Inc Small Business
The ex-Facebook executive and TV producer explains her plan to shake up the content business--and make her own mark on the Web.
The name Randi Zuckerberg might conjure visions of nepotism, but the Facebook founder's sister is doing her best to carve out her own space on the Web--and elsewhere.
Speaking with The Financial Times' Emily Steel Wednesday during the Internet Week conference, Zuckerberg spoke about everything from from curated content and distribution to what she playfully dubbed "tech-life balance."
When asked what compelled her to launch Zuckerberg Media, her latest foray into the online video space, Zuckerberg replied, "When I looked around at the landscape, I saw you have all these companies investing more in original content, but there were very few places for makers, for content creators."
The company, which she called her second start-up after newborn son Asher, is meant to function as a Hollywood studio for Web-produced films.
"The Bay Area has a great content history--Pixar, Lucas Film," she noted, but "getting data and insights is becoming more important to creating great content, and you have to know your audience."
It's a perspective that Zuckerberg surely picked up at Facebook, where she created and ran the social network's marketing campaigns. Specifically, she says, she got a good idea of "what a TV network built on social media might look like" when she "commandeered a broom closet" and started interviewing engineers right on the spot.
The Web series took off, and "the next day, Katy Perry called asking if she could announce her tour on Facebook Live," said Zuckerberg. Soon she was getting calls from other celebs--including President Barack Obama, who asked to host a town hall on Facebook. "That was the moment I thought, 'Someone else is going to do this. Why shouldn't it be me?'"
Flash forward three years, and Zuckerberg is busy trying to make her mark on the content business. She's been nominated for an Emmy for her 2010 coverage of the mid-term elections on Facebook Live. She produced a Bravo show called "Start-Ups: Silicon Valley," though it was panned by critics and cancelled after one season due to low viewership. Now, she says, she's on a mission to serve up quality, curated content that people will actually want to watch online.
"There is so much noise, there's so much content," she said. "You need to give someone that curator's stamp of approval," especially when it comes to TV. That medium "is still the main cultural driver of influence in this country and that stamp is important."
Recalling her experience producing "Start-Ups" she added, "You can't really just walk into a room in Hollywood and say, 'I make videos for the Web, pay attention to me!' Hollywood wants to see credibility."
Follow the three Ts to launch better products, says Ryan Ferrier, co-founder of the 60 Day MBA program.
Launching an imperfect product is an entrepreneur's worst nightmare. But by taking the time to perfect it prior to launch, entrepreneurs might be missing out on valuable feedback from customers, says Ryan Ferrier, co-founder of the program 60 Day MBA.
Ferrier and his partner Dave Llorens created 60 Day MBA to help aspiring entrepreneurs learn by doing. For students, that doesn't mean writing a step-by-step plan or designing a flawless product but coming up with an idea and taking it right to the consumer.
"Don’t plan forever and build the perfect machine," Ferrier said in a recent interview with Smart Planet. "Listen to customers, all good comes from that."
At the core of his curriculum are the three Ts:
Talk to the customer.
Translate what you’ve learned into an offering.
Try it out.
By incorporating customers' feedback into product development and their business model, entrepreneurs can launch a successful business.
Email can leave people feeling overwhelmed, even harassed. Do you know when to stop?
When I was running my first technology company, I found it hard to sleep: too many thoughts and ideas buzzing in my head. So I used to get out of bed, do email for about an hour, and then go back to bed. On one occasion, I was dismayed to get an instant reply: I wasn't the only one who couldn't sleep.
I realized that I had become an email bully: that employees saw the time stamp and felt, in some way, chastised. That hadn't been my intention but one of the first lessons of leadership is to appreciate that what you mean and what is heard are two separate things.
Everyone I know feels harassed by email which has invaded their waking and sleeping hours. The combination of fear (I don't want to be caught napping) and efficiency (I want to keep the backlog manageable) erodes peace of mind. Executives email all day, much of the night, during meals, during meetings. And everyone agrees: it's awful.
At eBay, management did something about it: they banned weekend emails. If you had to write an email, you could draft it--but not send it. The reform cost nothing. Productivity didn't fall. Innovation didn't cease. People said that it felt as good as a 50 percent pay rise--because it gave them back their weekends.
In the U.K., supermarket CEO Justin King introduced email-free Fridays. You could communicate by phone or face but no emails could go out on a Friday. The goal was to encourage face-to-face communication, build rapport, remind people that they had relationships at work, not just addresses.
Do you dare try it?
