That platform goes beyond commenting and moderation to also include community pages and other ways to highlight and monetize user generated content. Its customers include Hearst, Refinery29, Fox News and our corporate siblings at Engadget and AOL.com.
Shoval argued that these tools are particularly important as digital media businesses models are struggling — regardless of whether those publishers are focused on advertising, subscriptions or other business model, the key is to focus on loyal users rather than “random users that come in and disappear.
Spot.IM can make a big difference in this area by keeping users engaged, and by providing data to help publishers understanding the behavior and value of their users. In fact, Shoval said that for some publishers, a Spot.IM user will provide five times as much lifetime revenue as a non-Spot.IM user.
“We do believe it’s about better understanding: Who are our users, what do they want and how can we provide them with more value?” he added.
The company has now raised a total of $63 million, according to Crunchbase. The new funding was led by previous investor Insight Venture Partners with participation from Norma Investments (representing businessman Roman Abramovich), AltaIR Capital, Cerca and WGI Group (founded by Noah Goodhart, Jonah Goodhart and Mike Walrath).
Spot.IM is also announcing that it has appointed tech and media executive Itzik Ben-Bassat as president and as a member of its board of directors.
Jude Gomila, who previously sold his mobile advertising company Heyzap to RNTS Media, is taking on a new challenge — building a “knowledge base” that can fill in Wikipedia’s blind spots, particularly when it comes to emerging technologies and startups.
While Gomila is officially launching Golden today, it’s already full of content about things like the latest batch of Y Combinator startups and morphogenetic engineering. And it’s already raised $5 million from Andreessen Horowitz, Gigafund, Founders Fund, SV Angel, Liquid 2 Ventures/Joe Montana, plus a long list of individual angel investors including Gomila’s Heyzap co-founder Immad Akhund.
To state the obvious: Wikipedia is an incredibly useful website, but Gomila pointed out that notable companies and technologies like SV Angel, Benchling, Lisk and Urbit don’t currently have entries. Part of the problem is what he called Wikipedia’s “arbitrary notability threshold,” where pages are deleted for not being notable enough. (Full disclosure: This is also what happened year ago to the Wikipedia page about yours truly — which I swear I didn’t write myself.)
Perhaps that threshold made sense when Wikipedia was just getting started and the infrastructure costs were higher, but Gomila said it doesn’t make sense now. In determining what should be included in Golden, he said the “more fundamental” question is more about existence: “Does this company exist? Does Anthony Ha exist?” If so, there’s a good chance that it should have a page on Golden, at least eventually.
In his blog post outlining his vision for the site, Gomila wrote:
We live in an age of extreme niches, an age when validation and completeness is more important than notability. Our encyclopedia on Golden doesn’t have limited shelf space — we eventually want to map everything that exists. Special relativity was not notable to the general public the moment Einstein released his seminal paper, but certainly was later on — could this have been the kind of topic to be removed from the world’s canon if it was discovered today?
Gomila said he’s also bringing some new technologies and fresh approaches to the problem. Some of this is pretty straightforward, like allowing users to embed video, academic appears and other multimedia content onto Golden pages.
At the same time, he’s hoping to make it much easier to write and edit Golden pages. You do so in a WYSIWYG editor that doesn’t require you to know any HTML, and the site will help you with automated suggestions, for example pulling out author and title information when you’re adding a link to another site.
Gomila said that this will allow users to work much more quickly, so that “one hour spent on Golden is effectively 100 hours on other platforms.”
There’s also an emphasis on transparency, which includes features like “high resolution citations” (citations that make it extra clear which statement you’re trying to provide evidence for) and the fact that Golden account names are tied to your real identity — in other words, you’re supposed to edit pages under your own name. Gomila said the site backs this up with bot detection and “various protection mechanisms” designed to ensure that users aren’t pretending to be someone they’re not.
“I’m sure there will always be trolls up their usual tricks, but they will be on the losing side,” he told me.
If you think someone has added incorrect or misleading information to a page, you can flag it as an issue. Gomila suggested AI could also play a more editorial role by pointing out when someone is using language that’s biased or seems too close to marketing-speak.
“AI can have bias and humans can have bias,” he acknowledged, but he’s hoping that both elements working together can help Golden get closer to the truth. He added that “rather than us editorially changing things, our team will act like normal users” who can edit and flag issues.
Golden is available to users for free, without advertising. Gomila said his initial plan for making money is charging investment funds and large companies for a more sophisticated query tool.
Facebook’s social graph is aging, full of long-lost acquaintances and hometown friends you don’t care much about seeing in the News Feed any more. But Facebook is now testing a pivot away from its core identity of connecting you with existing friends so it can revitalize the social graph and keep people coming back. Facebook’s “Meet New Friends” lets you browse people from shared communities such as your school, workplace or city who’ve also opted in to the feature. It’s now in testing in a few markets before it’s rolled out more widely soon.
Meet New Friends could give people fresh pals to follow in their News Feed, or help recently registered users grow their network until they have access to enough content to keep them busy. And eventually, Facebook could layer on monetization features similar to dating apps where users pay to be shown more prominently to potential connections.
Fidji Simo, the head of Facebook’s main app, tells me Meet New Friends was based on emerging behaviors the company had spotted. “Developing relationships with people they didn’t already know is very different from the core use case of Facebook,” but she notes, “We’ve already seen that naturally happen in Groups, and Meet New Friends will make that a bit easier.”
When users open Meet New Friends, they pick the communities through which they’re open to meeting new friends. For now they choose between schools, employers and locations, but Facebook will eventually add Groups too. In that sense it works a bit like Facebook Dating, which rolls out to 14 new countries today and opens to dating friends with its new Secret Crush feature.
