, and if the stock rose to $3 for the same strike price, then the value of the option would be worth $2. Now here's where the complication is – options also have a time value. The time value of an option is the discounted expected value of the difference between the exercise price and the stock price at expiration. In layman's terms, even though the intrinsic value of an option today might be zero, there is a probability that by expiration of the option that the stock might have risen. So even though the intrinsic value might be zero, the value of that option isn't exactly zero, it's instead worth a small amount, which is a reflection of the probability that at some time in the future it might be worth something. It's fairly complicated to calculate the time value of an option. Companies usually use either one of two ways: the binomial method or the Black-Scholes method, although there are other methods, but all the methods use a lot of complicated maths (if you want to know the difference between the two, here's a great video). The main way is the Black-Scholes model. The development of this model by Stanford academics was so fundamental to the creation of modern financial markets that the economists that developed it won a Nobel Prize in Economics for it. The model takes into account something known as the volatility of the stock, which is a statistical measure of the variation of price of the stock over time. The more volatile the stock is, or the more it moves up and down, the higher the time value is of the option. This makes a lot of sense intuitively, because the more it moves up and down the greater than chance it might actually be above the strike price at the time of option expiry. So it's important to remember that even though the company is giving out stock options to staff that has the strike price equal to the market price of the stock, even though the intrinsic value of the option is zero, the time value of the option will still be worth something, and as such the option will have some value which the staff will receive as income and have to pay tax on in the current financial year. So let's now talk about taxation of employee stock and why it's so important to get this right. We know so far that when you're granted either a share, or an option, that you're going to have to pay income tax on the fair market value of that grant in the financial year in which you receive that grant unless the grant is subject to deferred taxation, that is, among other things, subject to vesting conditions. Not all shares in startups are the same Now the first thing to remember is that not all shares in a company are the same. Investors rarely buy common (or ordinary) stock in a company – they buy instead a class of stock known as preferred stock. The stock is called preferred because it comes with a number of special rights and privileges. A common right is something known as senior liquidation preference. Liquidation preference was originally designed to provide downside protection to investors that put hard cash into the business, as opposed to just the hard work that founders and staff put in. We call that hard work "sweat equity", because the equity is paid for in sweat, rather than hard cash. Financial investors in startups like venture capitalists are not just smart, they are in a powerful position; there's a rule in startups called the golden rule – he who has the gold rules. These financial investors invented senior liquidation preference to ensure that if the company goes belly up that in a liquidation scenario that they get their money back before any of the people who earned sweat equity get anything. This is why it is called "senior" in a liquidation. So if a venture capitalist invests $2 million dollars in a company with a 1x liquidation preference, then if the company doesn't go very well and winds up, that the venture capitalist will take the first $2m out of what's left before any of the people with sweat equity see a cent. Now this was originally supposed to only provide downside protection, so that if a company didn't set the world on fire that the investor could get first claim on the assets, but if the company did well that in a distribution of returns in a sale of the business for a lot of money they would have to convert their preferred stock to common (or ordinary) stock and share like everyone else. So in a trade sale there are two options – you either chose to be paid out as a preferred stockholder, who only gets back their money up to the terms of the liquidation preference in the case of a wipeout, or you could convert to common and share with everyone else if the company did well. This is called a non-participating liquidation preference. However, over time, and because of the golden rule, venture capitalists twisted liquidation preference to become participating preferred stock. What this means is that in a sale of the business they got both the liquidation preference and after that they get to share with everyone else. So let's say our venture capitalist invests $2m in a company giving it a $6m pre-money valuation, so that they take 25% of the stock, but their stock is preferred stock with a 1x participating liquidation preference. This means that if the company sells for $8m, they first get their $2m liquidation preference and then they get 25% of the remaining $6m, for a total of $3.5 million! So you can see that even though the venture capitalist owns only 25% of the company, they get almost 50% of the returns in a sale of the business! So you should be able to see right away that the taxation of the common stock on par with the preferred stock in the case of liquidation preference is quite unfair because the returns are not equally distributed between the two classes of stock. It can get much, much worse than this. Sometimes the multiple on the liquidation preference for participating preferred is more than 1x, sometimes it's 2x or 3x, or more. If we go back to our VC's $2m investment in a company at a pre-money valuation of $6m to get 25% of the shares outstanding, that if the multiple is 3x then the VC would get $6m off the top before anyone else got anything. So if the company sells for $8m, then the VC takes $6m and then they share in 25% of the remaining $2m so they end up with $6.5m of the $8m which is over 80% of the returns even though they only had 25% of the shares outstanding. These egregious terms are more common than you think. The US law firm Fenwick & West publishes a quarterly survey on financing terms in venture deals and for example in Q1 of 2013, 23% of senior liquidation preferences were multiple liquidation preferences, and of those 29% were between 2x and 3x and 14% were over 3x. Right before I floated Freelancer.com, one of the term sheets I received from a US late stage venture capitalist had a 3x liquidation preference. To make matters even worse, liquidation preference stacks; later investors will always want at least the multiple that the earlier investors got. So if the company takes in $2m at a $6m pre-money with a 2x liquidation preference, then $5m at a $20m pre-money and finally $50m on a $200m pre-money, all with a 2x multiple, then the total amount of liquidation preference in the company is $114 million dollars. That's right, in a sale of the business, the investors take $114 million right off the top, and if the company sells for less than that, the founder and staff get nothing at all. If it's participating preferred, then on top of this they get to share in the rest. Sometimes there might be a cap on the total amount of liquidation preference that can be received, but in the latest Fenwick & West survey for Q3 2014, 63% of participating liquidation preferences were not capped. Participating preferred liquidation preference, senior multiples and uncapped liquidation preferences are common tricks of the trade that venture capitalists and other financial investors use to bridge valuation gaps between what the valuation that founders place on their business and what investors are willing to pay. Taxation of grants So again you can see it's grossly unfair to tax grants to founders and staff as if the value of the common and preferred stock are the same. The problem is that when your startup is still a private company that there is no active market price for your stock, in fact, the only price you'll typically have is the last price that an investor bought preferred stock at. That's why in the US it is common in the treatment of taxation of common stock to discount the market price of the preferred by 90%. It's illiquid, it's subordinated, there might be a tonne of liquidation preference on top, and I'm not going to even get into all the other rights and privileges that VCs will have as a result of owning preferred stock – including the ability to pretty much fire you at will. Now let's look at how the taxation of grants works with respect to vesting. Let's say for arguments sake that an early employee is granted 200,000 shares which at the beginning of the life of the company, when there is no value in it, are worth 1 cent per share. Let's say these shares vest with our standard Silicon Valley-style vesting agreement, which is over four years with a one-year cliff. On the one-year anniversary of the grant, 25% or 50,000 shares vest, and after that each month, 1/36th of the remaining or 4,166 shares vest until the four years are up and the grant is fully vested. Let's say that after the first round of investment in the company, or the Series A, happens sometime in the first year and that the shares are now worth 20 cents each. On the one-year anniversary 50,000 shares vest which is worth $10,000 at 20 cents a share. On that date, the early employee would have to pay income tax on $10,000 in that financial year. Let's say the company then goes through another round of funding and the shares are now worth $1 each. Each and every month now, the employee would have additional income of $4166 that they would have to pay tax on – and there are 12 taxable events in that financial year! Let's say the company does really well and the shares end up being worth $20 each – that would be 12 taxable events per year on income of $83,320 each! Granting options where the strike price of the option is equal to the fair market value of the stock at the time of grant might be slightly better, but remember that the value of this option will never be zero due to the time value of the option. If the company does really well, this rapidly becomes a nightmare from a taxation standpoint! If the company is still privately held, the staff member might not be able to sell any stock to cover their tax bill because there is no active market for the shares. The company might not even be generating any revenue – just think of how Snapchat is valued at over $10 billion and not making any money yet. 26 U.S.C. § 83(b) In the US, luckily the IRS has realised the problem of vesting of employee stock, and has created a special exemption called an 83(b) election. 83(b) allows founders and employees to decide at the start of your vesting agreement to be taxed for the entire amount that will eventually vest at the present value. Rather than paying tax each year then, you pay all the tax up front based on the value of the stock or options as and when it is granted to you. The two important conditions of 83(b) is that the stock or options granted to you need to be at risk, that is to say be subject to a vesting agreement, and that you have to file a 83(b) election within 30 days of receiving the grant. If we go back to our example of the early employee receiving 200,000 shares at 1 cent each under a standard Silicon Valley vesting agreement, then under 83(b) the employee could just elect to pay income tax on the total value at the start, which is $2,000. This is significantly better than the nightmare scenario I talked about before, when you have to pay tax as and when each share vests. Of course, if the company ends up being valuable, the employee will still pay capital gains tax when they sell the shares down the track on the difference between what the stock is worth then and now. If they've held for more than a year they'll pay long term capital gains rather than short term, which is a bonus. At the end of the day, the tax department still gets their tax, it just gets their tax when the stock has crystallised real value and the employee can actually sell the stock to pay for the tax bill. Click here to read part two. This story originally appeared on SmartCompany.