Four entrepreneurs say the Big Apple is becoming America's next start-up hub. Are they right or is this just wishful thinking?
Four entrepreneurs think New York is on the way to becoming the next Silicon Valley. Are they right?
New York is notoriously unfriendly to start-ups, and during a recent mayoral forum the candidates said as much. But launching a company here has gotten easier, explained members of a Made in New York panel that met during Internet Week on Wednesday. The panel included Artsy founder Carter Cleveland, LearnVest CEO Alexa von Tobel, ZocDoc COO Oliver Kharraz, and Seamless' Jonathan Zabusky.
"The elephant in the room is obviously, 'Why didn't we go to the Silicon Valley and San Francisco,' right? But I think there are some distinct advantages that New York can offer," said Kharraz. "Since we started in 2007, this question gets asked less and less. Everyone gets, 'Why you would start your start-up in New York?'"
ZocDoc needed engineers when it launched, but it was ultimately a people business, he added. The company decided to go where the users were--and where one in every six doctors trains. LearnVest's von Tobel agreed there was no other city for her but New York. Her start-up aims to disrupt financial planning and New York is the finance capital of the world.
High Stakes, Higher Rents
"It's very costly here," Seamless' Zabusky admitted. Since its launch, he's moved parts of the start-up to different cities in an effort to clamp down on costs.
Kharraz agreed "the real estate has always been a problem." ZocDoc launched in an apartment in Harlem and continued to operate there until the ceiling literally caved in on the founding team. Finding a space that is start-up friendly--and won't be outgrown within a matter of months--is definitely a challenge.
Beyond the lack of viable real estate, von Tobel noticed a lack of "entrepreneurship structure" when LearnVest launched three years ago. Fortunately that's changing and in recent years she's seen an entrepreneurial ecosystem take form, connecting angels to ideas.
With Internet giants like Google and Facebook opening offices in New York, New York no longer seems uncool on the West Coast, said Zabusky.
That shift in perception is powerful from a recruiting perspective, noted Cleveland. East Coast engineers won't have to move to find jobs, and great talent might decide to move there.
Noting current Mayor Michael Bloomberg has less than a year left as mayor, von Tobel urged his successor to make "sure that no one slows down that momentum, that the policies in place outlive" his tenure.
"I think we are on a great path, but it will take time," added Kharraz.
Blogger and marketing strategist John Jantsch explains why learning to write for an audience made him better at selling and doing business.
They say the pen is mightier than the sword--but what business does an entrepreneur have picking up either? More than you might think, says marketing consultant and blogger John Jantsch. On his blog, Duct Tape Marketing, Jantsch explains why mastering writing skills is a must for business owners, and how becoming a blogger has made him a better business communicator and salesman.
Writing keeps your message short and sweet.
Forcing yourself to create succinct content limited by a certain number of pages or words can help you organize your thoughts in a simple and understandable way, writes Jantsch in a blog post. By breaking complex issues into digestible chunks on the page, you can simplify problem areas--perhaps even hitting upon a simple solution, he explains. This is a skill that can apply across disciplines--and be particularly helpful to a problem-solving founder or entrepreneur.
Writing motivates your ears.
Being a better writer makes you a better listener, according to Jantsch. He writes, "When I engage in conversations or listen to radio interviews. I listen with a writer's ear and often find my head filling up with ideas for blog posts by simply listening to others discuss sometimes unrelated subjects." This ability to identify key topics and string together extraneous data and commentary to structure your own story can help you to read between the lines.
Writing teaches you to look for the gaps in conversation.
Listening to the discussion is one thing--but training yourself to think about what you can add to it is quite another. "The discipline required to create even somewhat interesting content... requires that I study what's new, what's being said, and what's not being said in order to find ways to apply it to the world of small business," writes Jantsch. If innovation occurs in the gaps that no one else has thought to occupy, paying close attention to what has been said--and what has yet to be said--seems like a valuable entrepreneurial asset.
Writing helps you refine your pitch.
There's a reason that your grade-school teachers suggested writing notecards to accompany a class presentation: Writing your speaking points down helps you to organize and pare down your thoughts.
"I write like I speak and often I write to sell an idea or even a specific tactic," writes Jantsch. "But I find that clearly stating idea pitches in writing has improved my ability to quickly articulate them in a selling or interview setting. It's like you build up this reserve bank of pre-tested discussion points."
Writing allows your ideas to evolve.