Algorithms will sort potential connections by who is most relevant, such as those with mutual friends or shared interests, but you won’t get “matched” where both users have to state their interest in the other. Instead, users can just browse profiles, and then either send people a friend request (which might feel a bit out of the blue), or send them a single text-only message to a recipient’s dedicated Meet New Friends chat inbox. They can’t message that same person again until they respond (to prevent spamming), and the text-only limitation ensures no unsavory photos get blasted around. If they do reply, the thread moves to Facebook Messenger.
Meet New Friends will pit Facebook against a range of other apps, from local-focused Meetup and Nextdoor to verticalized apps like Hey Vina for women only to dating-affiliated apps like Bumble BFF. But Facebook benefits from its ubiquity, so users can try Meet New Friends without feeling embarrassed by downloading an app just to make them less lonely.
For years, the mildly creepy People You May Know feature has been a cornerstone of Facebook’s growth strategy. But it’s still just about recreating your offline social graph online. As Facebook strives to become more meaningful to people’s lives, fostering new friendships could give people a fuzzy feeling about the giant corporation.
Cable television provider Altice USA has confirmed plans to pay $200 million for the millennial-focused, digitally-native news network Cheddar in all-cash, or all-cheddar, rather, deal. The price tag comes at a 25 percent premium to the media startup’s $160 million Series D valuation.
Jon Steinberg, the co-founder and chief executive officer of Cheddar and former president and chief operating officer of BuzzFeed, will become president of Altice News. Altice, an existing Cheddar investor, plans to leverage Cheddar’s broadcasts and CheddarU, a growing network of 1,600 screens on 600 college campuses, to expand its portfolio of news businesses.
“Our goal is to make Altice News a leader in local, business, national and international news everywhere,” Steinberg said in a statement. “The Altice team and Altice Way are as entrepreneurial as it gets with amazing markets, world-class local and international news, an amazing broadband network, and a soon to launch mobile offering.”
Cheddar declined to provide further comment.
Altice News, a new unit born out of the Cheddar acquisition, will include Cheddar, News 12 Networks and international and current affairs news network i24NEWS.
Founded in 2016, the New York-headquartered business operates its flagship business newscast on the trading floor of the New York Stock Exchange, as well as three other programs at its studio in New York’s Flatiron Building, WeWork Vine in Hollywood and the White House.
The company, dubbed the ‘CNBC of the internet,’ focuses on business news and the top headlines with 19 hours of programming per day. In a short time, the “fast-paced, young, non-partisan general and headline news network” has inked key partnerships to become widely available across platforms. Currently, its programs are viewable in 40 million homes on Sling TV, DirecTV NOW, Hulu, YouTube TV, Sony PlayStation Vue, Snapchat, fuboTV, Philo, Amazon, Twitch, Twitter, Facebook and 60 percent of smart TVs in the U.S. Cheddar attracts 400 million video views per month.
Cheddar had raised a total of $54.5 million in equity funding across four financings. Its investors include Lightspeed Venture Partners, Raine Ventures, Goldman Sachs, Liberty Global, Comcast Ventures, AT&T, Amazon, Antenna Group, Ribbit Capital, The New York Stock Exchange, Altice USA, 7 Global Capital, and Dentsu Ventures. Here’s a closer look at Cheddar’s funding history, per PitchBook:
February 2016 Series A: $3 million at a $15 million valuation
September 2016 Series B: $10 million | $40 million
May 2017 Series C: $19 million | $84 million
March 2018 Series D: $22.5 million | $160 million
The transaction is expected to close in the next two months.
“Cheddar has demonstrated an innovative approach to live news while building an engaged audience, solid followership and a strong brand,” Altice CEO Dexter Goei said in a statement. “As one of Cheddar’s early investors, we have enjoyed our partnership with Jon and admire the entrepreneurial spirit, energy and smart disruptive mentality that he brings to the news business.”
The deal represents a rare outcome for a digital media startup, a sector plagued by sudden shutdowns and slipping revenue figures. Mic, a similarly millennial-focused news outlet, laid off most of its staff last year before being acquired by Bustle for peanuts. The business was well-funded by venture capitalists, raising a total of $60 million before falling victim to Facebook’s 2017 algorithm change.
There’s more where that came from. Vice earlier this year confirmed plans to cut 250 jobs, BuzzFeed is laying off 15 percent of its staff and Verizon Media Group (TechCrunch’s parent company) laid off 10 percent of its workforce in January. Just this week Brit&Co, a digital media brand catering to young women, began laying off a majority of its staff after an M&A deal failed to come together at the last moment, according to Recode.
Glovo, the Spain-headquartered on-demand delivery app that has similarities to Postmates in the U.S., has raised $169 million (€150m) in Series D funding. Lakestar led the round alongside Drake, owner of global pizza franchise Papa John’s.
Idinvest Partners and Korelya Capital also participated, bringing total raised to approximately $322 million. The company last raised funding ten months ago: a $134 million Series C round from Seaya Ventures, Cathay Innovation and Rakuten Capital.
Founded in January 2015 by Oscar Pierre and Sacha Michaud, Glovo offers a ‘shop on your behalf’ app that promises to let you order anything locally on-demand and have it delivered “within minutes”. This includes food items — the company is known for its McDonald’s deliveries in Spain — and non-takeout food and other verticals, such as groceries and pharmaceuticals.
The fast-growing company claims more than 5.5 million unique users and 16,000 associated partners, and now operates in 124 cities across 21 countries, including EEMEA, LATAM, and most recently in Sub Saharian Africa.
The startup says it currently employs over 1,000 people globally, with over 400 people in its Barcelona HQ. A classic gig worker setup: Glovo has 35,000 active “Glovers” on its platform (that’s “self-employed” couriers, to you and me).
Glovo says it will use this injection of funding to bolster global growth, which has been dramatically picking up pace. CEO Oscar Pierre tells me the company launched in 18 new countries in 2018. There are also plans to further innovate around on-demand groceries, including creating “dark supermarkets” that operate alongside the app’s marketplace of local supermarket chains.
