Facebook’s Fine, Fighting Disease With Data, A Founder’s Tips for Selling on Amazon

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DAYLIGHT  

Facebook expects to be fined up to $5 billion by the FTC: “It would also be a milestone for the FTC, whose biggest fine for a tech company was $22 million against Google in 2012 for misrepresenting how it used some online tracking tools. The agency, which is charged with overseeing deceptive and unfair business practices, is riding a wave of anti-tech sentiment as questions about how tech companies have contributed to misinformation, election meddling and data privacy problems have stacked up.”

TAXES

San Francisco is considering an IPO tax: “San Francisco Supervisor Gordon Mar is circulating a motion that, if approved by a majority of the county board, would place a payroll tax covering stock-based compensation on the November ballot. The proposal, a draft of which was obtained by Bloomberg, would impose a new cost, ‘for the privilege of engaging in business in the city,’ on companies that dole out equity to employees.”

TRANSPORTATION

Tesla has posted a first-quarter loss of $702 million: “‘We expected weak results, but Tesla’s revenue and profit misses were stunning,’ Vicki Bryan, chief executive of Bond Angle, a research firm, said in an email. ‘Revenue was soft, but spiking costs for obvious strategy missteps really drew blood at the bottom line.’”

Meanwhile, Ford is investing $500 million in a Tesla competitor: “Rivian, based in Plymouth, Michigan, plans to begin producing a pickup truck and a sport utility vehicle by the end of next year. Both will be powered by battery packs and are designed to be luxury vehicles that could appeal to many of the consumers drawn to Tesla and its upscale models. The retail giant Amazon led a $700 million investment in Rivian in February.”

E-COMMERCE

Jules Pieri is co-founder of The Grommet, an online marketplace that introduces novel consumer products (Fitbit, GoldieBlox, and SodaStream) to a community of consumers. Here’s her advice on selling on Amazon: Don’t! “You will have a more sustainable long-term business if you work with other retailers. They are all extremely aware that 50 percent of online searches start on Amazon, and the Prime customer base is growing by leaps and bounds.

“So if your product is available on Amazon, it is probably going to be the primary outlet. And then you are going to have three problems. One: It is not healthy to have one dominant customer in any business. Two: If you sell directly to Amazon you give up control of your pricing. And three: It opens up a neon-lit superhighway to counterfeiters and copycats. Having said that, if you choose to open up on Amazon, open your own marketplace. Never sell directly to Amazon.”

Here are some strategies that companies are using to sell on Amazon. For example: “More established brands have the resources to fund legitimate strategies and win on Amazon. For Tuft & Needle, success on Amazon can be boiled down to a few key tactics Kerr introduced to his team: Be creative in garnering customer reviews. Build a desirable brand off of Amazon at the same time you’re building an Amazon business. And use the competition’s successes and weaknesses to your advantage, by, for example, tracking the keywords on high-ranking products, then mining their negative reviews to find what Amazon customers are looking for and not getting elsewhere.”

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STARTUPS

Sonder, an Airbnb competitor, is close to completing an investment round that would value the company at $1 billion: “Like Airbnb, Sonder operates a platform for renting homes for short-term stays. Unlike Airbnb, Sonder takes possession of leases and maintains the properties on its marketplace, including furnishing them, according to Sonder’s website. The company also stocks items such as toiletries and provides clean bed sheets and towels. What began as an idea by one of the co-founders to make money while attending college in 2012 is now a business with roughly $100 million in annual revenue, according to people familiar with the matter.”

Livongo is fighting disease with data. The tech startup makes “a blood-glucose meter that’s used by 120,000 diabetes patients to instantly upload their blood sugar data to Livongo’s analytic engine. Livongo has also introduced a cellphone-enabled, cuff-to-cloud blood-pressure device for people with hypertension, as well as a wireless-enabled scale. … And, if Livongo’s users’ blood sugar tests outside normal parameters, they can expect a call or text within 90 seconds from a diabetes consultant to assess the situation and suggest next steps. …

“But the bigger idea animating Livongo is how it uses AI to continuously analyze its devices’ data, plus everything else the system knows about its patients. By doing so, it’s searching for patterns and discoveries across the population—potentially incredibly valuable insights—while delivering increasingly personalized advice. As Livongo agglomerates all that data, this feedback loop … refines such advice, and adjusts it as needed.”

BRANDING

Pax Labs, another vaping unicorn, has managed to raise capital and not get caught up in the negative press surrounding Juul (even though Juul was conceived at Pax Labs): “It’s obvious Pax is attempting to differentiate itself from its embattled vaping counterpart Juul by using language like, ‘the gold standard for safety,’ ‘a product that enhances many people’s lives’ and ‘establishing cannabis as a force of good.’”

HUMAN RESOURCES

After falling in love in while working in a West Virginia coal mine, Sue and Stanley Jennings started making wooden spoons and related kitchen utensils, forming Allegheny Treeware. In the 1990s, the business was booming, but the couple has had to cut back: “For a while in the early 2000s, the company employed 12 people…They added e-commerce, but now do just four craft shows a year. And their wholesale accounts have declined as some small retailers have gone out of business. Production is also a problem: Sue says West Virginia’s opioid crisis has made finding help next to impossible. ‘In 2016 we hired 32 people trying to fill one spot, and most averaged less than a week,’ she says. ‘Drugs was a lot of them.’”

ZACK AND GRANT’S DEAL OF THE DAY

MongoDB, a software support company for databases has acquired Realm, an app builder for $39 million. “It’s the kind of acquisition that makes a lot of sense from a tech perspective. Both companies are built on the premise that data is the center of application development, although they both come at it from a bit of a different angle.”

OBITUARY

Henry Bloch, founder of H&R Block, which became the world’s largest tax-services provider, died Tuesday at 96: “The business boomed in the mid-1950s as the Internal Revenue Service began discontinuing its free tax-preparation services, and the Bloch brothers began advertising their discount tax service in a local paper. … Starting in 1972, Henry Bloch began appearing in TV ads for his company—a rare step for a chief executive at the time. …

“Mr. Bloch, who conveyed a trustworthy Midwestern persona, spent 20 years as the public face of the company in those commercials, touting 17 reasons why taxpayers should trust H&R Block with their taxes. The ads typically ending with the catchphrase, ‘What can we find for you?’ … Mr. Bloch’s commercials proved so effective that other businesses hired him to star in their commercials. He hawked cars, airlines and hotels; he once jumped out of a suitcase in an ad for the Comfort Inn hotel chain.”

SPOTLIGHT

Reminder: Today on SiriusXM 132’s Mind Your Business, Loren will talk real-life, business-owner issues with three experts: Jay Goltz, Lou Mosca, and Gene Marks. They’ll talk about some of their own struggles with hiring, marketing and profitability, and they’ll talk about some tricky issues—like how owners decide what to pay themselves. But mostly They’ll take calls from listeners who have their own challenges to discuss at 844-942-7866. The show airs at 1:00 pm ET/10 PT.

And that’s what’s ahead.

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

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