One of the toughest things to observe can be the trajectory of complex ideas over time. But when you're writing your ideas down, Jantsch explains, simply collecting those ideas and looking for connections can help you speed up the "Eureka!" process.
"The habit of producing content over time affords you the opportunity to create larger editorial ideas that can be reshaped and repurposed for other settings. I've taken a collection of blog posts on a specific topic and turned them into an ebook more than once," Jantsch writes. In other words, writing--and examining reoccurring themes in that writing--can help you to pick out those overarching connections you may be missing and help you arrive at that "Aha!" moment even faster.
Members of the question-and-answer site Quora submitted their picks for the smartest moves in business. Here are three to study.
Earlier this month, the online question-and-answer forum Quora asked its members: What's the shrewdest, smartest maneuver you've ever seen in business? Users were quick to respond with their favorite stories of business prowess--citing entrepreneurs from Henry Ford and Sir Richard Branson, to the little-known inventors of liquid soap and a mucus-destroying cold medicine. Here are three colorful tales submitted by users in response to Quora's query.
Herbert Dow founded Dow Chemical in 1895, and invented a way to cheaply produce the industrial chemical bromine in Midland, Michigan. He sold the chemical for 36 cents per pound throughout the United States--but couldn't expand overseas as the international chemical market was dominated by an incumbent company from Germany. A gentleman's agreement at the time dictated that the German company wouldn't encroach on the U.S. market as long as Dow didn't try to muscle in on chemical sales in Europe.
However, by 1904, Dow's business was struggling and he needed to expand. So he began selling bromine in England and quickly cut down the German competition--which sold its product at the fixed rate of 49 cents per pound. Outraged, the Germans began flooding the U.S. market with even cheaper bromine, on the order of 15 cents per pound, in an attempt to put Dow out of business.
That's when Dow got crafty.
He stopped selling his product in the U.S. altogether--and began buying up the German-made bromine. Then he repackaged it, sent it back to Europe, and began selling it as his own--for 22 cents less than the Germans did. The Germans couldn't figure out why Dow wasn't going out of business--or why there was such a high demand for German bromide in the U.S.--so they just kept lowering their prices to 12 cents, then 10 cents. By the time they caught on, Dow had broken the German monopoly in Europe and forced it to lower prices on its home turf. Ouch.
In the early 1970s, Robert Taylor--who owned then-small soap company Minnetonka--came up with the idea to sell liquid soap in dispensable pump containers. Unfortunately, he couldn't patent the product--liquid soap already existed, as did the pumps that he planned to dispense it with. Taylor worried that the larger, more established soap companies would steal his idea to bottle liquid soap into a pump dispenser, replicating his product on a larger scale than he could compete with and effectively running him out of business.
So he decided to beat them to the punch.
Taylor raised $12 million dollars--more than his company's net worth at the time--and ordered 100 million of the pump dispensers from the only two companies that manufactured them in the U.S. This order effectively purchased every pump the two manufacturers could make in the next year or two--giving Taylor a head start on the competition. Two years after this maneuver, Taylor's product SoftSoap dominated the market and was eventually sold to Colgate-Palmolive for $61 million.
In 2002, the over-the-counter cold medicine Mucinex burst onto the market--destroying its competition through a legal loophole. The company patented the drug's 600 mg dose and 12-hour release period, and gained approval from the Food & Drug Administration to sell its product as a non-prescription medication--then pointed out a crucial stipulation: According to law, no drug may be simultaneously sold as a non-prescription product and a prescription product using the same dose and release period.
In other words, once Mucinex--which owned the patents for all non-prescription drugs of its kind--gained FDA approval, its competitors' prescription products were deemed illegal. The FDA issued warning letters to 66 manufacturers, distributors, marketers, and retailers that sold the drug as a prescription product and eventually ordered them to cease production altogether.
Change.org just raised $15 million, despite the fact that founder Ben Rattray vows never to sell the company or go public.
Change.org, the online petition platform which we recently named one of Inc.'s Most Audacious Companies, has landed $15 million funding from the Omidyar Network, as well as the impact investing firm Uprising. It's the first institutional investment Change.org has accepted since it was originally founded back in 2007. But make no mistake, assures founder and CEO Ben Rattray, this doesn't mean Change.org, a certified B Corporation that focuses on social impact, is selling out. Along with the investment, Rattray promised both Change.org's users and staff that he would never sell the company or take it public.
"We're making a pledge to our community and demonstrating that we're not kidding about being a mission-driven company that wants to build for the long term," Rattray told us, adding that's also why he announced his commitment to stay founder-owned and operated forever. "We're now beholden to our own public announcements about what we think is best for the company."
