Yelp’s Competition, Walmart’s Secret Weapon, and Crowdsourcing Employee Ideas

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MANAGEMENT

Rather than developing ideas through a traditional R&D model, some companies are taking a page out of Kickstarter’s playbook to give employees a say in future projects. “With internal crowdsourcing, employees get to pitch their ideas to managers and colleagues—and collectively decide which projects the company should pursue. Some organizations accomplish this by giving employees virtual money to ‘invest’ in the projects they think are worthy. The projects that attract the most interest are then funded with real money. …

“Canadian Nuclear Laboratories, an Ontario, Canada-based nuclear science and technology organization, is among those experimenting with crowdsourcing. ‘We wanted a simple way to inspire people’ and engage with them about their ideas, says Dana Hewit, CNL’s chief R&D operations officer. CNL worked with Cultivate Labs last year to set up a platform through which employees could submit ideas. Each project was limited to a request of $100,000 in funding. Within three weeks, CNL received 38 proposals.”

STARTUPS

Yelp has competition from a well-funded startup: “G2 operates a website where business customers can weigh in on a software vendor’s offering with reviews and ratings. It also offers a similar ratings and reviews service for other industry sectors, such as, law firms to marketing firms.

The seven-year-old company plans to make its global expansion a top priority this year, Abel said. Currently, 10 to 15 percent of the company’s more than $30 million in annual revenue comes from its customers overseas. And of this group of overseas customers, more than 80 percent are from Europe.

‘As we evaluated the different options to build a presence in EMEA (Europe, the Middle East and Africa), we always came back to the UK,’ Abel said. ‘London is an international tech hotspot, with great talent, and an ideal city to be based as a first stepping stone outside of the states.’”

A San Francisco-based company, BetterUp, offers one-on-one executive coaching through a mobile app: “BetterUp uses virtual coaching that’s optimized by artificial intelligence—periodic survey responses get analyzed for insight which is then given to the coaches to pass on to the clients—and supplemented with mini-lesson plans for practicing skills like negotiating conflict or managing stress. Between weekly video chats, employees can message and check in with their coaches.

“Already, some of the company’s more than 100 enterprise customers include Bay Area-based players like Airbnb, Instacart, Equinix, Symantec and Workday. … Customers buy in using a subscription model, purchasing a license for a certain number of employees, which includes unlimited coaching for a few hundred dollars per month. That’s similar to what many C-suite executives pay for a few hours. Christine Tao, co-founder of another San Francisco-based leadership coaching startup, Sounding Board, told TechCrunch that the price tag for a weekend of traditional executive coaching in the Bay Area is between $25,000 and $30,000.”

Walmart is using JetBlack, a money-losing personal-shopping service, to develop artificial intelligence that it hopes will help it compete with Amazon: “A few hundred shoppers in New York City pay $600 a year to order anything by text message except for fresh food. Members were invited by Walmart, or referred by current members, and need to have a doorman to join. Their orders go to Jetblack headquarters where dozens of agents sit at computers and field requests, from reordering diapers to making suggestions on high-end cribs, organic snacks and yoga attire. Couriers fetch the items and bring them back to a Manhattan delivery hub, where they are wrapped in black packaging and hand delivered, usually the same day.

“It’s a labor-intensive operation that loses money. But making money isn’t the goal, at least not right away. Walmart executives are betting the upstart becomes a powerful weapon in an escalating technological ground war with Amazon.com Inc., as the two companies battle over shoppers who are increasingly making all sorts of purchases online. Amazon reset the landscape with Prime, in which more than 100 million people globally get two-day delivery and other perks for $119 a year. Even though Walmart is bigger in sales overall, it is an underdog online, and it is fighting for a larger presence. Walmart is using Jetblack’s army of human agents to train an artificial intelligence system that could someday power an automated personal-shopping service, preparing Walmart for a time when the search bar disappears and more shopping is done through voice-activated devices, said Jetblack CEO Jenny Fleiss [a co-founder of Rent the Runway].”

REAL ESTATE

ZeroDown is betting on a business model that allows clients to live in the house they want to buy while they save up for the down payment: “To use ZeroDown, a qualifying client pays the company a $10,000 fee and chooses a house for sale. Then ZeroDown buys the home using funds borrowed from bank lenders. The client can move in right away and immediately begins making a monthly payment to ZeroDown in lieu of a mortgage. As the client makes those monthly payments, he or she builds up credit toward an eventual down payment.

