New Gold Rush in the Valley
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today.
Investing like it's 1999. If any of the very recent $40- or $50-million investments in tech buzzy-but-unproven start-ups have given you pause, have you found yourself thinking back to the last dot-com bubble? The Wall Street Journal reports that while venture capital investments rose for the first time in years in 2010, the first quarter of 2011 blows the first quarter of last year out of the water—with a 76 percent increase in VC spending. "Suddenly everyone wants to invest in Silicon Valley," says Bill Gurley, a partner at Benchmark Capital. "It's game-on all the time." As demand for private shares in tech companies also surges, it's springtime for buzzy start-ups who "are getting their pick of deep-pocketed backers," the Journal reports.
Start-ups' 10 most common legal blunders. Intellectual property expert Connie Bagley shares a list of the 10 mistakes entrepreneurs tend to make in New Business magazine, a publication of the Harvard Business School, where she is a professor. The rundown includes failing to incorporate in a timely fashion, issuing founder shares without vesting, moving slowly to protect IP overseas, and writing a hyperbolic business plan. Bagley encourages start-ups to invest in legal talent early on to avoid these trouble spots. "[H]ire a competent lawyer," she argues. "Excellent legal talent can be retained for relatively little money up front at the early stages. It will cost much less to get it right at the beginning than to try to sort it all out later and correct it."
A new chief at the table. CFOs and COOs, scooch over. The latest fashion in managerial officers is the chief customer officer, according to Harvard Business Review. In a column yesterday, Forrester Research analyst Paul Hagen predicted the rise of the CCO as a part of The HBR Insight Center's special section on Creating a Customer-Centered Organization. While Hagen shows some concern that such dedication to customer service is just a passing fad, the CCO might just be the next staple in the executive wardrobe.
Yahoo's bait-and-switch? In 2008, Yahoo announced the company would only keep search records for a limited period of time—about 90 days. Now, three years later, the company has changed its plans: it will keep search data for 18 months, angering many Internet privacy advocates and causing a stir in some digital circles. "Privacy advocates complain that the changes erode consumer privacy and amount to a flip-flop by Yahoo," notes The New York Times. "They suspect that Yahoo intends to use the information gleaned from search queries, along with details about the pages they view and the ads users click on, to present users with more focused advertising." For businesses, however, the move can be viewed positively. After all, more data leads to more targeted advertising, which, many advertisers claim, should benefit the consumers anyway. Still, there are those who disagree. "Frankly it was pretty disappointing," Richard Esguerra, a senior activist at the Electronic Frontier Foundation, told The Times.
Social networks are educational. High school and college students use social media like Facebook and Twitter to foster school and career connections (as well as to stay in touch with their friends), according to an Associated Press-Viacom poll covered here. The research also found four out of five of those who participated say web sites are an "excellent" or "good" way to interact with other students, while seven in 10 say so about getting information on class assignments or school events, or to form study groups and collaborate.
A second chance for a Myspace co-founder. Sometimes getting fired is a blessing in disguise. In 2009, Myspace CEO Chris DeWolfe got the boot from the very company he founded after it was acquired by News Corp. Today, according to DealBook, he's at the helm of one of the Internet's most promising gaming companies, MindJolt. With $20 million in revenue and 20 million users, DeWolfe is positioning MindJolt as a Zynga competitor, recently acquiring both the Social Gaming Network and Hallpass Media. Of the acquisitions, DeWolfe tells The New York Times, "The deals diversify us in a huge way, and it positions us very well for the future, in terms of the growth of the smartphone market." Meanwhile, DeWolfe says he's learned his lessons from Myspace's mistakes, the greatest of which he believes was the company's decision to sell to News Corp. and go public too early. "Facebook didn't have an arm tied behind their back. They didn't have the same pressure…Myspace prioritized revenue and profits over user experience," he says, noting that priorities at MindJolt will be different. "We are in no hurry with this one. We really want to get it right."
Twitter's new push. The San Francisco company is trying to put its recent management drama behind it and refocus on gaining new users. With more than 200 million registered accounts—but with less than half being active users—Twitter is trying to make it easier for new users to participate and find the news they want quicker by first highlighting tweets from people in their geographic region. The Wall Street Journal notes that Twitter is also potentially looking to purchase Tweetdeck for a reported $50 million.
Facebook offers resources for marketers. Facebook, arguably the largest online sharing ecosystem ever created, allows businesses to connect to their fan bases; however, many companies and ad agencies don't know how to effectively tap the full strength of the platform to maximize word-of-mouth sharing. For these companies, Facebook introduces "Facebook Studio," a resource for ad agencies that explains all of Facebook's marketing tools and describes how to employ them, Mashable reports. Described by the company as a "place to celebrate innovation, creativity, and effectiveness" on the platform, Facebook Studio showcases recent work with the most likes in its "Spotlight" section, and also features an agency directory, a section that details new product launches, trends, and resources, and a learning lab, which offers how-to videos to strengthen your brand's marketing strategy.
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