It takes a special kind of investor to agree to Rattray's terms, and he says he's found that investor in Omidyar Network, which is headed up by eBay founder and philanthropist Pierre Omidyar. Rattray says he first approached Omidyar Network back when he launched Change.org, but, he says, "They tend to fund later-stage companies, and so after that talk, we were heads down, building Change.org."
At first, the site was billed as "a social network for social change." It then morphed into a blog about topics relating to social impact, before Rattray finally found a business model that worked and transitioned the company one last time into a petition platform in 2011.
Since then, the site has taken off, adding 2 million new members a month. Though Change.org generated $15 million in revenue last year from sponsored petitions, Rattray believed that outside funding would help the company hire more engineers and scale the platform more quickly. While he says plenty of venture capitalists had approached him in the last year and a half ("It comes with the territory when you're growing as fast as we have."), few investors would entertain Rattray's unusual terms. Omidyar Network, he says, was the only firm he felt was both committed to Change.org's mission and willing to make a large enough financial commitment to help Change.org grow.
Because Rattray's committed to never sell or go public, he says, the most likely return for Omidyar Network will come in the form of stock buybacks or dividends paid out over time. He hopes Change.org can be a glowing example of the fact that there are more than two ways to satisfy investors.
"Right now, it's an exotic idea to say you won't have a traditional liquidity event. There's such reflexive adherence to the traditional mechanism of venture investment. It's not only not good for the world, its not good for these companies," he says. "It's almost impossible for companies to maintain the singular vision of the organization over time if they're not independent. We believe there's no one in the world that will be better at running Change.org than we are."
Americans are some of the most entrepreneurial citizens in the world. But is this a good thing?
The Global Entrepreneurship Monitor, a yearly report funded by Babson College, concluded Wednesday that Americans are more bullish than ever about starting a business--even if their entrepreneurial ambitions will never materialize into the profitable business they believe it will become.
So does their entrepreneurial optimism actually lead to starting businesses?
According to the report--yes. But are those businesses successful? That's harder to prove.
In 2012, about 43 percent of Americans "believed there were good opportunities for entrepreneurship around them." A year earlier, that figure was around 23 percent.
The study also looked at several other innovation-driven economies, and researchers noticed a curious cultural discrepancy: While perceptions of entrepreneurship jumped in the United States from 2011 to 2012, they generally languished almost everywhere else.
"This assessment of attitudes suggests that Americans see entrepreneurial opportunities in light of current economic conditions, but assess their own abilities as distinct from external shifts," the authors note.
In 2012, the Total Entrepreneurial Activity--a measure of entrepreneurial intentions--rose to nearly 13 percent, up from 7 percent in 2009. Of course, the recession had largely influenced those numbers, but again, Americans displayed more entrepreneurial activity than other countries surveyed.
Part of it has to do with the relative level of opportunities elsewhere. The authors speculate that in wealthy, well-developed countries, where job protection and security are rooted in the economic landscape, there's less incentive to pursue entrepreneurship.
Still, that doesn't fully explain why the U.S. would rank so highly for would-be entrepreneurs. Perhaps it's a cultural phenomenon:
The digital generation has grown up entrepreneurial, a fact reflected in the boom in entrepreneurship among young people. Additionally, amid the economic cycle of the previous years, the data indicate that the appeal of entrepreneurship has returned to the United States earlier than in many innovation-driven economies.
Now, of course, comes the question of whether or not these soon-to-be entrepreneurs will launch successful, job-creating, revenue-generating businesses. Start-up failure rates are notoriously difficult to measure, but Wednesday's report highlights a growing problem for America's future entrepreneurs: Access to financing.
It's worth noting, too, that the lion's share of funding for new ventures comes from personal savings and loans from friends and family. About 73 percent of all financing comes from an entrepreneur's own bank account--less than two percent comes from venture capital. So while the report generally highlights a positive trend, there will be obstacles to overcome.
Let's call the 'Millennials' the Entrepreneur Generation' and learn to manage the valuable characteristics that set them apart.
My neighbor Adam is a so-called Millennial. That means, according to those who follow pop culture today, that he is between the ages of 19 and 30. (He's 21.) Adam will be entering his senior year of college in September at Penn State. He was born the same year that Bill Clinton was elected president. He never knew Michael Keaton as Batman and he's never heard of Murphy Brown. He grew up watching Rugrats on Nickelodeon and Arthur on PBS. He has always had a cell phone and can't imagine a world without the Internet. Growing up, he only had to deal with 150 Pokemon characters (compared to 600 today).
