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Start-ups Serving Start-ups

Who's really winning in the dot-com revival? Plus, a new eBay acquisition, how to hike prices, 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.

Move over, B2B. Services that are best-suited for the start-up boom, well, serve the start-up boom. The San Francisco Chronicle and Bloomberg report that companies such as Stack Exchange, which provides answers to programming questions, DotCloud, which simplifies app development, and New Relic, which makes apps run better, are finding a resurgence in funding, due to plentiful seed money and clients with lots of investment themselves. But is starting a company based on start-ups a risky strategy? "It's a mistake for a company to bet their business only on serving start-ups in the long term," says Lewis Cirne, CEO of New Relic, a Web company working to diversify after solely focusing on start-ups. He cited a "graveyard of companies" that tried the strategy before the last dot-com bubble burst.

When Google changes, so do businesses. For some small businesses, a change in Google's search algorithm can be a killer. Consider online ergonomic-products retailer Ergo In Demand. According to The Wall Street Journal, when Google changed its search algorithm, Ergo in Demand saw a 40 percent decline in sales, and was forced to "reduce its 17-person staff to five, moved to a 4,500-square-foot office space from one more than double in size and cut $4,000 in monthly software subscriptions." Ouch. But now, businesses are trying to find creative ways to circumvent Google's (sometimes seemingly arbitrary) modifications. Miles Young, who owns an online office-supply retailer in Atlanta, said that after Google's algorithm change, his company saw a 50 percent decrease in traffic.Not wanting to put all of their eggs (online marketing) into one basket (Google), some businsess are just looking to move away from Google altogether. "We're trying to figure out ways to grow the business without relying so much on Google," Young told the paper.

Small business struggles along the Gulf Coast. A year after the major oil spill from the Deepwater Horizon explosion, small business along the coasts of Louisiana, Mississippi, Alabama, and Florida, are seeing sustained declines in business. U.S. Census Bureau data shows that nearly 97 percent of the Gulf region's businesses have fewer than 20 employees. And that means the whole regional economy is suffering, Kelley Pace, a Louisiana State University finance professor, tells The Wall Street Journal: "Small business has a more pronounced effect on the economy here simply because there are few big corporate employers."

Yes, Facebook does make mistakes. And this is one of them. Yesterday some Facebook users woke up to an overwhelming amount of Facebook notifications in their inboxes. A few of those users made their complaints known on Facebook's "Known Issues" page: "really angry to see all that s--- in my inbox today and then to have to go carpal tunnel clicking EVERY SINGLE BOX opting out. FB- I am marking you as a spammer and every thing you ever send me from now on gets dumped into my email doo-doo heap," wrote one user. Facebook tells CNN that the problem was bug and that "a small number of people to start receiving notifications they had previously turned off. We have since resolved the issue and apologize for any inconvenience."

Your iPhone is tracking you. According to The Guardian, ever since the release of iOS 4 in June 2010, iPhones have been storing location data as well as the date and timing of it's movements. The data is accessible through software from a couple of security experts that discovered the location storing. Check out Washington, D.C., to New York from Alasdair Allan on Vimeo.

EBay buys location software firm. The Web auction site eBay agreed to acquire Where, a software company based in Boston that helps smartphone users find shops and restaurants. EBay intends for Where to become part of its PayPal payment service so that local retailers and customers can use PayPal to make transactions in real-time. More details at Boston.com, the website of The Boston Globe.

Succeed in price hiking without really trying. Raising prices can be tricky, considering how customers have plenty of ways to find a better bargain. New businesses tend to undercharge because they don't realize how much customers would be willing to pay for a product, but how can a company raise its prices without scaring away clientele? In a column for VentureBeat, Healy Jones, vice president of marketing for OfficeDrop, a document management solutions company based in Boston, offers four ways to raise prices while keeping customers from jumping ship. His bottom line? Stay positive, and never apologize.

Why you should be jealous of this Houston grandma. Because she got super Wi-fi and you didn't. FastCompany rubs it in our faces.

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Last updated: Apr 21, 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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