Explains Pierre: “Our Darkstores are urban micro-fulfillment centers located in central areas of a city. They allow us to fully control the value chain and offer the best UX, with a delivery of around 20 minutes. They are run 24 hours a day by Glovo employees whose role is to pick and pack customer orders and have them ready for when the courier arrives. We have launched the offering in Barcelona and Madrid so far and we are still learning and analyzing the results”.
In addition, Glovo will continue to throw more engineers and technology at the problem of optimising on-demand delivery. The company recently hired VP of engineering Mustafa Sezgin, who was an engineering leader at Uber prior to joining.
Pierre says tech is being developed to continue improving the efficiency of Glovo’s “delivery and dispatching capabilities to building a world-class mobile product that exposes everything in a city at the push of a button”. To support this, he intends to grow the tech and data team to over 300 engineers in the next 18 months.
“Today, more than 70 percent of our business is food, followed by groceries, courier and pharmacy,” adds Pierre. “Our vision is to make everything in a city instantly available through the app, and we want to expand into other areas beyond delivery (services, reservations, etc) soon”.
Communication is an important element in managing business of any type and size. How has it evolved through various generations and how it impacts your business?
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The Working Assemblybegan as a side hustle. Jolene Delisle and Lawrence O’Toole juggled full-time jobs while collaborating on projects for startup clients, and they eventually realized there was an opportunity to help companies with branding, marketing, andadvertising. In the past four years, TWA has grown from a team of two to a team of twenty in NYC’s Flatiron district. We spoke with Creative Director and Partner Jolene Delisle about their start, their new initiative 24-Hour Assembly—a branding program for minority and women founders, what makes an ideal TWA client, and why she’s excited about the new frontier of experiential and immersive branding.
On common founder mistakes:
“Clients often come to us and say, “I love the branding of this.” And we’re like, “Well, that’s not really your target. It doesn’t really make sense for you as a brand.” And I think it can be hard for founders to separate their own personal aesthetic from what is actually going to be most effective for their business.”
On TWA’s core values:
“There’s an opportunity when you start your own business to be able to pick your clients, and we started working with a lot of female-founded startups right away. Zola and TheSkimm are both led by women founders. We developed a natural passion for working with these types of companies. It helps that our team is also comprised of mostly women, which I think is really outside the norm. For us, we really focus on diversity and inclusivity. It’s a core tenet of our company and an integral part of the conversation.”
“TWA is great at collaborating, ideating, and executing brand identities. They have outstanding taste, beautiful design skills and understand the marketplace well.” Michael Wayne, LA, CEO, Kin
Below, you’ll find the rest of the founder reviews, the full interview, and more details like pricing and fee structures. This profile is part of our ongoing series coveringstartup brand designers and agencieswith whom founders love to work, based onthis surveyand our own research. The survey is open indefinitely, so please fill it out if you haven’t already.
Interview with TWA’s Creative Director and Founder Jolene Delisle
Yvonne Leow: Tell me a little bit about your backstory. What led you down this path of design and branding?
Jolene Delisle:So, I have more of a background in advertising and communications, and my founding partner, Lawrence, has a background in branding. In the beginning, we were both working full time, but we would collaborate on projects for startup clients. We eventually realized that there was a need to create branding elements before we could ever develop a marketing strategy so that became the impetus for starting Working Assembly
We’re a relatively new studio. We have about 20 people full time. We’re based in the Flatiron district in NYC. And we work with emerging and evolving brands. The emerging brands are startups. About 40% of our clients are early-stage companies that have either received some kind of angel investment or are pre-series A. Sometimes, founders come to us when they don’t even have a name yet, but they have a great idea and a core MVP. Other times, startups are growing very quickly, and we’ll build out their brand and create additional assets.
Banking used to be built on a simple economic premise: tuck money away from customers into deposit accounts that pay interest, and then lend that money back out as loans at a higher interest rate. Today though, the modern bank — much like the airline industry — thrives on fees tacked on to basic services. JP Morgan Chase made about $77.44 billion on interest income, but $50 billion on non-interest income (i.e. fees), according to MarketWatch.
As the pressure builds on banks to increase that income, consumers can be bamboozled into paying all kinds of fees they didn’t even know they were expected to pay.
That’s where Cushion comes in. The San Francisco-based fintech startup offers a consumer app that sucks in the transaction history from its users’ bank accounts, determines what fees have been assessed and then conducts negotiations on their behalf to get a refund. It’s designed to be incentive-aligned with consumers by only taking a commission on any returned cash.
The company has had early success so far, and (officially) announced today that it raised $2.8 million in seed capital from Afore Capital, which also invested in the company’s pre-seed round, as well as from 9Yards Capital, Flourish, Green Cow Venture Capital and Vestigo Ventures. Its original Form D filing indicated the firm was targeting $2.5 million, and its amended filing in February showed $2.8 million.
Why Cushion avoided Plaid in its early days
Founder Paul Kesserwani got the idea for Cushion after leaving his job at Twitter. While taking some time off to think about what he wanted to do next, he was helping his parents manage their bank accounts while they were traveling for work in Lebanon. Due to bank security policies, his parents weren’t able to login to their accounts from Lebanon, and eventually, they faced a mountain of banking fees as their accounts went unattended. As Kesserwani investigated, he turned to his own accounts, and realized he had also been paying fees to the tune of $400 that he had no memory of agreeing to.
That sparked the idea for Cushion, which he formed in late 2016, and he launched an alpha product built on Plaid, the well-known banking API platform. But he soon got kicked off the service for holding on to users’ credentials, which violated Plaid’s policies. Cushion uses the credentials to negotiate on your behalf by accessing the secure messaging systems available at many large banks, and so it is a critical feature to make the product work as intended.