Adam and his friends are different than my generation. (For the record, I'm in a demographic called "Generation X," which I think sounds a lot cooler.) If you're running a business you had better be prepared. Because over the next few years this completely new generation of people like Adam are going to be entering the workforce. In fact, they've already started to arrive.
Last week I read a survey from oDesk and consulting-firm Millennial Branding that polled almost 3,200 workers (2,000 of them called themselves Millennials). Turns out, 72 percent of the people who responded to the survey and who are still at "regular" jobs said they wanted to be entirely independent, and 89 percent said that they prefer to "work where they choose." Fifty-eight percent identified themselves as "entrepreneurs."
Let's Rename Them
To me, this says Adam is more part of the "Entrepreneur Generation" than any "Millennial" group. I don't mean that Adam will one day own his own business or risk everything on a start-up. He may never become rich, invent the next Facebook, or come up with something like Bang With Friends (and for that you should be grateful). But he, like most in his generation, has been raised to be more entrepreneurial than my generation. And if you're going to be a smart employer, you need to recognize this now because this generation is entering the workplace with different expectations and needs than anyone before. Can I make generalizations for an entire generation? Yes, yes I can. In fact, I see five things that set them apart:
Adam has a smartphone. He has an iPad. He also has a laptop. These tools are inexpensive and common. He's been using these things since high school and can't imagine not having them around. Not only that, he can't imagine not having information wherever her goes. He grew up in a cloud-based world. He turns on a device and up comes data, be it from Facebook, YouTube, Google, or Twitter. (I didn't say it was meaningful data, OK?) He will have the same expectations in the workplace. He'll assume he can do his work from anywhere and any time he wants. He will expect to be able to move around the office, leave the office, just stay away from the office, as long as he gets his work done. He'll get frustrated if he can't collaborate instantly with others like he's been doing since the 10th grade. Are you ready to accommodate needs like these?
Adam and his friends are more in-tune to the world than any generation before them. They are used to seeing almost real-time videos of revolutions, war, natural disasters, and Russians doing daredevil acts on YouTube. Adam has flown to far off places and cruised the Caribbean. He has not had to battle Germans or bomb the Japanese. He chats with opponents from the Middle East on his Xbox and plays Mafia Wars with other students in Malaysia. He has watched his country transform from a dominant super power to one of many equally-important players in geo-political events. He has witnessed the rise of China and the fall of dictatorships. He will expect that your company has customers around the world and is willing to do business wherever opportunities lie. Is that true?
Adam has a cool tattoo on his arm and wears a small earring. And yet he's pretty conservative. Many of his friends have more ink on their bodies than a Staples store. These friends are different in other ways too. Adam has friends who are gay, straight, black, yellow, and autistic. He has grown up in an increasingly more tolerant world. In fact, he is incredulous when he hears those my age and older make shockingly-insensitive and racially-charged comments that even 20 years ago wouldn't have raised an eyebrow. This means that Adam is comfortable partnering, working, and competing with people of all backgrounds, ethnicities, sexual orientations, and appearances. He would expect an employer to hire the best, regardless of how they look or where they come from, in order to compete and succeed, and would probably turn away from a boss who acted otherwise. Are you that boss?
Adam is used to having things immediately. He grew up in a world where good things do come to those who wait, as long as they don't have to wait more than five minutes. He hears a song and downloads it instantly. He likes a movie and streams it. He wants to buy something and he goes online and just buys it. He has a question about something, anything and Google gives him an answer in less than a minute. ('What was that ridiculous Flo Rida song we danced to in 12th grade? Oh yeah, it was Club Can't Handle Me'). He texts, he Facebooks, he tweets, he even sends an email once in a while. (Don't expect a response, or even one that's grammatically accurate because he doesn't have time to punch in these letters.) He moves fast. He expects to get answers fast because so much information is available to him now. Can you manage someone who's used to finding things out in minutes? Will you be able to meet his expectations?
This may come as a surprise, but when you peel away Adam's attitude and his swagger and his arrogance, you'll find raw fear. That's because even though this generation hasn't grown up in times of war, famine, or pestilence, they have seen major uncertainty. An America that is no longer the No. 1 super power. Terrorist attacks on their land. Older friends who graduated without jobs and are desperate for work. Parental expectations to do better, be more successful, and maintain an increasingly-expensive and harder-to-attain middle-class lifestyle. Potential failure lurking all around them. But with this fear comes the desire to succeed, and with this desire comes the willingness to work hard. Millennials work hard. Putting in long hours and making sacrifices is completely acceptable to this generation as long as there's something to shoot for. Money. Success. Or maybe just a feeling of pride from being part of something good. Is your company providing incentives like these?