Prepare to open your wallets, ladies and gentlemen: Microsoft has announced the release of an augmented reality (AR) headset called HoloLens. Although having been announced only a fortnight ago, tech media are already dreaming feverishly of the potential applications for such a device. Meanwhile, Microsoft’s own press images seem to promise a benign utopia replete with living room Minecraft games and attractive, tech-savvy white people. It might look rather like an excitingly chunky pair of wrap-around sunglasses, but Microsoft promises that it is entirely self-contained, with speakers, lens and CPU housed entirely within the chassis. Being substantially smaller than the Oculus Rift, and intended to be less invasive than Google’s much-maligned Glass, HoloLens provides perhaps the most credible attempt to introduce augmented reality into our homes. What is augmented reality anyway? Even though HoloLens is new, the idea of augmented reality is certainly not. First proposed by L. Frank Baum (author of the Wizard of Oz) in his 1901 novel The Master Key, AR has a long and illustrious history, at least in theory. But what is it, exactly? Augmented reality is a form of “mediated perception”: an AR device overlays a virtual world on the real one. It does this by taking a live video feed of the external world and then supplementing it with computer-generated sensory input. In this sense, it is unlike virtual reality, which entirely replaces the external world with a virtual one. Instead, AR embellishes the real world to make it more fun, clear or informative. Already there is a huge number of AR apps, most of which have been built for mobile devices. One such is Layar, which synchronises camera input with data from Google Maps in order to let you see the world with the digital marginalia built in. Meanwhile, games like Ingress enable smartphone users to win points and compete with other players by “hacking” with virtual nodes that are attached to real-world landmarks. In order to hack the node, they need to actually stand near the landmark, giving it a distinctly physical dimension. Some of these AR programs are genuinely remarkable, and carry with them the seeds of a changing paradigm. The new version of Google Translate, for example, can perform real-time spoken-word translation, as well as translating written words almost instantaneously. The Babel fish from The Hitchhiker’s Guide to the Galaxy gets one step closer. However, HoloLens provides you with something a little different. Unlike mobile phone apps and Google Glass, the sensory overlays provided by HoloLens are interactable digital objects. They don’t merely provide parenthetical or additional information about things in the world; instead, those objects serve to further populate the world around us. The futures of where we live and work If you’re interested in Microsoft’s vision of a future filled with digital objects then check out its publicity video: the promises may seem overwhelming (one might even say “unbelieveable”). According to Microsoft, with a liberal application of augmented reality, the home and office become deeply and richly interactive in a way that has been hitherto impossible. Objects are designed and tested on the fly. A single pinched finger or flicked wrist enlarges or crumples or dismisses instantly and organically. Meanwhile, entire classes of consumer items are rendered completely redundant, collapsed into HoloLens and products like it. If Microsoft realises the future it proposes, AR products will see televisions, gaming systems, music players, desktop computers and even cosmetic objects like wall art and decorative carpets consigned to the dustbin of history. We will no longer have a need for these physical objects; instead, they will be projected into our field of perception as strictly digital entities. To be clear: this is not a prediction on my part. Far be it from me to make predictions about the purchasing habits of other people (I can barely keep track of my own). This, however, appears to be Microsoft’s vision. Although varnished into a high gloss, what is perhaps most telling about its vision of the future is not what isnew, but more what is missing. Televisions, gaming consoles, paintings: these objects have no place in Microsoft’s future. The future of consumption If this outcome is realised, it seems obvious to expect radical shifts in manufacturing and other secondary industries. Already there have been murmurs of concern and excitement about the possible economic ramifications of cheap 3D printing, particularly with regards to what it means for the manufacture of simple items. If Microsoft is successful in killing off the television and other media apparatuses, we may well also see manufacturing shrink from the other end. If the HoloLens and products like it do supplant other consumer electronics, we will be witness to the slow, awful collapse of what is currently a highly speciated consumer landscape into a homogeneous field of kooky-looking headsets. However, even as manufacturing will be forced to grapple with greater decentralisation and greater automation, not to mention potential market erosion at both the top and bottom ends of the sector, those who create, market and sell entertainment content will almost certainly find AR technologies an enormous boon. Marketers and content producers will have a window into our habits and tastes, sharing material funded by consumer commitment to almost-negligible microtransactions. Meanwhile, consumers will almost certainly fight back. Already a great many web browsers come installed with native ad and pop-up blockers. Moreover, having tired of product placement in movies and the indignity of “advertorials” in magazines, several designers and developers are working on products that block ads in the real world. It seems fair to expect that this presages a subtle, extremely sophisticated arms race between those who consume content and those who produce it. The sky is not falling These developments might sound like the first stages of a miserable Gibsonian future, but there’s no need to panic just yet. Indeed, there’s plenty of reason to think that the widespread uptake of AR technologies will, on the whole, make life easier. However, just like the internet dramatically changed the way business is conducted (such as the slow demise of brick-and-mortar bookstores), it seems reasonable to expect that the spread of AR technologies will introduce its own difficulties. But we should not take our own predictions too seriously. After all, we’ve been privy to these kinds of statements before. People who visited Norman Bel Geddes' Futurama exhibit at the New York World’s Fair in 1939 were awarded a souvenir pin upon departure: “I have seen the future”. Now, with the benefit of hindsight, we can look back upon this claim, along with some of the more outlandish predictions made by our forebears (flying cars, robot servants, Jetsonian spaceflight, post-scarcity economics) with an indulgent smirk: chrome, finned cars and bakelite have swung seamlessly into fashionably kitsch; ill-fated relics of a future that never was. There is, of course, a lesson here. In our own era of social networking, genetically modified foodstuffs and tawdry capitalism, it behoves us to be a little cynical about the promises and drawbacks of an augmented reality, in much the same way that we mock the promises of the Atomic Era. Of course, I’d be lying if I said I weren’t excited. I am, and very much. There’s too much of the techno-utopian in me not to feel a subtle thrill that the future we’ve been promised is finally arriving. But nonetheless, I worry, and I reserve judgement. Not very much, granted, and not very loudly, but amid the excitement there is a subtle sense of disquiet, and the sly hint of a disdainful sneer. Follow StartupSmart on Facebook, Twitter, and LinkedIn. This article was originally published on The Conversation. Read the original article.