Kesserwani decided to get around these restrictions by building out his own data plumbing to avoid using Plaid. “If we build our own infrastructure, then we can offer a whole suite of services that no one else can offer,” he explained to me. The new platform launched in early January 2018.
With the infrastructure, Cushion can now securely download a user’s transaction history, and also initiate and conduct requests for refunds and fee reductions directly with banks automatically.
Surprisingly, many banks are quite amenable to these negotiations. Kesserwani told me the story of a user who was driving around looking for a payday loan, ended up downloading Cushion, and “by dinner had $500 in her pocket.” The company said that more than $1 million of fees have been returned to customers since its founding.
Building personal financial (active) management
The personal financial management space has been a hot one, with market leaders like Mint and Credit Karma offering products that paint a picture of a user’s finances and directing users to sign up for credit card offers and other financial products as a business model.
Kesserwani sees a distinction between what those sorts of companies have done and what he wants to do with Cushion. “A lot of folks are focusing on very sexy problems like investing, but we feel that there are a lot of foundational problems” that no one is solving, he explained.
Rather than just offering a financial snapshot with some recommendations, he wants Cushion to be able to actively manage a user’s financial accounts to maximize their financial health. That might mean switching to a cheaper bank account offering with lower fees, or hypothetically, working with a utility company to change the deadline of a heating bill so that a user doesn’t need a payday loan to pay it in the first place.
“If we do our job properly, we are introducing this whole new concept of managing your finances for you,” Kesserwani explained. He believes that the enormous complexity of the U.S. consumer banking and financial world lends itself to more activist software intervention.
That mission is what attracted Emmalyn Shaw of Flourish Ventures, an economic resilience-focused firm spinout of the Omidyar Network that has raised $300 million in new capital and also merged in a $200 million existing portfolio. What attracted her to Cushion is the incentive alignment between the company and its users. It only makes money when its customers make money, unlike with advertising-driven products. Plus, it can democratize finance by making fee negotiations accessible to all.
Will banks continue to negotiate though?
Cushion says it already has “onboarded tens of thousands” of users on the platform. But what happens if millions of people use AI to reach out to their banks to get fee reductions? Eventually, won’t the banks stop negotiating and just give their AI interlocutors the middle finger?
Kesserwani appreciates that perspective, but repeatedly mentioned in our interview that banks face extremely high customer service costs in working with customers. He sees an opportunity for Cushion to potentially work directly with banks and offer them far more affordable mechanisms to interact with their customers.
Plus, the cost of acquiring a new banking customer is extreme, and Cushion could help direct customers to lower-fee banking accounts. Without the high marketing costs required to make such programs profitable, Cushion might be able to make lower fee accounts more viable for banks.
That trajectory is all in the future though. For now, the company is looking to hire more engineers and data scientists, and continue to build out its AI recommendations, hoping to one day turn its overly fee’d customers into freed customers.
Updated: This article was updated to reflect that Cushion didn’t literally rebuild Plaid, but simply built its infrastructure to avoid using the popular service.
How you respond to your customers is a good indicator of the long-term success of your business. And as more people shop online, this will entail addressing issues with eCommerce. This means making as many communication options as possible.
According to a report from Sykes, only 26% of eCommerce sites provide an email address. But almost half or 46% of consumers in the U.S. want to use email to resolve issues they might have. This data highlights the pain points customers face in resolving problems quickly.
If you don’t make yourself readily available on your site, customers will not enjoy their experience. And as data after data has shown, they will take their business elsewhere. In the U.S. 82% of consumers stop doing business with a brand because of customer service.
The report provides insights into the importance of offering options users prefer for communicating. Providing more options and making them available is critically important because more consumers are using them, and they now expect it.
So, What Customer Service Channels are Sites Offering?
Better to ask, how many communication channels are there, and how many clicks away are they from the home page?
The report says 98% of eCommerce sites have a phone number listed, but it is 1.23 clicks away from the homepage. The number of clicks goes up to 1.4 for the 26% of sites who have an email address. This is followed by 2.05 clicks for 73% of sites with a live web chat, and 2.44 clicks for 64% who use a web form.
The graph shows the number of clicks for each communication channel.
When it comes to using social media, 91% of sites have their Facebook and Twitter links on the home page. But the amount of time it takes for a business to respond on Facebook varies greatly.
Close to 10% respond instantly on Facebook and less than 5% said within minutes. Another 8% said within an hour, followed by 28% within hours and a little over 30% said within a day.
What do Consumers Want?
Sykes asked over 2,000 U.S. consumers which communication channel they would use if they have an issue while shopping online.
Phone and email took the top two spots with 51.7% and 46.2% respectively. The respondents said live web chat at 26.8%, web form at 27.2%, Facebook at 8.3%, and Twitter at 4.6%.
Here is what consumers prefer.
The demographics which responded to this question revealed older users prefer the phone and younger users like social media.
Another obvious question is, why are eCommerce sites not making their communications channels readily available?
The good news is the technologies are affordable and easy to deploy. And for small business owners, it is yet another way digital technology makes it possible to compete with large brands.
If you have an eCommerce site, ask your web developer about these communications options and make them easily accessible.
Research and Survey Methodology
Sykes researched the top 100 US eCommerce sites compiled from Similar Web’s 2018 Q1 Index and Alexa’s Top Shopping Sites. It then surveyed U.S. residents via Google Surveys in December 2018 and January 2019.
They were asked, “If you encountered a problem when shopping online, what methods of communication would you use to contact the store or retailer?”
The sites received a score based on each type of communication along with the response time.
Fabletics, the digital-first activewear brand founded by Kate Hudson, Adam Goldenberg and Don Ressler, has recently opened up a physical store in Soho as part of its 2019 expansion plans.
The company has plans to open up 12 new permanent retail stores over the course of this year alongside the Soho pop up shop, all of which will include a heavy tech element.
