Entrepreneurial

from Reuters Money:

Raw deal: Why Groupon might be bad for business

When Fan Bi wanted to get the word out about his new company, Blank Label, he instantly thought of popular daily-deal sites like Groupon and LivingSocial. By offering a healthy discount for custom-designed dress shirts, “it wouldn’t cost us anything up-front, and we’d get all these new customers,” Bi remembers. “It sounded like a no-brainer.”

So he signed up with the deal site BuyWithMe, offering $100 gift certificates for $50. Only thing is, the discount worked a little too well. Almost 250 customers snapped them up, and after the deal site took its cut, “we were losing around six dollars a shirt,” he says. “If we’re losing money on every single order, it’s not even worth doing.”

It’s a common refrain from merchants who are testing out the increasingly popular daily-deal sites. For customers, as long as you actually cash in the coupon, it’s often a terrific bargain; for business owners, it can be a riskier gamble than they realize.

According to a new study by researchers at Houston’s Rice University, such promotions lost money for more than a quarter of businesses surveyed, and less than half said they would run such a deal again. “Consumers are getting a heavily subsidized product or service, so for them it’s a great deal,” says Utpal Dholakia, a Rice management professor and author of the report. “But businesses are hoping that those buyers will come back again and again, and by and large, they’re not achieving that goal.”

Indeed, for business owners, there are a number of potential mines that could blow up in your face. If the discount is too deep; if the deal site’s take is too large; if the duration is too long; or if those new customers never come back to pay usual retail prices, then you could be seriously endangering your bottom line.

Is Airbnb growing too fast?

– Connie Loizos is a contributor to PE Hub, a Thomson Reuters publication. This story originally appeared here. The views expressed are her own. –

Airbnb is on a tear. Three years after the San Francisco-based company began inviting real people to list for rent their homes and apartments, castles and houseboats, users have booked 1.9 million nights in more than 184 countries; bookings are growing an astonishing 40 percent month over month; and roughly 1,000 new properties are entered into its system each day.

The company is growing so fast, in fact, that it’s reportedly raising $100 million at a whopping $1 billion valuation — a mighty addition to the $8 million in capital it has previously raised from Sequoia Capital, Greylock Partners, and numerous individuals.

10 marketing lessons for early stage tech startups

– Mark Suster is a former serial entrepreneur and a partner at Los Angeles-based venture capital firm GRP Partners. This article originally appeared on Suster’s blog “Both Sides of the Table”. The views expressed are his own. –

I made every textbook mistake at my first startup, which is why I believe I was much more effective at my second one. I have adopted the motto “good judgment comes from experience, but experience comes from bad judgment.” We need to learn from doing, by trial and error.

If I can help you avoid some of my first-time mistakes it would be a victory. The following are some lessons I learned about early-stage startup marketing. Because market is such a broad topic, I’m restricting these lessons to PR marketing (as opposed SEO, SEM, product marketing, etc.).

Entrepreneur Peter Yared: Social is “so over”

– Connie Loizos is a contributor to PE Hub, a Thomson Reuters publication. This story originally appeared here. –

Entrepreneur Peter Yared doesn’t mince words. In April, after TechCrunch misreported some of the circumstances around a Facebook employee’s termination, Yared wrote a widely read post titled “Why TechCrunch is Over” in which he called its founder, Michael Arrington, “insane,” adding that it “must be hard to live amidst a rapidly declining site.”

In more recent posts, Yared has called Twitter “primarily a broadcasting platform with very few active users” and unusable for “normal people.” He has also suggested that if he were to start a company today with either entrepreneurs Mark Pincus, Evan Williams, or Mark Zuckerberg, he’d go with Pincus “given what we now know” about Williams and Zuckerberg. (Both have been accused of elbowing their early co-founders out of the picture.)

Author self publishes aromatherapy-scented children’s books

The idea for a children’s aromatherapy-scented book about a rescue dog came to Margaret Hyde in a dream.

“I woke up with the idea for it in the middle of the night, four years ago,” said Hyde, author of the Mo’s Nose book series. “I got up, wrote the idea and wrote the first version of the first story. I even saw it illustrated in Japanese ink brush in my dream.”

The dog in Hyde’s dream belonged to her best friend Amanda Giacomini, whom she asked to illustrate the first book, “Mo Smells Red”. Giacomini didn’t know how to use Japanese ink brush, but learned the skill for the books.

Are peer-to-peer loans a good small business Idea?

– Cynthia Hsu is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. This article originally appeared here. –

Have you tried to get funding for your small business, only to get met with denials from banks and other big lenders? Peer-to-peer loans, or person-to-person loans, are a new and rapidly growing area where businesses can get some starter funding.

If you’ve heard of microfinance, the idea behind peer-to-peer loans is fairly similar. A large network of “lenders” come together to help borrowers raise money for various purposes.

Banjo mobile app keeps travelers in touch

A missed opportunity to connect with friends at an airport was the impetus behind a new social discovery service targeted at smartphone users.

The free service, Banjo, is the brainchild of 38-year-old tech entrepreneur Damien Patton. It launched this week and is available for iPhone and Android owners.

“It was started because I missed out on a personal connection,” Patton said. “It brings all the social information together into one convenient place on the mobile device.”

from Chrystia Freeland:

America’s economy: glass half full?

Is it morning in America? Or is now a time for blood, sweat, toil and tears? As the United States warms up for the presidential elections, the choice between those two narratives will be the most important decision each party makes and may determine who wins in 2012.

Both are ways of talking about the economy — the issue that polls show overwhelmingly preoccupies U.S. voters. The morning-in-America storyline is that the financial crisis is over, the economy is healing and the country’s innate powers of renewal, reinvention and innovation are already asserting themselves. The blood, sweat, toil and tears view is that the U.S. economy is still sick and that it will take a significant, arduous and collective effort to nurse it back to health.

For now, the White House is committed to morning in America. That was the message of a discussion among members of the President’s Council on Jobs and Competitiveness that I moderated this week at the New York Forum, a high-powered annual gathering of CEO’s and politicians that is shaping up to be New York’s answer to Davos.

from Business Traveller:

The story of LUXE City Guides

His “piece of folded card” has now sold over a million copies; the man behind the sassy and saucy LUXE City Guides explains why no other travel companion comes close


Grant Thatcher, Luxe City Guides' founder and editor

By Grant Thatcher

Two and a half years after arriving in Hong Kong in 1996, and having travelled all over Asia grumbling about how cruddy, boring and unstylish all the available travel guides were, I moved to Bangkok.

I had swiftly come to realise that not only were these guidebooks not written for me, they were written by people with completely different lifestyles, values, needs and interests. Moreover, they were predominantly written by people who didn’t actually live in the city at all, but who were paid to visit and record their thoughts, then edited by someone in a foreign city who had probably never travelled to that destination.

Founder-market fit a key for startups

– Chris Dixon is the co-founder of Hunch and of seed fund Founder Collective. This blog originally appeared here. The views expressed are his own. –

An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls “product/market fit,” which he defines as “being in a good market with a product that can satisfy that market.” Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that “the life of any startup can be divided into two parts: before product/market fit and after product/market fit.”

But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee calls “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”

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