Female entrepreneurs will be able to work from a women-only environment in Melbourne next week as part of a pop-up co-working space. Participants will be provided with a desk and free Wi-Fi, as well as the opportunity to attend a range of talks aimed at helping entrepreneurs reach their full potential. Career coach Sheree Rubinstein told StartupSmart she and her co-founder Gianna Wurzl decided to start the co-working space because of the discrepancy she sees between the number of women who look at themselves as entrepreneurs and the number of women who run companies. “We’re trying to capitalise on that entrepreneurial spirit and really build and create an event for entrepreneurs that is supportive and provides everything that an entrepreneur needs to thrive and activate their ideas,” she says. Rubinstein says the pop-up format was chosen in order to trial the female-only co-working space and see if there was demand. “We’re testing to see if our assumptions are right and women need events, resources and all the tools and frameworks they may be struggling to find themselves,” she says. “We’re considering trialling the same thing in LA next and if things are very successful and work out well we’d be looking at potentially running permanent spaces – one in Melbourne and one in LA – as a start. If we’re looking at permanent spaces we’d be setting up a few so it’s not exclusive to Melbourne.” Gender diversity, and diversity more broadly, is an ongoing issue for the tech industry. It’s a problem that industry giants like Twitter, Google and LinkedIn have all admitted needs to be addressed. Only a small portion of early-stage investments go to female founders despite the fact that companies with women on the executive team generally perform better, according to the Diana report. One Roof will be based at an Airbnb property in St Kilda from February 9-14. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The world’s move into the mobile post-PC age has accelerated, it seems, after Apple’s record quarterly sales of 74.5 million iPhones. To put this in perspective, this is almost the same as the total global quarterly sales of PCs, which were around 84 million. Because of the large amount of profit Apple makes from the iPhone, its profit was a record-breaking $US18 billion. This compares with Lenovo, the world’s largest PC manufacturer, whose last quarter saw them make just $262 million in profits. The drivers behind Apple’s success Although the drivers behind Apple’s success include those that are specific to the brand, it is what the phone means in terms of social- and self-identity that determines the difference between buying a Samsung phone and an Apple one. But there is another psychological driver that could be a candidate behind why Apple has succeeded where companies like Samsung have struggled. This driver is one that, according to Harvard Professor Teresa Amabile, is behind what motivates us at work and leads to the greatest levels of job satisfaction. Through extensive interviews and surveys of employers and employees, Amabile and her team distilled down the factor behind creative satisfaction and motivation at work to the feeling of “making progress”. This work actually builds on research reported in the 1960’s by Frederick Herzberg which stated that the principle driver behind worker motivation was a sense of “achievement”. Interestingly, although the research has consistently reinforced the view that making progress and achievement are highly motivating, senior managers and even CEOs commonly rank this driver at the bottom of what they consider important in motivating workers. This probably explains why many workplaces overwhelmingly give their employees a sense of futility in trying to effect change or contribute in such a way that workers get a sense that they are achieving something significant through their work. It is unsurprising then that Gallup has reported consistently that almost 70% of US workers are not engaged or are actively disengaged with their work. How does Apple give us the sense of “making progress”? Apple, and to a lesser extent Google, have brought out a new phone each year, along with new versions of the software that runs it. Each year, customers are able to upgrade the device that they increasingly use as the principal work productivity tool. 40% of US employees use their personal smartphones for work. Contrast this with the fact that employers commonly only upgrade work tools such as PCs ever 4.5 years. Very few employers will be operating on the latest versions of operating systems and the entire environment is locked down with the employee given very little control over the work computing environment. This technological stagnation at work is usually only one symptom of organisations that change very slowly, if at all. In such environments, individuals will find it difficult to experience any sense of “making progress” either in what they actually do, or how they go about doing it. Being able to use your own device, upgraded each year, brings the very latest technological features along with the sense of being in control and making progress. Every year, the phones are faster, lighter, more secure and more functional. Every year, a new technological enabler is made available through the device. This year, for example, through Apple Pay, it is mobile electronic payments. At the very least, it gives employees the belief that they are on an equal footing with colleagues and competitors and are not being “extrinsically disadvantaged”. The fact that companies are now supporting the ability of staff to use their own devices at work acknowledges that they will never be able to provide the flexibility that employees gain by being able to control this for themselves. In fact, the smartest thing companies could do would be to pay staff an extra bonus each year, specifically for this purpose. Of course, what this means is that Apple can theoretically continue to succeed with its iPhone business by providing for workers what their own employers are unlikely ever to do and continue to give them the sense that we are all making progress. This article was originally published on The Conversation. Read the original article.
During the process of a capital raise it is likely that you will need to present some documentation for due diligence purposes. The bigger the raise, the more likely you will encounter a more intense due diligence process. This may include a full audit of your company's legal documents. I can't recommend enough that if you haven't already got a good cloud-based filing system in place, that you get one as soon as possible. Developing good habits now could save you from expensive, time-consuming admin work later. I often come across entrepreneurs who think that written agreements are unnecessary in the early stages of their business. This can be agreements relating to things such as employees, contractors and commercial partners. What is often overlooked is how this kind of thinking may present potential risk issues for future investors. If you are just starting your business I suggest that you consider setting up a simple framework from day one. I recommend Google Drive or Dropbox. If you already have something in place but it's not organised, it’s not too difficult to make some changes. The key is keeping the high level structure simple and then developing good disciplined habits to maintain it. Here's how I always set up a simple structure using either Google Drive or Dropbox: Set up two main folders: Folder 1: Highly Confidential – imagine you have a filing cabinet in your office; this is the one that you would lock and keep private. Folder 2: General Admin – this is the folder for the whole team to use. Folder 1 is the main focus of a due diligence process, it will need to contain all legal, financial and HR records. I always keep it as simple as possible by creating three sub-folders. I always think of each of these sub-folders as drawers of a filing cabinet, I guess that's because I'm old school and I've done lots of filing the old way. Once you've created your three main sub-folders then you can create more sub-folders for each one. I find this flow works in all startups that I've worked with: ● LEGAL ○ 3rd Party Agreements ○ Company ○ Investment ○ Employee Share Scheme ● FINANCIAL ○ Bank Accounts ○ Sales Invoices ○ Suppliers Invoices ○ Management Reports ● HR ○ Employees ○ Contractors Folder 2 is for general admin, this is where you keep all things general, items that anyone on the team may need to access at any time, e.g. R&D product development, shared company policies, etc. Of course everyone has their own way of setting things out so there are no hard and fast rules here. This is just an example that might help you to start a filing framework for your business. The secret is to have a framework in place and then to continually add your documents into the correct folders on a regular basis. If you know you don't have the discipline to do this yourself, then I recommend that you make it a priority to engage someone who does. I also recommend that once you have this in place you provide clarity to your team on the importance of keeping the startup house in order. Clare Hallam is a Startup Operations Specialist. Follow Clare on Twitter. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Think your day has been busy? Spare a thought for Crowd Mobile, which announced the takeover of a Hong Kong-based company on the same day as its initial public offering, after completing a $3.8 million pre-IPO funding round. Launched in 2009, Crowd Mobile operates a platform where users pay a small fee to receive crowdsourced answers to their questions. The fees, in turn, can either be paid through direct carrier billing, the Apple app store or Google Play. While its best known brand is its Bongo app, where users ask entertainment-related questions, the company offers a range of apps covering a range of topics including fashion, religion, and gossip about friends. Since launching, the Australian-based company has expanded its services to a range of markets, including New Zealand, the UK, Ireland, Germany, Austria, Belgium, Portugal, Spain, The Netherlands, Switzerland, Italy and Poland. Chief executive Domenic Carosa told Private Media the 2014 financial year, Crowd Mobile charged for more than 3.4 million questions, generated more than $9.8 million in revenue and made circa $2.2 million in EBITDA. "Basically, there's a big opportunity for us. In FY2014, English-speaking countries were our big markets. Since July, we're in multiple markets and multiple languages," Carosa says. Immediately ahead of its IPO, Crowd Mobile completed a $3.8 million funding round, which included $363,000 through the VentureCrowd equity-based crowdfunding platform. It then completed a back-door listing on the Australian Securities Exchange through former resources company Q Limited. "Part of our growth strategy is making acquisitions, and there are a number of acquisitions we're exploring at the moment. Being a publicly-listed company helps facilitate acquisition growth and also allows us to share the upside with our team." Shortly after listing the company announced it had just purchased a Hong Kong-based start-up called Kiss Hugs, its first move into the Asian market. Crowd Mobile anticipates the Kiss Hugs intellectual property will form the foundation of its expansion into Asian markets. Carosa anticipates the company will use its funds to further push into more countries and launch new products. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The final communique of the 2014 G20 Leaders’ Summit called for enhanced economic growth that could be achieved by the “promotion of competition, entrepreneurship and innovation”. There was also a call for strategies to reduce unemployment, particularly amongst youth, through the “encouragement of entrepreneurship”. This desire to stimulate economic and job growth via the application of entrepreneurship and innovation has been a common theme in government policy since at least the 1970s. The origins of this interest can be traced back to the report produced by Professor David Birch of MIT “The Job Generation Process” that was published in 1979. A key finding from this work was that job creation in the United States was not coming from large companies, but small independently owned businesses. It recommended that government policy should target indirect rather than direct strategies with a greater focus on the role of small firms. Fostering the growth of entrepreneurial ecosystems Over the past 35 years the level of government interest in entrepreneurship and small business development as potential solutions to flagging economic growth and rising unemployment has increased. It helped to spawn a new field of academic study and research. This trend was boosted by the success the iconic “technopreneurs”. Technology entrepreneurs such as Steve Jobs of Apple, Bill Gates of Microsoft, Jeff Bezos of Amazon, or Larry Page and Sergey Brin of Google have become the “poster children” of the entrepreneurship movement. One of the best known centres of high-tech entrepreneurial activity has been California’s Silicon Valley. Although it is not the only place in which innovation and enterprise have flourished, it has served as a role model for many governments seeking to stimulate economic growth. Today “science” or “technology” parks can be found scattered around the world. They usually follow a similar format, with universities and R&D centres co-located with the park, and venture financiers hovering nearby looking for deals. Most have been supported by government policy. What governments want is to replicate Silicon Valley and the formation and growth of what have been described as “entrepreneurial ecosystems”. However, despite significant investments by governments into such initiatives, their overall success rate is mixed. So what are “entrepreneurial ecosystems” and what role can government policy play in their formation and growth? This was a question addressed by the first White Paper in a series produced by the Small Enterprise Association of Australia and New Zealand (SEAANZ). The purpose of these papers is to help enhance understanding of what entrepreneurial ecosystems are, and to generate a more informed debate about their role in the stimulation economic growth and job creation. What is an entrepreneurial ecosystem? The concept of the “entrepreneurial ecosystem” can be traced back to the study of industry clustering and the development of National Innovation Systems that took place in the 1990s. However, the term was being used by management writers during the mid-2000s to describe the conditions that helped to bring people together and foster economic prosperity and wealth creation. In 2010 Professor Daniel Isenberg from Babson College published an article in the Harvard Business Review that helped to boost the awareness of the concept. The diagram below shows the nine major elements that are considered important to the generation of an entrepreneurial ecosystem. The focus of this first SEAANZ White Paper is on the role of government policy. Future White Papers will deal with the other eight elements. Isenberg outlined several “prescriptions” for the creation of an entrepreneurial ecosystem. The first prescription was to stop emulating Silicon Valley. Despite its success the Valley was formed by a unique set of circumstances and any attempt to replicate it in other places were unlikely to succeed. This led to a second prescription, which was to build the ecosystem on local conditions. Grow existing industries and build on their foundations, skills and capabilities rather than attempting to launch high-tech industries from scratch. The third prescription was the importance of engaging the private sector from the start. Here the role of government is indirect and one of a facilitator not a manager. In trying to shape the growth of such ecosystems attention should be given to the support of firms with high growth potential that can help to generate a “big win” early on. This is the opportunity for local success stories to become role models for others. However, care must be taken by governments not to try to pick winners or over engineer the system. High growth firms by nature are inherently risky and highly innovative firms are typically unique. As such there is no magic formula for their success. Helping such firms to succeed is more about removing obstacles to their growth such as anti-competitive cultures, unfair taxation on small firms, unnecessary “red tape” or lack of access to markets, skilled employees or investment capital. In seeking to help stimulate entrepreneurial high growth firms it is important, according to Isenberg, to avoid flooding the system with too much “easy money”. This can take the form of government grants and venture capital funds that are too easily obtained. What is important is to grow firms with strong root systems that can sustain their own growth as much as possible before seeking additional funding. Such firms should be financially sound; profitable and well managed, or their likely success rates will be low. The focus should be on encouraging sustainable, growth oriented and innovative firms not simply fostering more start-ups. Starting a new business is the easy part, successfully growing it is the challenge. What can government do to stimulate entrepreneurial ecosystems? The challenge for government policy is to develop policies that work, but avoid the temptation to try to effect change via direct intervention. A 2014 study of entrepreneurial ecosystems undertaken by Colin Mason from the University of Glasgow and Ross Brown from the University of St Andrews for the OECD, developed a set of general principles for government policy in the relation to these ecosystems. They contrast “traditional” versus “growth-oriented” policy approaches to enterprise development. The first of these approaches tends to focus on trying to grow the total number of firms via business start-up programs, venture capital financing and investment in R&D or technology transfer. This is a “pick the winner model” and can also include business or technology incubators, grants, tax incentives and support programs. Such programs are essentially transactional in nature. It is not that they are of no value, but they cannot guarantee success via such direct intervention. A “growth oriented” approach is more relational in nature. This focuses on the entrepreneurial leadership of these growth firms. It seeks to understand their networks and how to foster the expansion of such networks at the local, national and international level. The most important thing is the strategic intent of the team running the business. Firms seeking to grow need to be given help in linking up with customers, suppliers and other “actors” within the ecosystem who can provide resources. Government ministers can play a critical role in fostering enterprise and innovation. Their role is to direct the government departments and agencies to focus on the problem and develop effective policies. A minister who has a good understanding of what entrepreneurial ecosystems are, how they form and the role and limitations of government policy is well-placed to generate more effective outcomes. Key recommendations for government policy In summary, key recommendations for government policy in the fostering of entrepreneurial ecosystems are: Make the formation of entrepreneurial activity a government priority - The formulation of effective policy for entrepreneurial ecosystems requires the active involvement of Government Ministers working with senior public servants who act as ‘institutional entrepreneurs’ to shape and empower policies and programs. Ensure that government policy is broadly focused - Policy should be developed that is holistic and encompasses all components of the ecosystem rather than seeking to ‘cherry pick’ areas of special interest. Allow for natural growth not top-down solutions - Build from existing industries that have formed naturally within the region or country rather than seeking to generate new industries from green field sites. Ensure all industry sectors are considered not just high-tech - Encourage growth across all industry sectors including low, mid and high-tech firms. Provide leadership but delegate responsibility and ownership - Adopt a ‘top-down’ and ‘bottom-up’ approach devolving responsibility to local and regional authorities. Develop policy that addresses the needs of both the business and its management team - Recognise that small business policy is ‘transactional’ while entrepreneurship policy is ‘relational’ in nature. For more reading see: Mazzarol, T. (2014) Growing and sustaining entrepreneurial ecosystems: What they are and the role of government policy, White Paper WP01-2014, Small Enterprise Association of Australia and New Zealand (SEAANZ). Note: Tim Mazzarol is President of the Small Enterprise Association of Australia and New Zealand Ltd (SEAANZ). SEAANZ Ltd. is a not-for-profit organisation founded in 1987. It is dedicated to the advancement of research, education, policy and practice in small to medium enterprises. This article was originally published on The Conversation. Read the original article.