Adam represents a new generation of entrepreneurs coming into the workplace. People in their 20s who want independence, mobility, challenges, and a rewarding occupation. They want jobs yet want to feel like they're their own boss. It's a huge wave of knowledge and youth and energy that's hitting the economy at a time when you need it the most. Just watch: the really smart business owners will recognize this young people, hire them, and manage them the right way. And together they will all profit.
John Paul DeJoria manages multiple companies--all without using email.
When John PaulDeJoria and Paul Mitchell launched John Paul Mitchell Systems in 1980, they went door to door pitching their shampoos and conditioners to Los Angeles salons. Mitchell died in 1989, leaving DeJoria head of the company, which now sells more than 100 products in salons in 87 countries.
But DeJoria, 63, does way more than hair care. In 1989, he and Martin Crowley co-founded Patrón Spirits, which sells more than two million cases of tequila a year. DeJoria also owns many other companies, including pet care line John Paul Pet and jeweler DeJoria Diamonds. Though DeJoria's empire has grown, he still values door-to-door visits. He spends a lot of his time meeting with the salon owners and distributors. But these days, he uses a private jet to get there. As told by Liz Welch. Photographs by Jeff Wilson.
I work at home in Austin, but I spend a lot of my time traveling--about two weeks out of every month. I visit Paul Mitchell's headquarters in Los Angeles once a month, and I go to Patrón's headquarters in Zurich four to five times a year. I also travel a lot to meet with distributors and salon owners, to do press interviews, and to attend openings of Paul Mitchell schools.
I could not do what I do without a private jet. I travel to at least 20 states a year, sometimes leaving in the morning and returning at night. I save so much time not having to deal with checking in and customs. Plus, I haven't had a cold in 20 years.
I don't use email or a computer. I would be so inundated that I wouldn't be able to get any work done. Instead, I do everything in person or on the phone. I have a phone book that's 15 years old and filled with whiteout and rewrites. I carry that everywhere.
I chose to live in Austin because Eloise, my wife, is from Texas, and it was a great place to raise my youngest son, John Anthony, who is now 16. Plus, I can get to South America or the East Coast two hours faster from Austin than from Los Angeles.
I usually get up between 7 and 8 a.m. Whether I'm home in Austin or I'm in another part of the world, I like to spend the first five minutes of the day lying in bed and--I just am. I just try to be here and now. I find it helps me be more peaceful.
After a light breakfast, I head to my home office, which is separate from the house. There I have a desk, an exercise ball that I use as a chair, a phone, and a fax machine. The headquarters for Paul Mitchell and Patrón each have a fax machine for one purpose: communicating with me.
I don't use email or a computer. I would be so inundated that I wouldn't be able to get any work done. Instead, I do everything in person or on the phone. I have a phone book that's 15 years old and filled with whiteout and rewrites. I carry that everywhere.
I have three assistants. Kelly Sellers is my executive assistant, and she works out of our home. She's amazing. She went to high school with my wife and has been with us for 12 years. I also have an assistant at Paul Mitchell and one at Patrón.
Every morning, Kelly gives me a list of all the calls I need to make that day. There are about 10 companies that require my time. Paul Mitchell takes the most time. I talk to someone there at least once a day. And talk to someone at Patrón several times a week. I also own several water companies and a brewery in Germany that I touch base with regularly. My presidents are much smarter than I am. That's a prerequisite.
I could go insane if I obsessed over every little detail of all of my companies. My management philosophy is to pay attention to the vital few and ignore the trivial many. For instance, with Paul Mitchell, I want to know how the schools are doing, how the manufacturing is going, how sales are doing, what new products we're launching, what our main advertising campaign is, and if my people are happy. The other little details are just trivia.
I don't micromanage, but I do care deeply about every product we make. Every one goes through me, and I try most of our products before they go to market, including our John Paul Pet flea and tick shampoo. If I don't like it, it's not coming out.
I have a personal chef who makes lunch for me when I'm in Austin. It's a luxury, but eating well keeps me healthy. Everyone who works at Paul Mitchell and Patrón gets free lunches. I believe that you have to treat your people well. Eating good food is part of that.
