Trouble at the Twitter HQ?
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today.
Uh-oh. Is Twitter's leadership on the fritz? "There's no shortage of drama at Twitter these days," writes Fortune reporter Jessi Hempel in a fairly incendiary piece about Twitter today. "Besides the CEO shuffles, there are secret board meetings, executive power struggles, a plethora of coaches and consultants, and disgruntled founders." Hempel dives headfirst into the underbelly of the San Francisco-based company and finds that things aren't as rosy as their multi-billion dollar valuation might suggest. For example, Hempel notes that the day after co-founder Jack Dorsey announced his return to the company, Evan Williams quit his duties at the company, but stayed on as the largest shareholder. "All of this may explain why Twitter's numbers aren't looking so good," Hempel writes. "The problem is a board and top executive team that don't always appear to have control of its wide-ranging cast of characters...Twitter needs to get its act together or risk losing buzz, potential ad revenue, and its bright future too." The company does plan to release new features and ad products in the next few months, but one must wonder, if Hempel is right in her assessment of the company, will the new services be enough to keep the company afloat?
Plenty of available funding in 2011, but it's no 1999. As venture capitalists, angel investors, and entrepreneurs debate whether we're in the next start-up bubble, The Wall Street Journal points out that no matter how easy it is to get funding now, it's nowhere near 1999 pre-dot-com-bust levels. "Entrepreneurs and venture capitalists who were around more than a decade ago during the dot-com mania say fund-raising today requires meeting a higher bar—namely, a working product and some marketplace traction—than it did in the late 1990s," The Journal notes. "Then, a clever idea often was enough to attract investors."
Are you an annoying boss? Kelly and Marshall Goldsmith have an interesting post over at BNET on the ineffective habits of highly successful people. 'Successful people's confidence and optimism aren't always warranted, but that's what keeps them plunging ahead,' the authors observe. So what are the bad habits? First, because they win all the time, successful people tend to expect to win, which places an impossibly-high burden on the folks around them. Second, they are so used to adding value that they never let an opportunity pass to tell an employee how to improve upon an idea—often adding complexity and nuance to an initiative when simplicity may be preferable. Lastly, successful people have high standards, but often engage in the bad habit of criticizing others in public. You may think you are teaching; you may in fact be belittling.
Who should own shares of your start-up? How much, and how and when should ownership be allocated? It's an extremely daunting question, and former Inc. columnist Joel Spolsky provides an exhaustive—epic, really—answer on Stack Exchange's OnStartups answers site. He dubs it Joel's Totally Fair Method to Divide Up The Ownership of Any Startup. Simply, the founder should end up with about 50 percent of the company; the first real employees should share about 10 percent of the company, and each subsequent layer of hires (say, adding 20 employees in year two) would share another 10 percent. Spolsky's advice includes to not resolve paycheck inequalities, equipment or space gifts with shares (who knows how much they'll be worth, ever!). And, oh, if you don't work full-time on the company from the start, you're not a founder. How does that one rub you, loyal readers?
Business education not up to par. For a young adult entering college undecided, a business major has some serious appeal. Business is practical, it's mainstream, and it assures parents that they're not wasting thousands of dollars on an unemployable degree. Today, The New York Times revealed (in a collaboration with The Chronicle of Higher Education) another appealing reason to declare a business major: you don't have to work very hard. The most recent National Survey of Student Engagement revealed that "nearly half of seniors majoring in business say they spend fewer than 11 hours a week studying outside class." This alarms many in academia, as business majors have "the weakest gains during the first two years of college on a national test of writing and reasoning skills."
AmEx invests in mobile payments. With the potential successes of mobile payment tools such as Square and GoPayment, American Express is claiming its stake in the future of mobile commerce. According to The New York Times, American Express led a $19 million strategic funding round, along with two other companies, for Payfone, a mobile payment start-up based in New York City. Unlike other mobile payment tools, Payfone leverages the security of the mobile phone's network to authorize card and bank payments, which reduces the risk of fraud, chargebacks, and identity theft. Payfone will utilize American Express's new digital payments platform, Serve, which allows users to send or receive money from a bank account, debit or credit cards.
Call it the resentment network. Discovery Communications is launching a new network called "Velocity" that the Associated Press says is a channel for "rich guys and their toys" and is aimed at people making $150,000 annually. Discovery CEO David Zaslav is quoted in the story saying, "We just felt like this was a space missing in the marketplace." Given that Zaslav's 2010 pay package was valued at more than $40 million, I guess Velocity will be too downscale for him.
Positive signs on the economy. Two economic reports out yesterday are looking up. Job openings increased 14 percent to 3.1 million in February, according to the Bureau of Labor Statistics. Seeking Alpha covers the update, with some snazzy graphics. According to MarketWatch, sales at U.S. retailers rose 0.4 percent in March, but notes that it wasn't all rosy. The retail boost was largely due to higher gas prices, while the previous month, February, saw a 1.1 increase.
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