Publishing startup Tablo has launched an iOS and Android app in a bid to help people discover and follow authors on the platform with ease. The Tablo Reader app, available on both the iTunes and Google Play stores, allows users to browse books by scrolling through opening lines and synopses and swipe at their favourites to read more. Readers are also able to follow particular authors and see their works being written in the cloud. The aim is to allow writers to build up a fan base in a similar way to how musicians can create a large following on YouTube and then draw the attention of record labels and industry heavyweights. Ash Davies, founder and chief executive of Tablo, told StartupSmart the new app is a “big step forward” for the startup’s goal of helping authors share stories and connect with readers. “Authors now have a wonderful place to publish their work and readers have a never-ending library of the best up-and-coming books,” he says. “We’ve worked hard to create an experience where you can’t judge a book by its cover.” Davies says the app was developed in response to consumer demand, and he hopes it will mean the next generation of bestselling authors will be discovered on the platform. “We’ve always had a plan to enter the mobile space, but lately this has been pulled by our users,” he says. “The demand for a reading app from our users has been very, very high.” Tablo currently has around 20,000 authors from 130 countries using its platform to publish more than a million words a day. Davies says he could never have imagined when he first founded the startup in 2012 that it would be this successful. His advice to other entrepreneurs is to focus on their product because if they get the product right, then growth will come naturally. “The past few months have been extraordinary and not something I would have expected,” he says. “The thing that’s got Tablo to this stage is focusing relentlessly on our product and focusing on our users. In an early stage company there is a trend for people to focus on their pitch deck, partnerships, pitching and PR – but the thing that’s helped us is aiming to have the best publishing product in the world.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
I’ve always thought of myself as a pretty weird fit within corporate culture. Having never adhered very well to corporate dress codes, understood the reason for having a meeting to discuss a meeting or put the person who works the longest hours on a pedestal. It’s always been a little irregular for me to enjoy “office life”. A little over a year-and-a-half ago, I was working for a pseudo-government company when I decided it was time for a change. I interviewed for a marketing role within Melbourne startup ‘BugHerd’. Attending the interview in my usual corporate regalia, a grey suit skirt and shirt, I prepped with answers to the “usual” interview questions. “Why my greatest weakness would have to be that sometimes I pay too much attention to detail” (barf). I realised I wasn’t in Kansas anymore. The people in the office played loud music, they wore t-shirts and jeans, they talked to each other in casual tones and there weren’t any partitions, cubicles or meeting rooms in sight. My interviewers didn’t ask me the usual questions I’d prepped for and instead told me a little about the history of the company. What they’d been working on, what they were looking for and, most importantly, they wanted to know about me. Not about my “top 5 Marketing Strategies” but about what kind of person I was. (Of course we eventually covered my skill-set but not in the first interview). It was really refreshing and I knew immediately I wanted to be a part of it, even though I knew nothing about startups, little about the tech industry and even less about web development. However, I was technically proficient in digital marketing, had a good background in traditional marketing and have always had a roll-up-my-sleeves and ‘get shit done’ mentality. I got the job and started nice and fresh, waltzing in incredibly eager to make a big difference. I had a lot to learn. Other than the obvious differences between corporate and startup culture such as the lack of dress code, the plethora of beard styles and the casual working environment (thumbs up to all these things). I started to realise that I had to adapt my style of working, quickly. Things can change on a dime in less than 24 hours flat. I’d never heard of the term ‘pivot’ before but it sure makes sense in the startup world. You need to be able to adapt and move on as fast as you can. It was the first time my Google Analytics code was stripped from the site during the middle of a campaign that I was confronted with one of the challenges of the ever-changing nature of a startup. “That’s going to affect how I prove ROI?!” I would cry. I had to come to terms with, unlike in the corporate world, there being no “chains of command” or “hierarchy of reporting” in a startup and often the only person really interested in your very important reporting and analytics is you. Losing my data was the least of my troubles, it merely pointed to missing processes and protocols that I had the opportunity to implement along the way. Processes you can sometimes take for granted when you work with a corporate company. Marketers who can look to Brand Guidelines or Communications Strategies for guidance or have wonderful procedure manuals to turn to should be pretty thankful these documents exist. I’m thrilled to help create such resources, but will never again look the proverbial horse in the mouth for having them in the first place. Startup marketing can be lonely. Going from a marketing team to one person is challenging. Marketing folks are often outgoing, type-A kind of people who love to have a chin wag about what they’re doing with the rest of the marketing team. This is a luxury busy devs scarcely have time or inclination for, unless it’s within the realm of real time messaging services such as Hipchat or Slack. It can get very loud in a chat room (usually sharing amusing cat gifs) whilst you can hear a pin drop in the office. The blessing with such a small and accessible team is you can gain insight from people with whom you’d not normally have access to within the corporate world. It’s not often that marketing would have access to the IT team on a daily basis. In startup culture the term ‘marketing’ is oft referred to as ‘growth hacking’ (I don’t love the term). You’re looking for opportunities to grow the company as quickly and efficiently as possible. Scalability is key and it often feels like you’re in a constant state of test and learn, learn and test. A lack of historical data existing and having to rely on information such as peer recommendation or gut feelings can be very exciting though incredibly daunting at first. So many articles I’ve seen on Growth Hackers bang on about quick wins, constant iterating, testing and quick hacks. Though it’s so rewarding to get that first data in yourself and being optimising. I’m not proud to admit it, but in big corporate companies it’s sometimes easy to get away with being a bit slack. Depending on your career level (though I’ve known plenty of managers with questionable work outputs) you’re possibly just one tiny cog in a big machine. Despite the clichéd image of startup employees sitting around playing Nintendo all day, there really isn’t anywhere to hide. People without the aforementioned ‘get shit done’ attitude won’t go much further than the door. If you slack off, it’s noticed. Comparing the realm of corporate culture to venture into startup land is like comparing apples and Winnebagos. I do wonder if I’ll ever make it back to the land of the corporate and be able to hold down my job. Chanie Hyde is the marketing manager at Macropod. This piece was originally published on Medium. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Two of Scotland’s leading politicians illustrate an interesting phenomenon on Twitter. In the wake of the Scottish National Party’s surge in popularity following the independence referendum, Nicola Sturgeon and Alex Salmond have both gained large numbers of followers. Both have now amassed more than 100,000 each, with Salmond out in front with about 139,000. A high proportion of them are fakes, however. These fakes might be what social media specialists call “sock puppets” – fake accounts of individuals pretending to be someone else. These online imposters often follow celebrities to make themselves look more authentic, along with other tricks that include constant automated re-tweeting and constantly following and un-following other users. What is the point of these sock puppets, you may be wondering. One obvious advantage is that they can be parcelled up and sold in batches to people and organisations seeking extra Twitter followers. Make me popular! Social media is one of the fastest-growing areas of marketing. One study in which I was involved concluded that there is indeed no such thing as negative publicity if Twitter is used effectively. Organisations and individuals realise that having a healthy social media following increases trust from prospective customers. You want everybody to know your business is popular. You can build a strong following by developing good content and relationships with other users, particularly those who will either help amplify your message or act upon it. This takes time, however, not to mention the human resources required to plan and engage with your following. So people are sometimes tempted to take shortcuts, including buying Twitter followers, retweets, Facebook likes or YouTube video views. You name it, it can be bought. Sometimes they might do it themselves; sometimes it might be the social media agency that manages their account, or even a sub-contractor. Nor does this cost a great deal. Visit some websites offering these services and you find that thousands of Twitter followers can be had for as little as £5. Such shortcuts certainly seem to be popular. Data from the Google AdWords keyword research tool shown below reveals that on average, more than 40,000 searches are conducted per month that use the keyword “buy twitter followers”. Is it worth it? If the followers are simply accounts that do not have any human interaction or just re-tweet everything that your account says, they are of very little value. A number of studies suggest that simply having a large number of followers does not indicate that you have an influential Twitter profile. What is more important is that viewers can see that the account has been recently updated and the content is not simply a monologue about the great things that the organisation offers. Twitter is a social platform and although there is room for sharing content, it is also about listening and engaging with others. If an account interacts and replies to its audience, it is usually much more useful and influential compared to an account with thousands of followers but does not tweet to them. A number of tools exist that can help people analyse the value of their Twitter profile. For instance Sprout Social looks at engagement and influence. Here’s what it makes of Alex Salmond (139,000 follows) compared to Salford Business School (2,000 follows): Salmond might have vastly more followers, but his account actually scores slightly lower than our business school. It is worth pointing out here that you would expect an account that has lots of fake followers to score badly on these metrics. Another good analysis tool is FollowerWonk. Here’s what it has to say about David Cameron, Nicola Sturgeon and Salmond: I’ve included the follower numbers for context, but you can see that criteria such as engagement, average followers per day, total tweets and average tweets per day are also used to show the success of an account’s performance. We can clearly see that Nicola Sturgeon is much more active compared to the other two accounts. David Cameron is still attracting more followers per day, however, which could be due to his high profile or because he is a more popular target for those celebrity-following sock puppets. It is worth adding that fake accounts are not something Twitter encourages, as its spamming rules make clear. Twitter wants to remove and suspend these accounts, partly because it could undermine its own advertising-based business model. This is backed up by advertising regulators such as the UK’s Committee of Advertising Practice, whose non-broadcast-advertising code requires that any paid social-media endorsements be declared to the consumer of that information. In short, purchasing fake Twitter followers is both a waste of money and considered spam. It is not about your number of followers but how engaged they are and how useful these are in pursuing your objectives. On the other hand just because an account is not behaving as expected by the norm – not tweeting, for example – it is not to say it is a fake. The vast majority of internet users are “lurkers” – interested to read content but don’t want to share their views. If you are one of these lurkers, beware. Your account might be suspended or blocked if you don’t change your image from an egg to your profile and you don’t attempt to engage with others! This article was originally published on The Conversation. Read the original article.