When I travel, Kelly coordinates all of my plans and meetings with my other assistants. I like to make the most of every trip, so if I go somewhere for a board meeting, I want to also schedule meetings with my Paul Mitchell distributors and my Patrón sales team.
I meet regularly with my distributors, the independent companies that buy our Paul Mitchell products and sell them to the salons. I like to check in and ask, "What more can I do for you?" I frequently meet with salon owners, too. The hair industry is the only reason we made it. They believed in us, and I want them to know we believe in them. If I happen to be near a salon that carries Paul Mitchell products, whether I'm in New York or Seoul, I stop the car and go inside, thank them for using Paul Mitchell, get back in the car, and go.
I go to New York at least once a month, to meet with distributors and talk to the press. A big part of my job is to be the face of my companies. I'll usually arrive in the late afternoon and do a television interview that night. And then the next day, I'm booked solid. Sometimes, I'll start at 5:30 a.m. on CNBC's morning show and then end at night on Erin Burnett's show on CNN.
The interviewers usually want me to talk about the economy--beauty salons are a great indicator of how we're doing. People still go to a salon when times are tough, but instead of every six weeks, they go every two or three months. When the economy's coming back, more people go on a regular basis, which is what we are seeing lately.
Paul Mitchell has more than 100 schools for hairdressers, and every time we open a new one, I go to the opening. My feeling is, if you're going to run one of our schools, which represent us, I should be there helping you open it up. Shaking hands, taking pictures with you. I want people to feel they're part of the John Paul Mitchell Systems world family.
My motto is, Success unshared is failure. At least once a year, I meet with a group called the Giving Pledge. It's a group of billionaires--including me, Warren Buffett, Bill Gates, and Ted Turner--who have pledged to give away most of their money to charity. We meet for three days to talk about what we're doing to help make the planet a better place to live.
About once a week, I meet with Constance Dykhuizen, the executive director of my Peace, Love & Happiness Foundation. I created it in 2010 to invest in charities involved in sustainability, social responsibility, and animal-friendliness. In April, we had our annual motorcycle ride to raise money for a local children's shelter and families of police officers and firefighters killed on duty.
When I'm in Austin, I ride my motorcycles whenever I get a chance. I have seven customized, really cool bikes. There's nothing like jumping on one and going out in the hill country. I'll usually go with a friend. If the weather's good, maybe once a week.
About once or twice a year, I try to take a couple days and go on a retreat alone--usually up in the mountains. I think about what I did the past year, who is in my life, what I'm doing, what I want to do. There are no people, no phones, no obligations, no nothing. If I want to cook, I'll cook. If I want to be vegetarian, I'll be vegetarian.
I'll sip a little bit of nice red wine, just think, just feel, and just be. That's when I get my best ideas. And I write a lot. One of my ideas was to just be for a few minutes every morning. Another idea I had: Don't think about things so much. Let it happen. Sometimes, people spend too much time thinking. If you just let things happen, the universe works.
Paul Mitchell, Patrón Spirits, John Paul Pet, DeJoria Diamonds, and several others.
Estimated net worth:
$4 billion, according to Forbes
What's in his office:
A phone, a fax machine, and an exercise ball he uses as a chair
"Pay attention to the vital few and ignore the trivial many."
Best company perk:
Free lunch for every employee
Looking to make your mission more than a tagline? Here's how to start.
Mission-based businesses are a different breed. You can't expect your mission to matter if your company doesn't put it front and center.
Here, Luis von Ahn, the co-founder of Captcha and most recently, Duolingo, identifies three things mission-based companies need to thrive.
1. Get the culture right. It's not enough for employees to be talented. They need to have strong moral compasses and be true believers in what they are doing.
2. Constantly restate the endgame. At Duolingo, von Ahn never tires of reminding staff members that they have the potential to help millions of people. Success at the company is seldom if ever defined in monetary terms.
3. Put mission before money. In most cases, entrepreneurs focus on making money first, then perhaps doing some good in the world. With mission-based companies, von Ahn says, it's the opposite: Get the mission right, and the money will come.
Yes, manufacturing can be an engine of growth again. But it will only happen if we address these critical issues.
It seems hard to believe with people still struggling to find work, but there are 600,000 jobs in U.S. manufacturing that aren’t being filled because employers say they can’t find applicants with adequate skills, according to a recent survey.
