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When Customers Revolt

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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:

A cautionary tale on pricing. We told you in July about a Needham, Massachusetts-based company called Grasshopper Group, which has expanded from a virtual phone-system company into a start-up incubator of sorts. Their first new spinoff Chargify, an online billing service, caught on quickly with a freemium model that allowed early start-ups to get the service for free. But yesterday, as TechCrunch reported, Chargify announced that it was moving from a freemium model to a premium one, in which the lowest price would be $99 a month. Not surprisingly, many a customer was outraged, prompting the company to quickly introduce a new $39 "bootstrapping" option for customers who had signed up before yesterday. Still, the company seems intent on forever doing away with the freemium model. "Moving away from freemium gets rid of freeloaders [and] bad customers," Grasshopper Group CEO Siamak Taghaddos wrote on Twitter, "so you can provide better products [and] support to good ones."

How does your state measure up? The Atlantic recently released their list of the best- and worst-performing state economies in America, and the results might surprise you. For example, despite California' well-publicized financial woes, it did not rank last on this year's list. That dubious honor goes to Kentucky, whose poor scores in GDP per capita, median household income, and a weak S&P rating all contributed to its lowly rating. The best-performing state according to the list is Wyoming, which ranked high in low debt per capita, low poverty rate, and the highest high school completion rate. So what exactly constitutes a well-run state? As the survey explains, "Ultimately, well-run states have a great deal in common with well-run companies: Books are kept balanced. Investment is prudent. Debt is sustainable. Innovation is prized. Workers are properly recruited and well-trained. Executives are chosen on the basis of merit."

Becoming an overseas mogul. Entrepreneurs, why stay local? The New York Times chronicles the story of Michael Simon, who, on a whim after receiving an MBA from Washington University, traveled abroad and ended up becoming one of Hungary's most successful software entrepreneurs. Simon's company, LogMeIn,  offers customers the ability to use one computer device to take control of another (and was a critical tool for Inc. staff during our work-from-home experiment. Based in Budapest, Simon employs about 400 workers. The article notes that Simon expects his company to earn revenues of up to $94 million this year, as well as how the risk of traveling abroad has paid off. "Technology heavyweights have long looked to Eastern Europe for skilled, lower-cost software talent to help out big projects," the article says.

A lesson in rebranding. Today's Vanity Fair has published a woeful obituary for Gap's new, now defunct logo. "The new Gap logo, which was unveiled last week to a chorus of caustic criticism, died yesterday at the age of one week," the story reads. "The logo passed after a brief and ignominious battle with stage IV banality." It's true, the new logo, which featured the word "Gap" in black print and a hint of its trademark blue box offset above the "p," is no more, thanks to public outcry. The company tried crowdsourcing a new design, but the crowd's overwhelming response was that the old logo had to return. And so, it has. The obit concludes, "The new Gap logo is survived by its antagonistic Twitter feed and a dozen 'failed branding strategies' slide shows, in which it will be archived in the annals of history. To heaven, the Helvetica now ascends."

How small businesses can care for the elderly. With the number of Americans 65 and older expected double to 70.3 million by 2030, businesses will need to become increasingly flexible with regard to elder care. The Los Angeles Times reports that currently only less than 10 percent of small companies offer elder care resources to employees beyond what's required by law. "The majority of families do the heavy lifting when it comes to elder care, so for business, small business in particular, this is a big problem," said Bunny Dybnis, director of professional services at a Los Angeles senior living home. In order to reduce this problem and the strain on employees, productivity, and costs, the Times offers a list of ways small companies can prepare for elder-care emergencies. It advises businesses to provide free information about caregiving assistance, offer paid leaves of absence that comply with state laws, train employees to fill in for employees in emergencies, and create flexible work arrangements for the whole staff. Given these resources, the Times says, businesses can prepare before a crisis even arises.

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Last updated: Oct 12, 2010




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