When technology, and the companies behind it, fails, the end can come in a number of different ways. A technology can be mercifully put down, as with Google’s failed hardware media player, the Nexus Q. Alternatively, a failing company can be bought and shut down, as in the case of the once famous personal digital assistant maker Palm, who were bought, and then shut down by HP. Failing companies can also enter a more indeterminate, zombie state where the company may still earn enough money to stay open, but the company itself, and the products they produce, will never again be a significant force in the technology landscape. Recognising a zombie company Recognising zombie companies and technology is relatively easy. Companies with a languishing share price that shareholders are clearly only holding onto because they hope the company will be bought, is one clear indicator. Blackberry’s shares for example, popped 30% on the rumour that Samsung was about to buy the beleagured mobile phone company. The shares crashed back to their original value after the company denied the reports. Twitter and Yahoo also both benefited from the suggestion by ex CEO Ross Levinsohn that they should merge. The fact that the market should respond to these types of rumours are clear signs that the companies have exhausted the option of developing their own products to continue making them relevant or competing against the market leaders. Discussions about the death of a company or technology Another indicator of a zombie company are the number of discussions that occur about whether the company/technology is actually dead or whether it will see a resurrection. This is being played out right now after Google’s announcement that its much maligned smart glasses were being pulled from public sale. Commentators are divided as to whether this signifies the complete death of the product or merely a pause before some form of re-launch. Google Glass has become a zombie product because even if it does survive, it will never have anything other than marginal interest. In another case, reviews of BlackBerry’s latest phone, the Passport have tried to imply that this will somehow reverse its fortunes. Others propose growth for the company through services rather than hardware. The key thing for zombie companies however is not to confuse the ability to stay in business with the fact that the business is actually viable. In the UK in 2013 for example, there were approximately 160,000 companies that were capable of staying afloat because they could pay the interest on their loans but had no way of ever being able to pay back the actual loans themselves. Companies like Twitter for example, who are as yet to make a profit from anything other than the selling of their shares, can keep going on their IPO proceeds and by convincing people to invest further on the basis that they will eventually make money. The interesting thing with Twitter is that there is the belief that it can still make money somehow, with the right management. There are increasing calls for the CEO Dick Costolo to resign even though it may simply be that there is no viable way for Twitter to make enough money from its social network. Zombie technologies Zombie technologies pose a greater problem than zombie companies because it covers everyone involved in that technology. Zombie technologies are interesting because they often result from over-hyped expectations about their significance leading to a gold-rush surge of companies trying to catch the early wave of expectation. Massive Open Online Courses (MOOCs) for example, were going to transform the higher education sector by offering high-quality, free, online courses to the world. Companies like Coursera are still going only because of the large amounts of money that they have raised from venture capitalists. Unfortunately, the higher education industry proved resilient to change and Coursera’s attempts to make money out of ongoing professional education is never going to realise the ambitions of their investors. The same outcome is true for other MOOC companies like Udacity and edX. Another topical zombie technology are crypto-currencies like Bitcoin. Bitcoin’s 80% fall in value since its peak in the past year has cemented its general failure to gain acceptance by governments, the financial sector and the public at large. This doesn’t mean the end of Bitcoin as there will be fringe uses for this technology supported by a core group of loyal fans. Its zombie state however will continue to be confused with a technology simply waiting for the right market opportunity to become the basis for the world’s future digital economy. Zombie companies present a real problem in that they lock in funds, and employees who could otherwise be working more productively within their own startups or other companies. Of course, eventually companies will stop trading, or be bought for their remaining assets, but that time may be surprisingly far into the future. This article was originally published on The Conversation. Read the original article.
With the recent acquisition by Facebook of voice-recognition company Wit.ai, all four major players in the post-PC market (Apple, Google, Microsoft and Facebook) now have a significant infrastructure for hands-free communication with your device. But what will that mean for our communication with our devices? Is voice just another method to talk to your computer, or are we on the cusp of a revolution in computer communication? How old is your keyboard, anyway? The humble computer mouse was created in the 1960s by engineer Doug Engelbart. The keyboard, through its ancestor the teleprinter, is even older, having been developed in the 1900s by mechanical engineer Charles Krum and connected to a video display terminal that owes its ancestry to a device developed in the 1930s. Despite the age of these devices, they still remain the main input devices for your personal computer on your desk or laptop. Sure, they have more buttons, or more colours, or higher resolution, but the basic input mechanism for the average home computer is the same now as it was in 1984 when the Macintosh became the first commercially available computer to provide a graphical user interface and mouse and keyboard input. Even the multi-touch screen, made famous by the iPhone and other devices in 2007, could be considered a direct descendant of the mouse, simply moving control of the pointer from an indirect method on your desk to a more direct method on the screen. But perhaps that is all about to change, with voice-recognition technology finally becoming important to the main players and other technology changing the way we interact with computers. Your voice is your password to a world of possibilities Like the mouse and keyboard, voice-recognition technology has been around for a number of years. Commercial voice-recognition software has been available for computers since the early 1990s. But it was only with the advent of technologies such as Apple’s Siri and Google’s Voice Search around 2010 that voice recognition became part of many people’s lives. Through a natural language, context-aware interface that is always connected to the Internet, technologies such as Siri allow users to address a vast range of needs while skipping touching their device altogether. Instead, they rely on their voice to set timers, check the weather, find movie times and even query where to hide a body. In 2014, Microsoft introduced Cortana, a Siri-like competitor, meaning that all three leading smartphone platforms had voice recognition. Also in 2014, Apple introduced the “Hey Siri” feature in iOS 8, allowing users to “hail” a smartphone from across the room (as long as it’s plugged in) and ask it a question without touching any buttons at all. Finally, in 2012 Google released Google Now, an extension to Google Voice Search that provides users with contextual information prior to them requesting it, such as providing traffic information as you leave the office or a list of good restaurants to eat at when you arrive in a new town. And it’s widely rumoured that both Google and Apple have plans for voice-recognition technology in their television products as well. While these solutions sometimes have a way to go (John Malkovich surely remains the only person in history to get Siri to correctly interpret “Linguica”), they present a starkly different view from the mouse-keyboard combination of old. It surely won’t be long before users can have a standard conversation with their device, talking it through a problem rather than frantically tapping the on-screen keyboard or clicking the mouse. Blending the digital and the physical world The revolution extends beyond our voice to other devices as well. It would appear that along with replacing old-fashioned input devices, output devices like the monitor are slowly being phased out. Earlier this year, before it acquired Wit.ai, Facebook made news for acquiring pioneering virtually reality company, Oculus VR for a staggering $US2.3 billion. The major product of Oculus VR is the Oculus Rift, a virtual reality headset that immerses you fully in a 3D virtual experience. Using positional sensors, the Oculus Rift can track your head movements to allow you to look around the environment. The device is still in development. Given the cost of the development kit at around $A400, it’s expected that the final product will retail for less than $A500, bringing virtual reality to the everyday consumer. Even if you don’t want full immersion, new output products are making it easier for us to step in and out of a digital world without needing a computer monitor. Google Glass, still in development but having been in beta for a number of years, provides a small display that you can view while wearing the glasses. Products such as the new Android Wear watches from Motorola and others, as well as the Pebble smartwatch and upcoming Apple Watch, provide us with small, customised views into the digital world. These can all put notifications, music control, sleep and activity monitoring and all the power of those voice-control systems literally at our fingertips, all without the need to use a full input or output device. Even in your car, Android Auto and Apple’s CarPlay provide a glanceable, touchscreen and voice-controlled interface to your smartphone to ensure you’re always connected to the cloud. Sensors everywhere Beyond these standard options, input devices and data-gathering devices are continuing to pop up in places that we don’t expect, making it easier to interact with your devices and control your digital world. At the Consumer Electronic Show (CES) this year, gadgets using Bluetooth Low Energy for communication with your home network abound, from a smart chair that helps you work out to a pot for your plants that monitors their vitals and allows you to apply water with a touch of a button. These add to items from the last year such as the connected toothbrush that monitors your brushing time and style and reports on how you’re doing and the Vessyl cup, a smart cup that can tell you the calorie and caffeine content of your beverages as well as keep track of your daily water intake. No longer are we tied to our keyboard and mouse to look up and record this data. Our devices will now do it for us automatically and let us know when something needs to be changed. This trend towards the Internet of Things has been brewing for a number of years, but if the CES is any indication, this year shows a real explosion in external input devices that collect data about us and feed it into the cloud. It will be interesting to see what the future brings. It could be argued that the new ways of communicating with your computer are already here, although just beginning. As the year progresses and these models mature, perhaps it won’t be long before we are speaking to our device using natural language while wearing a VR headset and being instantly alerted about the status of our plants and how much activity, sleep and caffeine we’ve had so far today. With all of these solutions, perhaps finally the old mouse and keyboard are looking mighty old-fashioned. This article was originally published on The Conversation. Read the original article.