For one, Fabletics has built its own POS system that connects offline and online sales. The system, called OmniShop, allows Fabletics to track the conversion of every item that goes into a dressing room, by size color and style all the way down to each individual customer.
Co-CEO and cofounder Adam Goldenberg said that the company invested more than $150 million in OmniShop.
But the system doesn’t just make the product easier to buy; it actually informs the product itself. The system allows Fabletics to see when a certain size of a particular SKU isn’t converting well and investigate if there is a fit/sizing issue.
“From a creative perspective, it allows design team to actually test out new things in a way that creates less waste,” said cofounder Kate Hudson. “We know that when we test something we know exactly what that buy is going to be. We’re able to get this information so quickly.”
Hudson explained that these insights allow Fabletics to both maintain quality and move quickly to address exactly what the customer wants.
Fabletics can also use OmniShop to understand what’s trending, which helps with how the store is merchandized and gives designers insights to create new products.
It also allows shopping carts to be connected in store and online, which means customers can try on clothes they’ve already put in their shopping cart at home and sales clerks can pass a customer between stores quickly and easily. It also means that the relationship that begins in a store can be tracked online, which gives the company a more wholistic view of its own performance with customers.
The new Soho pop-up, located at 577 Broadway, has iPads in each of the dressing rooms that are personalized to the customer and also offer a single-tap button that calls an associate for a new size or some other question. Fabletics is also testing heat maps in store to measure interest in certain products and combinations.
Beyond the use of tech in physical stores, Fabletics has also carved a path for itself through a unique membership-based business model. Fabletics VIP members receive hand-picked outfits each month that start at $49.95, and are expected to opt out of any month where they don’t want a new outfit. If they don’t actively opt out, that $49.95 is credited to the account to be used toward future outfits.
This model feeds heavily into the OmniShop data set. Because users must come back to the Fabletics site each month, either to approve their new outfit or opt out for the month, Fabletics has a steady stream of information about its 1.5 million VIP members.
When asked about Fabletics’ greatest challenge, Hudson identified two.
“When you’re a name coming into a business and you have success,” said Hudson. “You hae one of those names that people would like putting in a headline, you have to be incredibly transparent about everything that you’re doing. Anything that might be considered negative feedback becomes a headline.”
She explained that, as an entertainer, it was a personal challenge and transition for Hudson to realize that you can’t make everyone happy in business.
“Being an entertainer, you want everyone to like you,” said Hudson. “In big business, there are moments where you aren’t going to please everybody. But that’s made us a very vigilant company with everything we do.”
The other challenge for Fabletics is simply keeping up with demand, which Hudson sees as a good problem to have.
For years, experts (myself included) often advised startups and small businesses to consider the Limited Liability Company (LLC). The alternative C Corporation possessed less flexibility, ease of administration and tax advantages. However, changes in the tax law from the 2017 Tax Cuts and Jobs Act now create a new potential for big tax savings. And they make the C Corporation a strong option for businesses of all sizes.
A full tax season has passed since the Tax Cuts and Job Act was enacted. So it’s time to take a new look at corporate structure. And to determine if the C Corporation structure is right for your business.
C Corporations, S Corporations, and LLCs – a brief overview
Let’s look at the new tax implications. Start with some of the basics of a C Corporation. Then continue with S Corporations and LLC.
A C Corporation exists as a type of company owned by shareholders. And an elected board of directors run it. But from a legal perspective, corporations are separate entities. And they can get sued and sue. Consider this important point. The corporation becomes responsible for legal and financial liability. And owners are often shielded from personal liability.
In addition, corporations become separate tax payers. And they pay taxes at a corporate tax rate. But this leads to the commonly known “double taxation” issue with C Corporations. The IRS taxes income first at the corporate tax rate. And then taxes come out at the individual tax rate when dividends are distributed to shareholders.
Individual tax rates were cut in the 1980s. And the C Corporation structure hasn’t made much sense for smaller businesses since. So savvy business owners often created pass-through entities like S Corporations and LLCs where business income passes through to the individual’s tax return. In fact, the C Corporation offered little advantage to smaller businesses who weren’t going public or looking for venture capital funding.
The two common pass-through entities are the S Corporation and LLC. An S Corporation is a C Corporation that has elected pass-through tax treatment with the IRS. Like the C Corporation, an S Corporation is owned by shareholders and run by a board of directors.
An LLC is a different kind of entity. As the name implies, it helps shield owners from personal liability with the business (like a corporation). But, an LLC is much less complex to run and manage. With the corporation, you need to appoint a board of directors, hold an annual shareholders’ meeting and directors’ meetings, document key shareholder and director decisions, and file a separate corporate income tax return. For an LLC, you typically just need to file an Annual Report with the state.
Tax Law Changes Make the C Corporation more Attractive
A major reduction in the C Corporation tax rate remains one of the big goals of the 2017 Tax Cuts and Jobs Act. It dropped from 35% to 21%. This lower corporate tax rate combines with additional benefits of IRC 1202 to make the C Corporation particularly attractive for some businesses.
Haven’t heard of IRC 1202? You’re probably not alone. It’s a generous capital gains tax exemption that was championed by President Obama. But it didn’t receive much attention until the corporate tax rate was lowered. In essence, if you qualify for IRC 1202, you might be able to exclude 100% of the gain up to $10 million or 10 times your original investment. You need to hold the stock for five years and there are many other requirements too. To learn more about IRC 1202 here, I recommend this post, as well as talking to your tax advisor.
With the lower corporate tax rate and IRC 1202, the C Corporation can now be extremely advantageous for the following scenario: you launch a business, expect to start smart small, make profits and plan to keep earnings within the company, and then cash out after holding the stock for five years or more.
What Business Structure is Right for Me?