“After two to five years, the client can cash out those credits—which after five years will typically equal nine percent of the home’s value, the company says. ZeroDown will add another five percent from the company’s own cash reserves for a total of 14 percent. That means the client only has to come up with six percent of the home’s value on his or her own to reach the 20 percent normally recommended for a down payment. At that point, the client secures a traditional mortgage and buys the home from ZeroDown. If a client ultimately decides not to buy the house, ZeroDown will refund up to nine percent of the home’s value.”

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IMMIGRATION

Falling coffee prices are one of the things driving Guatemalan migration: “From his wooden hut in the foothills of the Sierra Madre, Rodrigo Carrillo can see the product of his life savings: A vast green sea of coffee plants, sprouting red berries like tiny Christmas ornaments.

“Those plants once seemed a life-changing investment. Carrillo joined a cooperative that sells beans to Starbucks and several certified fair-trade organizations. In Guatemala’s fertile highlands, there was no faster way out of poverty than to supply American coffee drinkers. But in recent years, the price of coffee has crashed, leaving Carrillo, 48, with a choice to make. Last month, he pulled out a wrinkled map of the US-Mexico border and pointed to the spot on the edge of Arizona where he plans to cross with his five-year-old son.”

OXFORD STRATEGIC ADVISORY DEAL OF THE DAY  

Bird, a developer of a vehicle sharing platform, has acquired Scoot, an electric scooter and moped startup. The deal is for a reported $25 million.

PRIVATE EQUITY

Symphony Communication Services, a developer of a cloud-based workflow platform, raised $165 million from a group of private equity and private investors. Following this investment, the company is valued at $1.4 billion.

TECHNOLOGY

Starsky Robotics set out to lead the way in building self-driving commercial trucks, but formed a traditional trucking company along the way. “Starsky’s trucking business, which has been operating in secret for nearly two years alongside the company’s more public pursuit of developing autonomous vehicle technology, has hauled 2,200 loads for customers. The company has 36 regular trucks that only use human drivers to haul freight. It has three autonomous trucks that are driven and supported by a handful of test drivers. …

“The evolution over at Starsky illustrates the challenge that awaits the autonomous vehicle industry and the giant companies and startups operating within it. Even after engineers solve the complexity of building an AI-powered driver that’s better than a human, these companies must figure out the equally intricate task of operations.”

CANNABIS

Colorado passed a law allowing pot delivery services, but some dispensaries are not happy. “Some dispensary owners unable to afford their own drivers wanted third-party drivers included in the legislation immediately. Others didn’t want third-party delivery services allowed at all for fear they will lose a sizeable chunk of business to an Amazon-style takeover. Lawmakers compromised by allowing third-party drivers in the second year of the new law, as well as online ordering. …

“Tim Morgen, community relations manager for dispensary chain Bgood, told Westword that dispensaries have made an investment in the community by setting up brick-and-mortar stores. He said the new law could make some dispensaries no more than ‘fulfillment centers.’ ‘Your location doesn’t matter anymore by allowing delivery. If you’re taking orders through them, then they’re the store,’ he said. ‘They have all the information about you, and they have a relationship with you.’”

SUSTAINABILITY

Lego is trying to find a plant-based plastic that clicks: “The world’s biggest toy maker in 2012 pledged to find and start using sustainable alternatives to its raw materials by 2030. Realizing the scale of the challenge, it later invested $150 million to hire scientists and fund research and development. Lego has so far tested more than 200 combinations of materials, but just two percent of its products are made from plant-based plastic. The Danish company says it is still exploring several promising options, but finding the material to hit its target is proving difficult. ‘I wouldn’t stake my family on it, but we have to believe we will do it,’ says Tim Guy Brooks, Lego’s head of environmental responsibility. ‘We don’t set targets that we don’t put our weight behind.’”

A Vancouver store tried to shame customers who request plastic bags, but the move backfired: “Far from spurring customers to bring their own reusables, the plastic bags—variously emblazoned with ‘Dr. Toews’ Wart Ointment Wholesale,’ ‘Into the Weird Adult Video Emporium’ or ‘The Colon Care Co-op’—have become somewhat of a surprise hit.

“‘Some of the customers want to collect them because they love the idea of it,’ David Lee Kwen, the owner of the store, Vancouver’s East West Market, told The Guardian newspaper. The store began the campaign this month, printing up 1,000 bags with the eye-popping slogans. Shoppers who chose to use a plastic carrier would not only be charged five cents apiece, they would theoretically walk out onto the street with the cringeworthy messages for all the world to see. In smaller print, the bags revealed the true purpose of the campaign: ‘Avoid the shame. Bring a reusable bag.’”

And that’s what’s ahead.

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

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