How to Innovate and an E-Book Upstart Scores
BY Max Chafkin
If you're going to make a mess, make it a big one. That's the lesson Seattle entrepreneur and angel investor Andy Sack gives to his portfolio companies in regards to innovation. Specifically, rather than tinkering around with existing business models, Sack suggests that if you really want to create something new, then you must break with the traditional ways of doing things and make a full push to innovate. Or as he puts it, "If you're going to break the model, don't just break it a little." He cites the iPhone as an example of such a game-changer. Coincidentally, CNN's offbeat story of a yellow lobster found by fishermen in Massachusetts also manages to illustrate Sack's point, albeit in a weird kind of way. Thousands and thousands of lobsters are caught everyday, but not many of them make the front page of CNN's Web site. By being completely different, this lucky, yellow-tinged crustacean not only managed to make front-page news but he also found a way to avoid the lobster pot. Moral of the story: It pays to be different.
Scribd lands a big fish. In the race to be the leading e-book dealer, Scribd, would seem to be a significant disadvantage to e-commerce giant Amazon. It only has a few dozen employees, it was founded in 2007, and it's CEO is in his twenties. And yet, Scribd just struck a deal with publishing heavy Simon & Schuster, according to the New York Times. The website will sell 5,000 titles for the publisher, including books by Stephen King, Dan Brown, and Mary Higgens Clark. Scribd has been one of the standouts in the portfolio of Y Combinator, the investment fund cum business school that Inc. profiles in this month's cover story. Check it out, if you still haven't.
Another way to sell private company stock. The Wall Street Journal reports on SharesPost, "a kind of Craigslist for private company stock." The company allows owners of shares in private companies to offer their stock for sale in classified ads. The site has offers for shares of Facebook and Tesla motors. SharesPost is one of a handful of startups playing in this space. As Inc.'s Ryan McCarthy notes in a profile of another startup, SecondMarket, in this month's issue, "The IPO market has all but disappeared, and lofty merger and acquisition deals are unthinkable. So entrepreneurs, as well as their employees and investors, are left with few opportunities for unloading their stock."
Consumer confidence rates highest in nine months. For three months in a row, buyers have been feeling increasingly better about the state of the economy, Reuters reports. A Reuters survey pegs consumer confidence at the highest since the Lehman Brothers implosion last September, but that's not saying a whole lot. According to one analyst, "It's good news but not great news."
You've Got Acquisitions AOL is buying two startup media companies: Patch, which aims to create local news sites for small communities, and Going, a company that collects information on events for young people. AOL's new CEO Tim Armstrong told employees in a memo that the move is about adding "strength and talent to our local efforts." All Things D pegs the price at $10 million per company. Armstrong was the main backer of Patch and says in the memo that while the deal would have made him money, he is forgoing that profit and simply getting his money back in AOL shares.
New rules for toy makers Remember the Mattel toy recalls of 2007? Last year, Congress passed a law to guarantee that children's toys are free of lead and toxic chemicals. Sounds good, but as CNN Money reports small manufactures are crying foul about a provision that requires toys to carry a label detailing the manufacturing processes. Toy makers that don't manufacture their products in a single factory but instead assemble them from multiple sources are confused about how to comply with the new rules, which go into effect August 14.
Claim your Facebook identity! Or, you know, don't. Either way, we feel compelled to inform you that on Saturday at 12:00 am (that's just 12 short hours from now!) Facebook will let users sign up for customized addresses. So instead of having a web address that includes a long series of numbers, you can direct your friends to something like facebook.com/yourname. The Facebook blog has more. Valleywag points out that, given the widespread availability (since the mid-90s) of customized domain names, this is all kind of pointless.