Detroit's New Innovation Engine
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today:
Patent (Office) Pending. In his State of the Union address last month, President Obama stressed the need for more innovation in business. How's this for a first step: Open a new patent office in Detroit. The New York Times reports the new patent office could relieve some of the inefficiencies of the current patent office, located in California, which has a huge backlog of pending patents. "The delays and inefficiencies are more than a nuisance for inventors," the Times notes. "Patentable ideas are the basis for many start-up companies and small businesses‚ patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses." David Kappos, who became the director of the Patent and Trademark office last year, commented on the sad state of the current patent office. If it had, the CEO would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits," he said.
The return of start-up valuation backlash. Facebook is worth more than Ford Motor Company, according to its $60 billion valuation. By contrast, Ford is valued at $55 billion. Armed with facts like that, there's a new wave of predictable backlash to start-up valuations coming out of the U.K. this week. Experts are forecasting yet another impending bubble burst in the vein of the 90s dot-com fiasco. Alan Patrick, co-founder of the technology consultancy firm Broadsight, tells The Guardian that "A bubble is defined by too much money chasing assets, greater production of those assets, than the need to find a greater fool to buy them." He lists 10 points that should indicate to investors and to the public at large that a bubble in any industry is imminent. It seems that hot start-up companies such as Quora, a questions-and answer-site that is now receiving acquisition offers for $330 million, have hit all 10 points. Are these companies worth their startling valuations?
A $500 million social-media IPO? While Facebook has yet to go public, the site's Chinese clone reportedly will. According to Reuters, via Yahoo News, Chinese social networking site Renren.com plans to go public in the United States, with hopes to raise about $500 million in its initial public offering. Founded in 2005, Renren, which means "everyone" in Chinese, is the most popular social networking site in China—since the government has blocked the use of Facebook—with more than 160 million users. Should Renren follow through with its IPO, it will be the first social networking site to go public in the United States, allowing investors to cash in on the social networking sector for the first time. Renren reports advertising revenues more than doubled in both 2009 and 2010.
A revolt against AOL? Tim Armstrong, the former Google executive, entrepreneur, and now CEO of AOL, has a bold plan to turn around the once mighty Internet company. He's been buying up media start-ups like Seed, TechCrunch, and the Huffington Post, and writing grand strategy memos. But over the past few days, two editors at Engadget, the popular blog founded by Jason Calacanis and owned by AOL since 2005, stepped down and took shots at their owners on the way out. "AOL has proved an unwilling partner in this site's evolution," wrote editor Paul Miller. "It doesn't take a veteran of the publishing world to realize that AOL has its heart in the wrong place with content."
Can you fire an employee over a Facebook rant? Probably, but it would be pretty tough, writes Curtis Smolar, a partner at Ropers Majeski Kohn & Bentley, for VentureBeat. He writes that while the legal line on the matter used to skew in favor of the employer protecting a company's private information, today the federal government counsels against restricting employee Internet chatter—even if it's potentially harmful—because doing so might violate a worker's free-speech rights. That's after a fascinating National Labor Relations Board case that Smolar explains yielded a settlement that could be groundbreaking for social media law. The lesson? If you have a social media policy, your attorney should be reading it.
Groupon heads to China. In the country with more than 450 million Internet users, it only makes sense for a company such as Groupon to move in. But The Wall Street Journal says the competition is fierce. There are now hundreds of domestic companies in China selling group discounts and adding Groupon to the mix could give those companies a run for its money. (Check out Inc.'s piece from last year on how Groupon handles copycats overseas.) While Groupon's Beijing office is currently hiring staff from finance to customer service, it will still need regulator approval before opening for business. And after its controversial Super Bowl commercial, it'll be interesting to see how smoothly the process will turn out.
Blogs: so 2005? A semi-recent Pew study by the Internet and American Life Project found that from 2006 to 2009, blogging among children ages 12 to 17 dropped by half, and in 2010, blogging among 18-to-33-year-olds dropped as well. The New York Times today points the finger at Facebook, writing that after blogging began its rapid ascension about 10 years ago, sites like Blogger and LiveJournal went unchallenged, until Facebook "reshaped consumer behavior with its all-purpose hub for posting everything social." Twitter apparently added to the upheaval. What do you think? Would you rather shout Long Live Blogs or just quietly move this conversation over to Facebook?
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CHRISTINE LAGORIO-CHAFKIN | Staff Writer | Senior Writer
Christine Lagorio-Chafkin is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is a senior writer at Inc.