Facebook has begun trials of its Facebook at Work service, a cloud-based platform that allows business to create social networks for staff, with the project led by an engineer who launched one of Sydney’s most successful startups. Development on the project is being led by Lars Rasmussen, who was the cofounder of a Sydney-based mapping startup called Where 2 Technologies that was subsequently acquired by Google and rebranded as Google Maps. After his success with Google Maps, Rasmussen went on to lead the development of Google’s ill-fated Google Wave project, which was intended as a real-time collaborative document editing platform. TechCrunch reports an app for Facebook at Work has appeared on the iTunes app store, with an Android version set to go live shortly and another version accessible through the Facebook’s website. News of the service first leaked in November last year. Facebook at Work will also give employees the option of either using a single login for both their work and personal accounts, or the ability to keep both separate. Facebook at Work is set to compete against collaboration platforms such as Microsoft’s Yammer. Microsoft announced it is combining its business-focused Lync video conferencing and instant messaging app with Skype to create a new package called Skype for Business late last year. This story originally appeared on SmartCompany.
THE NEWS WRAP: Founder of ShipYourEnemiesGlitter says site made five-figures in sales within 24 hours1:08PM | Wednesday, 14 January
The founder of ShipYourEnemiesGlitter, an Australian startup that took the internet by storm yesterday, says his website is for sale after turning over five figures in less than a day. Mathew Carpenter – who also founded the Bye Rupert web browser extension – took to Twitter to say he was willing to sell his website which allows people to send enemies glitter in the mail for $10. Everyone from The New York Times to Mashable ran stories on the startup after the website was featured on Product Hunt and Reddit. Carpenter claims the website received one million visits, 270,000 shares on social media and made six figures from glitter sales within one hour. ShipYourEnemiesGlitter with 1m visits, 270k social shares, $xx,xxx in sales, tonnes of people wanting to order. 24 hours old. For sale. — Mathew Carpenter (@matcarpenter) January 14, 2015 Facebook unveils Facebook At Work Facebook is making the leap into the enterprise market with the launch of its new Facebook At Work product. TechCrunch reports the platform will allow businesses to create their own social networks among employees in a manner that looks and operates just like standard Facebook. Facebook At Work is available on the iTunes and Google Play stores, and will also be accessible through the company’s main site. Employees can create separate accounts for the work accounts; however, they can then link this to their personal profile. Online education company Lynda raises $186 million Online education company Lynda.com has announced a $186 million capitals raise to accelerate acquisitions and new content initiatives. The capital raise was led by global investment firm TOG along with existing investors Accel Partners, Spectrum Equity and Meritech. Chief executive of Lynda, Eric Robison, said in a statement the investment was a “tremendous vote of confidence” in the company’s ability to empower people through learning. Lynda.com offers thousands of online classes and video tutorials to its users in English, French, German and Spanish. Overnight The Dow Jones Industrial Average is down 172.43 points, falling 0.98% to 17,441.25. The Australian dollar is currently trading at US82 cents. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Tax is back in the spotlight with coalition MPs and the Australia Institute talking about getting rid of some of the exemptions to the GST. There has also been a lot of talk about whether or not corporate Australia is paying their fair share of tax. Many big companies, including Apple and Google have been in the firing line because of the small amount of tax they pay on their Australian earnings. Some suggest that our corporate tax rate is too high and this creates a strong incentive for multinationals to shift taxable income to other countries. Lowering our corporate tax rate and shifting to taxes that target economic rent could help resolve structural problems with our tax system, create a more productive economy and reduce incentives for corporate tax dodging. Such a tax shift could be designed to be revenue neutral or to increase overall tax take. Even for many economists, economic rent is a slippery term that’s difficult to grasp. Economic rent is unearned income. This means that it has no clearly associated cost of production. Unearned income can be obtained in many different ways but is almost always derived from privileged access to something scarce. The market power that monopolies can employ to raise prices generates economic rent. A rise in land values beyond inflation generates economic rent for the owner (the “earned” income from real estate is the actual rent or value derived from the use of the land). Unearned income also comes from artificial scarcity created by government policy. Taxi licenses and poker machine licenses are clear examples. When a communication company uses a part of the electromagnetic spectrum for profit making, nobody else can use that wavelength. The auctioning of electromagnetic spectrum is an effective type of economic rent tax. The spectrum gets put to efficient use and the public is compensated for giving up a shared resource. The company then profits according to how well they use the resource rather than simply because they have a monopoly over it. There is bipartisan support for the auctioning of electromagnetic spectrum but the principle can be applied much more broadly. The same logic sits behind mineral resource rent taxes - such as the first incarnation of the now-abolished mining tax. When the international price of a resource goes up, those who own the resource (every Australian) receive little benefit. The benefit goes to the mining companies even though they have done nothing to facilitate those price rises and they don’t own the material whose price has risen. This is unearned income and could be taxed in order to return the income flows to the public. Most businesses in Australia would greatly benefit from a tax shift to economic rents with a commensurate reduction in company tax and the abolition of inefficient taxes such as stamp duties and insurance taxes. Vast sums of money that are currently directed towards rent seeking would be redirected into productive activity, generating employment and diversifying the economy. Boom and bust property cycles would be flattened due to reduced speculation and, as a result, the broader scale ups and downs of the business cycle would be somewhat moderated. While the 2010 Henry Tax Review recommended many rent-based taxes (including land tax, gambling taxes and a resource rent tax) as well as taxing environmental degradation, very few of the recommendations were endorsed, let alone implemented. The most significant of the recommendations that were implemented (even if somewhat half-heartedly), the carbon tax and the mining tax, have recently been repealed, primarily due to the inevitable backlash of the rent-seekers. The political hurdles to serious tax reform are very high. However, the consequences of not reforming the tax system are severe. Tax reform policies are easy prey for opportunistic political opponents. This is why we need some clear principles for tax reform that are clearly explained to the public. Liberal politicians should favour shifting taxes off productive business and onto economic rents and the exploitation of shared resources because such reforms target market failure and free up productive and sustainable businesses to flourish. Labor politicians too should approve of these principles because they reduce taxes on labour and shift them onto the rent seekers who contribute little to society. The inherently progressive nature of most rent taxes should also appeal to The Greens, the Labor left and the increasing number of others concerned about economic inequality. Our politicians will need courage to stand up to powerful individuals and groups who have an interest in maintaining the status quo. They can get that courage from the rest of us who stand to benefit from a taxation system that supports a more productive and sustainable economy. This article originally appeared at The Conversation. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
