Silicon Valley Discovers Profits, Why You Need a Glassdoor Strategy, and the Price of Pleasing Google

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MARKETING

The cost of staying atop Google’s search rankings keeps getting higher: “In the 13 years since [Lee Griffin] co-founded British price comparison website GoCompare, the 41-year-old has tried to keep his company at the top of search results, doing everything from using a ‘For Dummies’ guide in the early days to later hiring a team of engineers, marketers and mathematicians. That’s put him on the front lines of a battle challenging the dominance of Alphabet Inc.’s Google in the search marketwith regulators in the US and across Europe taking a closer look.

“Most of the sales at GoCompare, which helps customers find deals on everything from car and travel insurance to energy plans, come from Google searches, making its appearance at the top critical. With Googlewhose search market share is more than 80 percentfrequently changing its algorithms, buying ads has become the only way to ensure a top spot on a page. Companies like GoCompare have to outbid competitors for paid spots even when customers search for their brand name. ‘Google’s brought on as this thing that wanted to serve information to the world,’ Griffin said in an interview from the company’s offices in Newport, Wales. ‘But actually what it’s doing is to show you information that people have paid it to show you.’”

FINANCE

Despite a big investment from the Chernin Group, Exploding Kittens plans to keep using Kickstarter for both marketing and finance: “Launched in January 2015, Exploding Kittens holds the record for attracting the most backers for any project on Kickstarter, with over 200,000 people chipping in. The $8.7 million the company raised to fund the creation of its eponymous card game is among the 10 largest sums ever raised on Kickstarter for a single project. Founded by former Xbox designer Elan Lee and Matthew Inman, creator of popular online comic ‘The Oatmeal,’ the company started from the desire to make games that would get players away from TV screens and encourage in-person interactions. Exploding Kittens has since released three more games with a fourth slated for launch in November, and it has developed a popular mobile app. But the original game remains its most popular offering. The company says it has sold over eight million units to date, most of them its namesake product.”

HUMAN RESOURCES

Do you have a strategy for dealing with Glassdoor? You should: “I’ve seen companies respond exclusively to good reviews, thanking reviewers for their positive feedback. Don’t do this. It looks cozy and convenient. In fact, it undermines these good reviews, and some readers might even wonder if they’re legit or if they were strategically planted. What’s worse is when companies then roundly ignore the not-so-good reviews. That lack of communication can scream an unwillingness to listen to employees. Managers might say their doors are open, but the message online doesn’t align. The message you’re sending instead? The company is always right. That’s not a good look to show those who are considering working for your company or those who are wondering if they should stay. So, you don’t have to respond to every reviewonly the bad ones, or especially those anyhow. While the positive reviews can and should stand on their own, the negative ones are opportunities for you to inform, educate, gently set the record straight, maybe even apologize and otherwise manage your company’s reputation and communicate its values.”

In China, entrepreneurs are starting fewer businesses, and employees are less interested in working at startups: “The tacit promise for workers in the country’s notoriously relentless tech culture—put in the hours and get rich quick—no longer holds. For years, tech workers in China have accepted a schedule dubbed 996—9 a.m. to 9 p.m., six days a week, plus any overtime required—in return for wealth they’d watched so many before them gain. Many were willing to take meager wages, around $2,000 a month in Hu’s case. They’ve now discovered that such blind loyalty doesn’t always pay off. In March a horde of mostly anonymous Chinese programmers took to the code-sharing community GitHub to protest 996. They compiled a blacklist of companies known for not paying overtime and lodged formal complaints against their employers to local labor watchdogs. Their post went viral, garnering almost a quarter of a million followers.”

REGULATION

The Supreme Court declined to deliberate on whether Domino’s website should be accessible to handicapped people: “The decision not to hear the case is a loss for the company and a win for disability advocates, who have argued that if businesses do not have to maintain accessible sites, disabled people could be effectively shut out of substantial portions of the economy. … A panel of the 9th US Circuit Court of Appeals sided with [plaintiff Guillermo] Robles, writing that the ‘alleged inaccessibility of Domino’s website and app impedes access to the goods and services of its physical pizza franchises—which are places of public accommodation.’ Domino’s urged the Supreme Court to review the decision. By declining to do so, the court’s decision on Monday will leave the ruling in place, meaning Domino’s will have to fight Robles’ accessibility claims in court.”

TRADE

An impending 25 percent tariff on certain foods from Europe will punish wine retailer Jon-David Headrick’s niche business model: “Mr. Headrick … operates Jon-David Headrick Selections, which imports French wines exclusively, focusing on small family estates in the Loire Valley and other parts of northern France. When the tariffs go into effect on Oct. 18 … they will affect wines from those areas more than those from southern France. … Only wines below 14 percent alcohol will be taxed, which hits squarely in the cooler climate regions like Sancerre and Muscadet that make up Mr. Headrick’s portfolio. 

