Blaming Private Equity, an Under-the-Radar Tech Startup, and a Social Media Case Study

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DAYLIGHT  

Tech startup Poll Everywhere found success without relying on buzz: “It built a nifty product, didn’t raise jillions in venture capital, and has attracted very little press over the past decade. Instead, it has simply focused on attracting customers such as McDonald’s, Google, Harvard, and Northeastern University.

“Using the company’s software, a presenter, for example, or a teacher could add a polling question to any PowerPoint presentation—‘What brand of mobile phone do you own?’—and the audience could respond by text. The slide would create a live chart as the answers came in. It ‘was a product that by its very nature spreads, because people in the audience have to use it,’ says co-founder Sean Eby. ‘As soon as somebody brings it up in a presentation, it would pique peoples’ interest.’

“[Chief executive Jeff] Vyduna recalls a moment in 2012 when they wondered what percentage of Fortune 500 companies were customers of Poll Everywhere. They did a quick search of their database and discovered that it was more than 60 percent. ‘It was a real moment to realize that a dinky team of about 15 people working out of my apartment could make something that so many industries and professions found useful,’ Vyduna says.”

INTELLECTUAL PROPERTY

Shannon McLaughlin used social media to call out a multibillion-dollar retailer for copycatting the design of her baby carriers: The founder and owner of Ubuntu Baba (total staff: 12) “posted a 2,000-word blog explaining how she felt South African retail giant Woolworths (2018 revenue: $5.5 billion) had copied the name, color scheme and design of her company’s signature baby carriers, and was selling them at a third of the price. …

“The carriers were pulled from Woolworths’ shelves almost immediately, but the situation was only resolved a month later, when Woolworths promised not to keep any profits from the sale of the carriers, give Ubuntu an undisclosed payout, donate a ‘large portion’ of the proceeds to support small business and implement intellectual property training across the company. … While it’s not the first time Woolworths has come under scrutiny … it is a stunning—and globally relevant—case study in the power of social media in the court of public opinion. …

“[McLaughlin’s] also the first to admit that her business has benefited from the saga, with sales of the $100 carriers continuing to grow and her brand becoming ‘a household name.’ But it ‘really pisses [her] off’ when people tell her she’s lucky Woolies chose her brand. ‘We had a real business before this all happened. There’s a reason Woolies copied us.’”

MARKETING

Loyalty programs are pivoting and enabling more social media campaigns: “Experience-based loyalty programs have an additional follow-on effect beyond just loyalty and repeat purchasing: the creation of organic influencers. It’s part of the reason why Reebok awards customers who share their brand experiences on social media with loyalty points; in turn, these posts can be shared by the brand to generate an additional marketing lift to new customers.

“‘We know that the addition of user-generated content significantly increases conversion because it helps people to understand the product,’ said Blonder. ‘The intention, of course, is to make the experience that much more real for a consumer—it’s critical for consumer understanding how a particular product can extend into her lifestyle.’”

HUMAN RESOURCES

The US Supreme Court is going to rule on whether the rights of gay and transgender people are protected in the workplace: “Lower courts have differed sharply on whether the 1964 Civil Rights Act, which prohibits sex discrimination, necessarily covers sexual orientation or gender identity. Congress, unlike some two dozen states, hasn’t explicitly added those classifications to federal anti-discrimination laws. The court’s calendar all but ensures decisions will come in the late spring or early summer of 2020, injecting a significant social issue—and likely the makeup of the Supreme Court itself—into the presidential election season.”

Two Google employees who helped organize the 2018 walkout as a protest to the company’s handling of sexual harassment cases allege their company is retaliating against them. Meredith Whitaker of Google’s Open Research artificial intelligence project said, “Just after Google announced that it would disband its AI ethics council, I was informed my role would be changed dramatically. I’m told that to remain at the company I will have to abandon my work on AI ethics and the AI Now Institute, which I co-founded, and which has been doing rigorous and recognized work on these topics.”

STARTUPS

Founded six years ago by a 19-year-old dropout, Bolt, a startup based in Estonia, has become Uber’s most formidable challenger in Europe and Africa: “The company honed in on markets in Eastern Europe, the Baltics and Africa where Mr. Villig felt Uber wasn’t making a big effort.

“The company struggled until business in Africa began to grow. The continent now makes up about half of Bolt’s business. Today, Bolt operates in more than 100 cities and 30 countries. It opened in Sweden, Croatia and Finland in the past six months, and will soon be available in Russia. More than 25 million passengers have used Bolt to take a ride since it was rolled out.

