Silicon Valley Smackdown
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today:
Larry Ellison takes Google to court. It's been a bad week for Google. Today, the Wall Street Journal reports that Oracle is suing the search company for copyright and patent infringement, casting "a legal cloud over the growing number of cellphones that use the Android operating system." The lawsuit alleges that the Android operating system improperly uses Java software owned by Sun Microsystems, which Oracle purchased earlier this year. The drama, which pits Oracle's brash founder Larry Ellison against Google CEO Eric Schmidt, is bad news for the growing number of app developers because "an Oracle injunction could block developers from building applications and shipments of Android phones," according to the article. Meanwhile, earlier this week Google's seeming walk-back on net neutrality (at least for the mobile Internet) caused start-ups to cry foul.
Meet the 16-year-old millionaire. Christian Owens is a humble British teen from Northamptonshire who's been computing since age 7. He's inspired by Steve Jobs, and has made nearly $2 million. How'd he do it? He set up a website at age 14 that sold bundles of neat Mac OS X applications for a limited time and for a tenth of their regular price, Gizmodo reports. It had almost a Groupon-esque word-of-mouth promotion, because if enough people purchased the bundle, a new app would be unlocked for everyone who purchased it. He also gave to charity. Anyway, Owens is now working on Branchr, a pay-per-click advertising company that has already made $800,000 in its first year. A star employee? Christian's 43-year-old mum, Alison.
Beating back the counterfeiters. They say that imitation is the sincerest form of flattery, but in the business world, you'd rather have your flattery in forms other than copycatting. That's the case for Vibram FiveFingers, an Italian company that started making "barefoot" shoes, the glove-like toe-separating running shoes that have become a health and fitness trend. While the company's revenue shot up from $430,000 in 2006 to $11 million last year, it costs the company $2,500 in legal fees to shut down each of more than 200 fake Vibram sites that have popped up all over the Web, CNN Money reports. "It's like Whack-a-Mole," says Georgia Shaw, a marketing associate at the company. "It's become a really huge problem, taking a lot of our time and energy." The company is working with Google to stifle the paid search ads for these knockoff sites and hiring an investigator to look into Chinese factories duplicating their brand. Here are some strategies for keeping tabs on the competition.
Mixing business with politics. Target's recent donation to a conservative gubernatorial candidate in Minnesota is damaging both its reputation and opportunities for growth. After the Supreme Court eliminated the ban on corporate election donations earlier this year, the AP reports that Target contributed $150,000 to back Republican Tom Emmer's campaign. Now, gay rights organizations, including Human Rights Campaign, are boycotting the corporation for supporting Emmer, who staunchly opposes gay marriage, and Target's plans to open two stores in San Francisco are in question. One San Francisco supervisor tells the AP, "It just illustrates their disconnect, I think, from a city that they would want to establish a successful business in," which she refers to as "the epicenter of the LGBT rights movement." Target is now in talks with HRC to negotiate an equal donation to "gay-friendly candidates."
How to craft a viral Web hit. Okay, if anyone knew how to do this 100 percent of the time they would have the Internet banging down their door with bribes and questions. But Jonah Peretti, an early employee of the Huffington Post and the founder of BuzzFeed, a site that aggregates viral content, reveals some strategies behind drawing stupidly humongous traffic, whether it's to your latest marketing campaign or pictures of your cat (via AllThingsD). One of Peretti's key bits of wisdom is to appeal to crazy people. "The web is ruled by maniacs like Perez Hilton, Ron Paul zealots, Apple fan boys, blog commenters, animal lovers, and other crazy people," one of Peretti's slides from a recent presentation explains. "Content is more viral if it helps people fully express their personality disorders."
Threadless goes retail. Although our feature story on Threadless a couple of years ago lauded the crowdsourced T-shirt company's business model of "no advertising, no professional designers, no sales force and no retail distribution," at least one part of that successful formula is beginning to change for the groundbreaking company. The Chicago Tribune reports that Threadless has quietly began testing sales of its t-shirts at 25 Nordstrom stores. CEO Tom Ryan tells the Tribune that it's one of many growth initiatives the company has underway, including a partnership announced last month with flip-flop maker Havaianas. Although the trial only began a couple of months ago, the Tribune points out that "it remains to be seen if Threadless can move into the traditional realm of retail while still keeping its loyal fan base." In case you missed our live chat on innovation with Threadless co-founder Jake Nickell, check it out here.
In other retail news... Small stores are bracing for what they're anticipating as another disappointing back-to-school shopping season, the Wall Street Journal reports. With reduced access to credit, it's difficult to stock up shelves with notebooks and gym shoes - 80 percent of small companies say they've been affected by the credit crunch. Meanwhile, Lee Jeans is trying something of an anti-shopping campaign to appeal to regular guys. The company is using Mike Rowe, the Discovery Channel star of "Dirty Jobs," in ads and on a microsite to promote its Lee Premium Select. The New York Times's Stuart Elliott writes: "The site, shopphobia.com, trades on traditional beliefs that men, as a Web page declares, "prefer running from an angry bear to shopping a storewide sale." So, wait. Are they supposed to shop for Lee jeans...or not?
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