Without factoring in all the specifics of your individual situation, it’s impossible for an article to provide a definitive answer on which business structure is right for you. With that said, there are a few things to consider…
Do you need to live off your business’ profits each year? If so, taking money out of the corporation will trigger dividend taxes – and therefore, business profits will essentially be taxed twice. If you are planning to put the business profits in your own pocket each year, a pass-through entity, like the S Corporation or LLC, might be better.
Are you planning on keeping your business “forever”? Keep in mind that capital gains taxes are erased at death, so if you’re never planning to sell your business, you may not need to bother with a C Corporation/IRC 1202.
Are you looking to keep things as simple as possible? As I mentioned before, running a C Corporation or S Corporation requires more regulations and paperwork than an LLC. If you form a C Corporation/S Corporation, be ready to spend more time keeping track of tax, business and financial records.
Do you plan on holding the business for at least five years and then sell? If so, the C Corporation could be very advantageous – particularly if you will be keeping profits within the business until cashing out.
Are you concerned about your personal liability? One of the key reasons to form an LLC or Corporation has always been the ability to minimize the personal liability and protect the personal assets of business owners from things that happen in the business. This holds true whether you form a C Corporation, S Corporation or LLC.
How to Incorporate
If you are interested in forming a C Corporation, it might be easier than you think. Follow these steps…
Choose an available business name for your state
Appoint the corporation’s directors
Register the C Corporation with the state, and draft and file your Articles of Incorporation. You can do this yourself or have an online legal filing service handle it for you.
Issue stock certificates to the initial shareholders
Obtain the necessary local permits and business licenses
Apply for an Employer Identification Number (EIN) with the IRS
If you have an existing business that’s currently structured as a pass-through S Corporation or LLC, you may decide it’s now more advantageous to operate as a C Corporation. If you’re an S Corporation, it’s an easy change to make. With majority shareholder consent, an S Corporation may revoke its S Corp election with the IRS (depending on timing, the revocation may retroactively apply for the whole tax year, or you may need to split the tax year between S Corp status and C Corp).
If you’re an LLC and want to restructure as a C Corporation, your state may allow a statutory conversion, which is a streamlined process. An alternative route is to create a C Corporation and then merge your LLC with the C Corp. This involves a bit more paperwork — but in some cases, the tax savings could be worth it.
The bottom line is your business structure doesn’t have to be set in stone. With the current changes to the tax law, this could be a good time to think about your business structure of a new or existing business.
Facebook’s yearly developer conference kicks off today. The keynote starts at 1PM / 10AM with opening remarks from Facebook’s chief Mark Zuckerberg. As in past years, the event will last several hours and feature updates from various Facebook departments.
This year’s event comes as Facebook is attempting an ambitious transition to a privacy-focused messaging platform. It’s a tough sell given the company’s recent history and a consumer base increasingly becoming jaded to Facebook’s data-harvesting ways. But the show must go on.
We’ll be onsite but you can follow along with Facebook’s official video feed here or through Oculus Venues, Facebook’s VR live platform.
You want to know the value of your small business. And this starts with an up-to-date valuation. Even if you don’t plan to sell immediately.
Small Business Trends spoke with Mark Zyla. And Zyla acts as Managing Director of business valuation and forensic accounting at Acuitas, Inc.
He explains what small business owners use these for. And he also speaks about what goes into one.
Face the Challenges
Zyla highlights some challenges small business owners face.
“Small business owners are usually part of the management team,” he says. “ That means there can be a mingling of the cash flows marked as a salary and return on investment.”
Clearly Differentiate
That means the smaller business needs to differentiate between labor and investment. And that usually does not become the case with bigger enterprises.
The differences between valuing smaller businesses and bigger ones don’t end there. Because the capital and tax structures often differ too. So valuing your small business might challenge you more than you think.
You base the income approach on the cash flow the business generates. But studying the transactions of competitor’s works as well. That’s a good way to see what the market bears.
“The third, which isn’t used as broadly is called the cost approach,” Zyla says. This is the cost of putting together all the assets of any particular business.
Consider Goodwill
If you’re going to sell your business, you need to consider goodwill. This is an intangible asset. It includes factors like the value of an SMB’s brand name and the customer base.
Even things like good employee relations and proprietary technology can be included.
Once again, small businesses need to be careful here.
Develop Successors
“It’s important to be able to distinguish between goodwill that’s attached to the person and the business itself” Zyla says.
He adds the value of your business gets bumped when you can develop successors internally.
In other words, it’s a good idea to ensure the value of your business’ goodwill doesn’t hinge on just one person.
Look at Regular Updates
Even if you’re not selling, regular updates matter so you can stay on top of your present valuation. This kind of exercise is important to bankers and lenders. It helps if a small business is looking to attract investors too.
Stay on Top
Staying on top of the differences between your assets and liabilities is a good practice.
“These also show that you’re on track for increasing value over time,” Zyla says.
Considerable Intangibles
Intangibles vary from business to business. But proprietary technology like software or processes make up one example. And a highly trained workforce makes another.
Recognized trade names in certain communities are examples too.
Zyla supplies an excellent example for SMBs with a good track record.
Establish Relationships
“If you have established relationships with customers. They return because they know the quality of your services and products. That enhances the value of your business.”
That means someone buying your company doesn’t need to find new customers.
According to a report published by Gallup last summer, only 34% of employees in the US are actively “engaged” with their jobs. This is an improvement from figures recorded earlier, but it still means that about two-thirds of employees are disengaged.
These are worrisome statistics all businesses should seriously consider. After all, between absenteeism, employee churn and contagious lackluster motivation levels, disengaged employees are estimated to cost companies in America between $450 and $550 billion per year.
Start with a Well Thought Out Plan
If businesses leaders are serious about increasing their revenues, they’re going to need a well-planned-out approach to curbing employee disengagement.
All too often, when businesses realize that employee engagement is low, the blame is pointed back at the employees themselves, and nothing is done about it. This is a huge mistake — leaders need to know better and take more responsibility than that.
