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Is Your Start-up Lying to Itself?

Why cover-up culture is toxic. Plus, a favorable franchise forecast, hilarity ensues after the iPhone announcement, and the rest of the day's news.
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Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today:

Why cover-up culture is toxic to a start-up. Large hierarchical organizations, such as big corporations and governments, are known to actively conspire to brush errors under the rug and hide failures—so much so we take such behavior for granted, Steve Blank writes. But, allow such cover-up culture to plant itself at your start-up, and you're asking for failure. It's part of the philosophy that founders of a start-up need to do basically the opposite as executives of a large company. In this case that means encouraging openness, sharing failures, and plotting out lessons learned from mistakes. What's so hard about learning from the truth? Blank writes: "The first time I delivered bad news [to my board] I got my head handed to me," and was told to simply hide the bad stuff. Blank's advice today? Work with mentors and board members who know how to manage and deal with chaos, changing business plans, and encourage a "lessons-learned culture."

A Google search bug? You may want to check your AdWords account—you just might be overpaying. Some advertisers are beginning to notice a potential flaw in the Google ad system, whereby ads for companies offering cosmetic surgery services, for example, are popping up in searches for limousine services. In one instance, a dentist says he wasted about $3,000 because of the problem, which is known as "session-based" clicks. But before any hysteria lets out, it should be noted that plenty of advertisers haven't seen this problem affect their business at all. "The scope of the issue is unclear," the Wall Street Journal reports. A representative from Google claims this only happens very rarely.

The Facebubble Saga. All of you naysayers can rest assured that Facebook really is, in fact, a private company. According to a Wedbush analyst, if Facebook was currently a public company, it would be worth around $100 billion now, reports Business Insider. And newly rumored: fresh hires to Facebook are given the goal of attempting to turn the company into a trillion-dollar empire. It looks like analysts and Facebook execs are bullish on personal data stocks these days.

Fuel for franchises. The forecast looks favorable if you own or plan to start a franchise in 2011. Two new studies say franchises will have modest growth this year (2.5 percent), create 194,000 new jobs, and increase economic output by 4.7 percent, according to The Wall Street Journal. Some of the biggest gains are expected in the automotive, lodging, retail, and commsercial/personal services industries. Despite the positive forecast, franchisees surveyed by the International Franchise Association still say access to credit remains the biggest hurdle to success. "Without more consistent access to credit, franchisees can't grow," said Steve Caldeira, president and CEO of the International Franchise Association. "We're beginning to see some light at the end of the tunnel, but clearly again we have a long way to go."

Google launches online science fair for budding scientists. Do your little Bobby and Susie dazzle you with their science experiments and inventions? Well, now you can share their talents with the world through a Google-led initiative. From FastCompany.com: "The company launched Google Science Fair, the first global online science competition. It's open to full-time students ages 13 to 18, who are encouraged to use the panoply of Google products to record and share their work." Submissions will be judged by some high-profile scientists, including Vint Cerf, Google's chief Internet evangelist and one of the fathers of the Web, and National Geographic's explorer-in-residence, the geneticist Spencer Wells. The deadline for submissions is April 4. Fifteen finalists will attend the awards ceremony at Google headquarters in Mountain View, California, in July. It could be a breeding ground for the world's next generation of great inventors.

Pennies make dollars and ... There's plenty of Twitter buzz today (among it a nice FastCompany analysis of the company's ability to fight its WikiLeaks subpoena), not the least of which involves the fallout from rapper 50 Cent's penny stock hijinx. Was he channelling the spirit of the late Enron president Kenneth Lay on Monday when he took to Twitter to hype his penny stock holdings? According to Switched, the stocks from H&H Imports began the day with a 10 cent per-share value. At the closing bell, after a day's worth of tweeting and cheerleading by Fiddy, they were worth 39 cents—a 290 percent increase in value. Although there are no reports of the rapper dumping the stocks after their gain—the price tanked again the following day—he's drawing ire from critics due to his crude investment advice.

The iPhone liberated (by comedy). Just before yesterday's Verizon iPhone press conference started, Daily Show correspondent John Oliver stunned the room by jumping up and repeatedly screaming "F--- yeah! Thank you!" Now we know why. It was a reaction shot, edited into a hilarious segment on last night's show. You can also see how the show's comedy sausage gets made, via a spy shot of Oliver's notes grabbed by Dan Frommer at Business Insider.

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Last updated: Jan 12, 2011

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.




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