A Melbourne-based startup is looking to make it easy to create fun, visual polls to drive user engagement for businesses and publishers. Chant, a mobile-first app, launched a public beta version this month so users can put together opinion polls using images, Tweets and YouTube videos quickly and – most importantly – for free. Co-founder Matt Garrett told StartupSmart Chant is “a lot richer” than a simple text-based polling experience. “It’s not limited to the big publishers or your individual bloggers, it’s targeted to the whole market out there,” he says. “It’s about simple polls in a matter of minutes that look great and can be used across platforms.” Garrett says Chant is looking to rival – and eventually replace – the polling service Polar, which was recently acquired by Google. After being acquired by the tech giant, it was announced Polar would leave the market in mid-2015 and its team assigned to Google+. “Polar had some great successes and we think there is a gap in the market now,” Garrett says. “There are more complex systems out there, but there’s not anything else out there to rival Pollar and we definitely think we have some product features that will not only match it but add to the experience.” Online polling is potentially worth big money, with popular platform SurveyMonkey raising $250 million in equity financing last month – meaning the company is now valued at around $2 billion. As for Chant’s target market, Garrett says the startup will “definitely” have its sights set on tech companies and small businesses. “It’s really easy to create a graphic and visual poll to allow your users to give you responses around what products or features they might prefer,” he says. “Or, in sport, it would be which catch was better or who was best on field. And in a politics or news environment, I can think of a number of examples.” Garrett says the company has a lot of exciting ideas up its sleeve “for the longer roadmap”, but will initially focus on what works and what doesn’t. “We’ll just see what the new year brings. The next two months are about creating that buzz and seeing what the response is in the market and we’ll tailor our response from there.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Catch Group, Shoes of Prey and up to 50 other Australian online retailers’ intellectual property caught up in phishing net1:26AM | Wednesday, 7 January
Intellectual property belonging to more than 50 Australian online retailers, including top names such as Catch of the Day and Shoes of Prey, appears to have been hijacked as part of an online phishing scam. In January last year, popular footwear and accessories chain PeepToe Shoes, which was launched in 2007 by designer Nikki Hager, collapsed into administration. The company was subsequently liquidated by KordaMentha, with Hager joining Sydney-based fashion label Izoa and the Catch Group, parent company of popular online retailer Catch of the Day, purchasing its intellectual property. But a website later appeared at peeptoeshoes.com.au with the branding of another popular Australian retailer, Shoes of Prey. In a statement, a spokesperson from the Catch Group told SmartCompany the company still owns the PeepToe brand but has no association with peeptoeshoes.com.au. “The Catch Group bought the PeepToe brand and some of the stock after the company went into administration. The product is still marketed through Catch. Catch owns the peeptoe.com.au domain rather than peeptoeshoes.com.au so they have no association with this website,” the spokesperson says. Likewise, a spokesperson for Shoes of Prey says the retailer has no connection to Peeptoe Shoes and is investigating the matter. A link appearing on the bottom-right hand corner of peeptoeshoes.com.au links to a landing page on a website called Strawberry Bay, with a layout similar to the Shoes of Prey page, which asks users to hand over their email address in exchange for daily deals. A Google search reveals the Strawberry Bay website also has landing pages for more than 50 other Australian-based domain names, including names such as Boat Books, Gardening Central, Hobby World and Our Deals. Search engine optimisation expert Jim Stewart told SmartCompany it appears the brands of Australian online retailers are being used as part of a ‘phishing scam’, where the names and logos of legitimate businesses are used to fool people into handing over personal information. “I’d say someone is buying expired domain names and redirecting them to this Strawberry Bay site,” Stewart says. “It looks like they’re lining up expired domains, then redirecting people to a landing page at Strawberry Bay, grabbing an email address and then sending out spam.” Stewart says there are a number of steps businesses that find their intellectual property copied by scammers can take. “The first thing you need to do is know when it happens, and one way to do that is to use Google Alerts or other tools to find out when another website appears with your content,” Stewart says. “The other thing you can do to beat the spammers is to make sure your genuine website gets indexed first. The way to do that is to maintain Google webmaster tools.” “When you publish something on your website, search for it in Google, and if that page doesn’t appear, make sure you go into Webmaster tools and tell Google to index it.” “Also, if you find someone cloning your content at a .com.au top-level domain, after telling asking them to take it down, you should pursue legal action. But for other top-level domains it’s a lot more difficult.” However, intellectual property lawyer Steve White told SmartCompany businesses should weigh up legal costs before pursuing action against online scammers. “It appears there are multiple potential claims of misleading or deceptive conduct in breach of the Australian Consumer Law. The question is how much money you want to spend in defending your rights,” White says. “The remedy is to take legal action, but the costs are quite large. A successful party will receive costs, but not all costs.” This article originally appeared at SmartCompany.
Whether it’s to do with people’s privacy or physical safety, everyone seems to love talking about drones and other remotely piloted aircraft (RPAs). A government crackdown and layers of red tape make a great headline, but will Australia really see some of the world’s toughest drone regulations in 2015 as reported by Fairfax? Not likely, according to Peter Gibson – the spokesperson for the Civil Aviation and Safety Authority. “We have got a number of projects on the way at the moment relating to recreational and commercial drones,” he says. “One of those is something we foreshadowed last year, which is creating the sub-two kilogram category for remote controlled aircraft. We went out to consultation with that, however we haven’t made a final decision whether or not to go ahead.” A number of experts StartupSmart contacted were of the view CASA would deregulate drones under two kilograms for recreational use. Gibson says if changes relating to drones weighing less than two kilograms were to go ahead, they would likely be released in the first half of this year. However, he says overall 2015 will be the “consultation stage” for any major overhauls of the regulations surrounding RPAs. “We also have several projects underway looking at the rules covering recreational drones with a view to update those because they were written in 2002,” Gibson says. “We’re looking to update the rules to take into account new technology and the popularity now of drones. So we just need to look at how we can make the rules as relevant as possible to the current situation and as simple and easy to use as possible for the average drone user.” As for the commercial sector, Gibson says CASA is reviewing the rules relating to remotely piloted aircraft because they were written around 12 years ago. However, it is unlikely these changes will be completed in 2015. “The main focus is not making it tougher, it’s about making them across the board more relevant and up-to-date,” he says. “Right throughout the process of reviewing both the drones and RPA rules there will be consultation with relevant groups as well as public consultation before firm, final proposals are put forward. There will be the chance for everyone to have their say.” Francis Vierboom, founder of drone surveying startup Propeller Aerobotics, told StartupSmart remotely piloted aircraft will shake-up the construction industry. “We expect a huge part of the growth in this industry will be related to the under-two kilogram class,” he says. “It’s possible to do some really valuable work without going over two kilograms and that means companies will be able to start brining drones in-house because they are low-cost and there won’t be red tape if that class is deregulated.” As for speculation CASA will crack down on drones due to public safety concerns, Vierboom says some concerns are valid – however the focus should be on the good that drones can do for Australian industries. “A lot of the concerns around drones are around privacy,” he says. “Those are really valid but the big growth in drones isn’t going to be flying over people’s houses – it’s going to be on construction sites. That’s where the revolution will happen.” Matthew Sweeny, founder of world-first drone delivery startup Flirtey, told StartupSmart he hopes CASA will be proactive rather than reactive by promoting “forward-thinking regulation” that sparks innovation and creates jobs in Australia. “We're entering a drone age where this technology will have applications all around to give us new perspectives on life, as well as to save lives by conducting urgent medical deliveries,” he says. “Shutting down the Australian drone industry today would be akin to banning modems in the early days of the internet. Do you think Google would have brought its drones to Australia for testing if we had prohibitive regulations? Unreasonable regulations will stifle local innovation.” Sweeny says all around the world countries are moving towards more liberal regulations on remotely piloted aircraft, and he hopes Australia will follow suit. Follow StartupSmart on Facebook, Twitter, and LinkedIn.