Mr. Villig said raising money for Bolt had been difficult: He pulled together less than $5 million over the company’s first five years, while Uber has raised more than $24 billion. Then last year, investors including the carmaker Daimler and China’s Didi put $175 million into Bolt. It is now working on a new round of funding.”

Wing, owned by Google’s parent company, has the first approval to make drone deliveries: “The drone deliveries will be limited to parts of southwest Virginia, where Wing is already part of an FAA pilot program looking at how to integrate drones with society. The exact locations are still being determined. The drones can be operated only during the day, when the weather is clear enough that they can be seen, said Greg Martin, an FAA spokesman. They can’t fly above 400 feet (planes and helicopters typically fly above 500 feet). One drone pilot can remotely fly up to five machines, though it’s not clear if there’s a hard cap on the total number of drones allowed in the sky at one time.”

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SUSTAINABILITY

Meal kit services have a smaller carbon footprint than shopping for food at the grocery store, study finds. “The study, published Monday in the scientific journal Resources, Conservation and Recycling, examines the whole life cycle—from farm to garbage can—of meal kits and their grocery store equivalents, and finds that, on average, store meals produce 33 percent more greenhouse gas emissions than their equivalents from Blue Apron. Much of the reduced emissions stem from less food waste and a more streamlined supply chain, according to the study.”

ZACK AND GRANT’S DEAL OF THE DAY

Prismic Pharmaceuticals, a developer of prescription therapies designed to address pain and inflammation has been acquired by FSD Pharma, a diversified cannabis company for $17.5 million.”’ ‘This transaction symbolizes FSD Pharma’s vision of acquiring a platform company to advance research and development of FDA-approved applications of synthetic cannabinoids and other synergistic molecules,’ said FSD Pharma CEO Dr Raza Bokhari.”

PRIVATE EQUITY

Who’s to blame for the Hollywood writers strike? Could be the private equity firms that have been buying up the talent agencies: “The relationship between private-equity firms and the major talent agencies dates back at least to the last decade but escalated in 2010, when TPG Capital made an initial investment in Creative Artists Agency. That investment grew to $500 million and a majority stake. Within a few years, the parent company of WME, the other industry leader, sold a stake worth $200 million to Silver Lake Partners, another private equity fund. …

“‘Everyone was looking out and saying, ‘How do we grow the business?’ said Chris Bevilacqua, who headed Creative Artists’ sports media ventures unit in 2008 and 2009. ‘This agency business is a nice little business, but it’s not going to make everyone’s dreams come true. If we want to grow, we need to move our model from pure agency commissions and towards ownership.’ WME and Creative Artists would later use their cash stockpiles to invest in the production of movies and scripted series. The writers say the investments have put the agencies or their parent companies in the position of simultaneously negotiating on behalf of writers and hiring them, a dynamic that could hurt their pay.”

VENTURE CAPITAL  

An investor says the unit economics for electric scooter companies are much better than many realize: “So for the first year Bird used off-the-shelf scooters that weren’t really built for long-term commercial use. They lacked spare parts, they broke down more often than anybody would have liked and they had insufficient battery lives.

“Bird moved early to design its own scooters with the launch of the well-received Bird Zero scooters in September of last year. They had better performance, better handling and importantly better battery lives. They also were exclusive to Bird so they gave the company a competitive advantage. With 65 percent improvement in battery life, the unit economics improved dramatically and with longer-term between maintenance and lower theft rates it has been a huge boon to the company’s finances.”

THE ECONOMY

Should you be preparing for a recession? Steve Strauss, author of “The Small Business Bible,” will discuss at Gusto LIVE on Gusto’s Facebook page today at 6 pm ET/ 3:00 pm PT. Among other things, he’ll discuss how likely a 2020 recession is, which small businesses are most likely to be affected, and how businesses can prepare.

SPOTLIGHT

Thursday on SiriusXM 132’s Mind Your Business, we’ll be talking real-life, business-owner issues with three experts: Jay Goltz, Lou Mosca, and Gene Marks. We’ll talk about some of their own struggles with hiring, marketing and profitability, and we’ll talk about some tricky issues—like how owners decide what to pay themselves. But mostly we’ll take calls from listeners who have their own challenges to discuss. Give us a call when the show airs Thursday at 1:00 pm ET/10 PT: 844-942-7866.

And that’s what’s ahead.

Please send comments and suggestions to mattg@oxfordcenter.com and lfeldman@oxfordcenter.com.

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