So, if employee engagement is down at your organization, it is time for the leadership to do their bit in boosting it by correcting previous mistakes that caused it.
Reasons for Employee Disengagement
Here are the usual culprits from leaders that lead to employee disengagement.
1. Neglecting Proper Communication With Employees
According to data from the International Association of Business Communicators, poor communication skills among managers is the top barrier to improved information flow in organizations. If your employees find that their leaders don’t recognize their achievements, don’t provide clear directions, don’t care about their lives outside of work and have no idea how to offer constructive criticism, then why should they aim to deliver their best work?
The most important thing to do is to regularly thank and congratulate employees for their efforts. Make sure you do this both for individual employees and for the team as a whole.
Also spend ample amount of time having real, meaningful conversations with your employees. Ask them about their lives outside of their work and if everything’s alright. This will make a huge difference.
Make sure that plenty of additional channels of communication are open and available. Face-to-face talks might be the best, but some of your employees would likely prefer communicating through an online channel.
Someone who understands the importance of building a culture and properly communicating with his employees is Zappos CEO Tony Hsieh. He communicates with them through personalized email updates, all-hands meetings and informal team gatherings. Here’s a comment (recommendation) an employee left on Tony’s Linkedin page.
This level of dedication towards his employees has helped Tony build an engaged workforce that generates over $2 billion annually and was acquired for $1.2 billion. Leaders and managers at companies of all sizes must make a note of this.
2. Having an Inferior Personal Brand
Many leaders make the mistake of believing that the only thing that contributes to effective leadership is their activity at work. But it’s also super important to realize that their online presence matters too. The average person spends 5.9 hours per day online. A lot of this time is spent using social networks. They do this even while at work.
It is very likely that your employees are following you and are reading your updates. This is why the manner in which you conduct yourself on the internet has such a huge influence on how much your employees respect you. If you develop a personal brand as a leader in your industry, your employees will look up to you and the company you contribute to.
So pay close attention to the brand image you project on your social media channels. And build your presence on more professional social networks like Twitter, Medium, Linkedin and AngelList. Expressing thought leadership through blogging or a holistic content marketing strategy can help too.
An example of a leader who understands the importance of building a presence through thought leadership online is Dharmesh Shah. Many people already know that he is a founder of HubSpot, and he’s projected his tech and marketing expertise through articles like these on the HubSpot blog.
Projecting Your Personal Brand
Shah has also projected his expertise as a founder who cares about creating companies with engaged employees and a good culture through his OnStartups blog. He regularly speaks at conferences and has authored a number of well-received books. Shah also adds to his personal brand by explaining his areas of expertise on his Linkedin account, which is something every business leader can do, regardless of company size and level of influence.
This type of activity can help keep your current workforce engaged, while also helping your company easily attract more engaged employees.
Another way to easily display your personal brand and expertise online is by using a site like Crunchbase, an authoritative directory of leaders and companies that are active in startup ecosystems. Here you can list things like the social networks you are active on, the recent press coverage you have received and more. Your employees and potential employees are likely active on Crunchbase.
For example, let’s take a look at Russ Ruffino’s Crunchbase profile. Ruffino doesn’t have anywhere near the name recognition that Dharmesh Shah has, but by maintaining an active profile, he makes a strong impression.
Getting a High CB Rank
Here people can see that he has a relatively high “CB Rank” on the site, in the top percentile. They can see that he is the founder of the company Clients on Demand, which also has a good rank on Crunchbase. On his profile, you will find links to his website where you can access his articles, podcasts, videos and interviews. There are also links to social networks like Facebook, Linkedin and Twitter. When people view his website and social networks, it strengthens his brand identity.
If you scroll down further on his Crunchbase page, you can see the recent publications that Ruffino has been featured on. This includes top sites like Entrepreneur and International Business Times.
All this content shows people that he is a leader in the client acquisition niche. A vibrant, dynamically updated digital footprint like this can go a long way towards improving team engagement, as his current employees will feel proud to work for him.
3. Failing to Actively Develop Leaders
Some 46% of employees feel that their own leadership skills aren’t being developed. This is a huge mistake, as businesses need to take steps to spot and develop new leaders within the company. If employees show leadership potential, it is the job of current managers in the company to mentor them and improve their skillsets.
When you groom leaders from within your company, it makes the job of the managers easier, as it helps to give people a greater sense of investment in the company. It will also help you keep some of your best talent around for longer, as 67% of employees say they would leave a position if it lacks avenues for leadership development.
So, get your managers to keep an eye out for the natural leaders present within your company. It’s a lot cheaper, easier and less risky to hone top leaders within your company and promote them as managers than to hire strangers from outside.
Here are a few things you can do to develop online leaders.
1. Conduct tests. Before you begin developing leaders, it is important to figure out who shows the strongest potential. So make sure all your new employees complete assessments. 2. Offer training. Purchase courses, webinars and conduct workshops on leadership that will help these employees develop their leadership skills further. 3. Turn current leaders into mentors. Get your leaders on board with mentoring these employees by sharing their own tips and experience on the subject.
Taking these three steps will ensure you build leaders for the future.
Conclusion
These are three common mistakes leaders make that result in employee disengagement. Address them, and you will likely notice a boost in morale, collaboration and even revenue.
When you’re self-employed, increasing business is a constant effort. Normally, you’ll do this by growing your main business. But you can also do it by adding income streams, from sources not directly related to your main business.
Usually those income streams will mostly provide additional revenue. But sometimes they can even be used to increase your primary business.
New Income Streams
Let’s take a look at a few ways to make that happen.
Start a Blog For Your Business
So much of today’s business takes place on the Internet. One of the best ways to increase your income is by positioning yourself as an authority in your field. You can do this by starting a blog related to your business.
The basic idea is to become a preferred information source for customers. In most cases, when people go to the web they’re not looking to buy something. They’re looking for information. And while it may seem as if providing information will hurt your business, it can actually have the opposite effect.