“‘One of the ways I have been successful is keeping my head down and focusing on the Loire,’ said Mr. Headrick, whose portfolio includes excellent producers like Domaine Vacheron of Sancerre and Damien Laureau of Savennières. ‘This is coming back to bite me.’ … While he said it was possible that each link in the sales and distribution chain could sacrifice some of its margin, he would not be surprised to see retail prices rise 30 percent.”

FOOD AND BEVERAGE

Chefs are modernizing and diversifying restaurants known as “supper clubs”: “The old-timiness that was once the supper club’s allure—iceberg wedges, décor untouched since Eisenhower, ice-cream cocktails like pink squirrels for dessert, even in the polar depths of a Wisconsin winter—became its downfall. And yet, paradoxically, this very stasis could be its salvation in our accelerated age, as we exhaust ourselves with our unceasing appetite for novelty and the swiftness with which one pleasure is supplanted and erased by the next. In late June, the Minnesota-born chef JD Fratzke opened a modern edition of a supper club called Falls Landing off Highway 52, just south of the Twin Cities. A week later, in Chicago’s Fulton Market district, the avant-garde chef Grant Achatz unveiled the St. Clair Supper Club, a throwback to his youth in a small town of that name in eastern Michigan.”

STARTUPS

EpicHint is a training and staffing service for cannabis dispensary ‘budtenders’: “By [founder Adriana Herrera’s] own calculations, cannabis companies (including dispensaries and growers) will add roughly 300,000 jobs—most of them starting out at near-minimum-wage salaries of $16 per hour. Meanwhile, current training programs cost between $250 and $7,000. That disconnect led Herrera to hit on her current business model—selling an annual subscription software for brands and dispensaries that would offer a training program for would-be job applicants. The training would give dispensaries a leg up for experienced hires, increasing sales and ideally reducing turnover that costs the industry as much as $438 million.”

Ashton Kutcher-backed startup Neighborly says it won’t be able to pay its staff: “It sought to sell bonds in smaller increments than the typical $5,000 lots to make it more affordable for residents to invest in their communities. Cities like Cambridge, Massachusetts, used Neighborly to sell such deals. But the company ended up having a limited impact on the state and local debt market. It was only credited as senior manager on 12 municipal-bond transactions, and most of those were under $20 million, according to data compiled by Bloomberg. [CEO Jase] Wilson said in July that the company was moving away from municipal bonds as a focus and cutting 25 percent of its workforce.”

ENERGY

PG&E is cutting power to hundreds of thousands of California households and businesses in an effort to lower the threat of wildfires: “The bankrupt utility said it began implementing the first phase of what it calls public-safety power shut-offs shortly after midnight, affecting about 513,000 customers in 22 counties stretching from Marin, Sonoma and Napa, north of San Francisco, to the Sierra Nevada foothills. PG&E said the second phase of the shut-off would begin at noon to about 234,000 customers in seven more counties, including cities such as Oakland, Berkeley and San Jose. A third phase was being considered for 42,000 customers in Central California, the company said. With multiple people in many households, the blackouts could affect millions of people.”

SUSTAINABILITY

There’s a green revolution spreading across rooftops: “‘The focus has shifted from pretty to performance,’ explained Vanessa Keitges, the chief executive of Columbia Green Technologies, the firm behind more than 1,500 green roofs in North America, including Amazon’s headquarters in Seattle and the Zella Apartments there, which feature a deck with an herb garden, outdoor kitchen, dog run and plenty of seating. ‘We’re getting better at fine-tuning the plant palette so you don’t end up with a brown roof. We’ve moved to drip irrigation instead of spray. We’re designing systems that are much easier to maintain. We want them to be goof proof.’”

VENTURE CAPITAL 

IM Therapeutics, a developer of personalized medicines intended for autoimmune diseases, raised $10 million in a Series A round.

Papa, a provider of an elderly care management platform intended to connect college students to senior citizens, raised $10 million in a Series A round.

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SILICON VALLEY

Suddenly, after a few IPO disasters, Silicon Valley is talking about profits: “For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and startups are beginning to rethink that mantra and instead invoke turning a profit and generating ‘positive unit economics’ as their new priorities. The nascent change is being driven by the stumbles of some high-profile ‘unicorns’—the startups that were valued at $1 billion and above in the private markets—just as they reached the stock market. … For startups and investors that were used to heady times and big spending, that means it may be time for a reset.

“Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old ‘winter is coming’ email she had sent to startups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because ‘I worry about becoming the boy who cried wolf.’ Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the ‘gross margins’—a measure of profitability—for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by [Fred] Wilson’s cautionary blog post. They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said.”

And that’s what’s ahead.

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