By providing a steady stream of information related to your product line on your blog, you position yourself as an expert. That builds trust. When customers and clients are ready to make a purchase, there’s an excellent chance they’ll buy from you.
Fortunately, you can build a blog easily and inexpensively. In fact, if you use WordPress – which is the most popular blog platform – to start your blog for free.
Make Instructional YouTube Videos on Your Specialization
In a real way, this is taking the blog idea to the next level. A lot of people are visual learners, and videos are a preferred way of gathering information. You can create simple instructional videos and place them on YouTube.
The videos can be specific to your business, and work to drive customers to it, or you can make videos about whatever you have expertise in.
Videos can earn money in two ways. First, they can drive customers to your business. They’re commonly used by businesses to bring prospects to the business website, where they make purchases.
But videos can also be used to generate revenue on their own. This can be done by adding advertising to the videos, like Google Adsense, or by direct selling specific products from each video.
It’s easier to create videos than you might think. There are even videos on YouTube showing you how to create YouTube videos.
This is becoming another common way businesses are increasing their income.
Sell Related Products for Adding Income Streams
You can often add additional income streams by selling products related to your current product line. This is another common business strategy. For example, if you have a business selling organic food, you can add selling organic cookbooks, or books on how to grow your own organic food.
This will also help to create the “one-stop shop” that makes the business more valuable to its customer base. And since the add-on products are related to your main business, it won’t be like stepping out of your comfort zone.
Set Up Dedicated Websites for Specific Products
Most businesses today have a website up and running. But it’s usually designed as something like an online store, to sell the entire line of products and services.
You can move to the next level by creating websites dedicated to specific products. If you have one or more product lines that are particularly important to your business, you can increase sales by creating a dedicated website for each.
This can be a benefit because you’re zeroing in on the specific product, eliminating the clutter that crowds multi-line business websites.
This is also another way of positioning your business or product in the expert status category. You’ll be able to dedicate the entire website to the single product, making it easier to emphasize its value and benefits. And once again, when people come to the web, they’re looking for information, typically about a specific product. Your dedicated website will give them just that.
It might also make it easier to specialize your search engine optimization, enabling you to draw more people to the dedicated website. You can be more specific with your keywords and audience targeting.
You can then link back to your primary website, or create links between your individual product websites.
Add Affiliate Marketing to Your Existing Product Lines
If you have a website or blog, or you’re creating business-related YouTube videos, you might also look into affiliate marketing.
This is a different way of adding additional product lines. Instead of carrying the products directly in your business, you’re instead acting as a lead generation source for other businesses that carry those products.
Literally thousands of companies today are offering affiliate programs. You can even go through a general affiliate program, like CJ Affiliate (formerly Commission Junction), where you can find hundreds of companies.
But you can also approach individual companies. Many will pay you a percentage of each sale that’s generated by your website, blog or video. You can generate the leads either by having advertisements for those products on your website, blog, or video, or you can even write reviews or endorsements of the affiliate products.
This will help to generate additional revenue for your business, but without you having to maintain inventory or fill orders. Due to special coding in the web links, you will be paid a commission when a customer leaving your site goes to another and makes a purchase. It’ll all happen automatically.
Adding Full-on Passive Income Sources
It’s probably just about everyone’s dream — not just business owners — to have passive income sources. You know what I’m referring to, the kinds of revenue sources that produce income without any effort on your part.
The perfect example is interest on savings. Unfortunately, as we all know, interest rates on savings are pitifully low. It may qualify as passive income, but it’s not much income at that.
If you have money to invest, that isn’t earning much in the way of interest income, but you’re concerned about investing too heavily in the stock market, there are some alternatives.
Some passive income sources I’ve found to be the most generous are these three.
1. Peer-to-peer Lending
Websites like Lending Club and Prosper enable you to invest money in loans taken by other people. If you know much about banking, then you know the same bank that pays you 1% interest on your savings, will charge you 10% on a loan.
Peer-to-peer lending puts you in a banker position. But instead of earning 1% on your investment, you earn something much closer to 10%. That’s because you’re acting as a direct lender, with no “middleman” involved in the process. It’s one of the very best passive income sources available.
2. Real Estate Investment Trusts (REITs)
A lot of people would love to invest in real estate – we’ve all seen the get-rich-quick in real estate infomercials. But most of us are also well aware of the challenges it involves. Still, you can invest in real estate – especially commercial real estate – through REITs. These are something like mutual funds for commercial real estate, but they pay a steady income.
This is an excellent way to earn income from real estate while you’re busy tending to your main business.
3. Become a Silent Business Partner
Do you know someone who’s running a successful business, and looking to grow? Think about becoming a silent partner to that person. By making an investment in his or her business, you can take an ownership share in the company, entitling you to a pro rata share of the profits.
It’s much like investing in stocks, except you’re investing in a private business. Of course, you’ll have to make sure it’s all nice and legal, complete with contracts. But it’s another way of increasing your income without disturbing your regular business, and without any additional effort on your part.
Final Thoughts on Adding New Income Streams When You’re Self-employed
As you can see, increasing business income doesn’t necessarily mean doing something radical – like buying a new building, or acquiring a competitor. It’s possible to increase your income, and even dramatically, by creating multiple income sources.
If you’re self-employed, you’re actually in a unique position to do this. The strategies above can easily be blended into an existing business of just about any type. All you need to do is adjust the specific tactics to your particular business.
With some creativity, and a little bit of cash, you’ll be able to do just that
Fidji Simo, the head of Facebook’s main app, tells me Meet New Friends was based on emerging behaviors the company had spotted. “Developing relationships with people they didn’t already know is very different from the core use case of Facebook,” but she notes, “We’ve already seen that naturally happen in Groups, and Meet New Friends will make that a bit easier.”