At a recent event at the Aspen Institute in Washington, Deloitte’s Craig Giffi attributed that disconnect to several gaps in manufacturing. People in business, academia and all the way to the Oval Office believe that advanced manufacturing is poised to deliver substantial job growth if we can bridge some of these gaps:
The education gap. In a 2009 study of high school graduates around the world, the U.S. ranked 31 in math, 23 in science and 17 in reading. China, by the way, ranked first in all three. The modern factory, even a small or mid-sized one like mine, increasingly relies on sophisticated technology. We desperately need our schools to generate graduates who know how to read a blueprint, who can calculate tangents, diameters and radii so they can confirm the quality of the steel wire baskets we produce.
The gender gap. Women represent nearly half of the U.S. labor force, but only one-quarter of the durable goods manufacturing workforce. The Manufacturing Institute joined with Deloitte, the University of Phoenix, and the Society of Manufacturing Engineers on an initiative called STEP Ahead (that's science, technology, engineering and production) to better promote opportunities for women in manufacturing.
The policy gap. Many people say that President Obama has shined a spotlight on manufacturing more than any president in recent memory, including highlighting it in his State of the Union addresses. But important and vexing issues like tax and regulatory reform that could propel the sector remain mired in the halls of Washington.
The training gap. We dedicate five percent of our annual salary budget on training so that our employees are coming up with the freshest ideas they can. We are going to leverage more out of a six-figure investment in a piece of high-end equipment if we have six knowledgeable people devising the best ways to employ it rather than one person. A manufacturer that can only offer what everyone else offers is not sustainable.
The perception gap. Many people, unfortunately, associate manufacturing jobs with the four D’s: dirty, dangerous, dumb and disappearing. In recent surveys, 18-to-24 year-olds ranked manufacturing last among where they would choose to start a career. It’s an outdated view, darkened by the downsizings and outsourcing of the past two decades. Driven by trends like lean manufacturing and automation, these jobs are much safer, cleaner and more creative than their reputation. We’re proud, for example, that we’ve gone more than 1,610 days straight without a safety incident.
The growth gap. Manufacturing has added 500,000 jobs since the end of 2009, but more than two million manufacturing jobs were lost in the last recession and output remains well below the 2007 peak, indicating how serious the recent manufacturing recession really was. To compete on a global stage, U.S. manufacturing needs policies that enable companies to thrive and create jobs.
People talk about a seventh gap, but it’s a myth: the wage gap. In 2011, the average U.S. manufacturing worker earned $77,060 annually, including pay and benefits. That’s 22 percent more than the rest of the workforce. And if the factory is an exporter, the average wage zooms to $95,000, double what the average American earns.
Few entrepreneurs like to delegate. But give it a try--you may be surprised at what you learn.
A few weeks ago, I did something that once would have been unimaginable: I handed over day-to-day control of 37signals's most popular product, Basecamp. A different Jason, Jason Zimdars, is steering that ship now.
Understand, Basecamp is not just any product. It's our signature offering. We launched it nine years ago, and it boasts tens of thousands of paying customers and millions of users across scores of industries around the world. It's critical to our success--and because many customers use the software to run their businesses, it's critical to their success, too.
For years, I felt I was the only one who could manage Basecamp. But I recently spent some time reflecting on my day-to-day responsibilities. Every day, I make dozens of decisions, some big, some small, about 37signals--about our culture, employees, customers, current products, future offerings, and more. As a result, very few things get my undivided attention anymore. And that's become a problem.
To put it another way: For me to hold on to Basecamp is no longer in the best interests of the company. In fact, our continued growth depends on me becoming a different kind of leader--one who is able to see when other people can do a better job than I can.
It also occurred to me that the only reason I was running Basecamp was that I had always run Basecamp. And that's no reason to do anything.
From the outside, this may seem obvious. But letting go is one of the hardest decisions a business owner ever makes. It's especially challenging when you've been doing things your way for years.
Given all that, you might ask why I didn't start with some baby steps and hand off something less important than Basecamp. I guess it's because baby steps are baby steps. They're not going to take you very far. It was time to take a big leap.
Basecamp is at the top of its game right now. Last year, we redesigned it from the ground up, and our customers have been delighted with the results.
But there's a flip side to that success: the risk of complacency. When something is working well, it becomes too easy to let things run themselves. Fix a few things here, improve a few things there, launch a new feature every so often. That's coasting. And I don't want Basecamp to coast. And I finally came to understand that given all that is on my plate, that person no longer can be me.
I was lucky. Because if deciding to delegate was difficult, deciding whom to delegate to was a cinch. Jason Zimdars has been a designer here for years. And lately, he's really stepped up, singlehandedly taking over projects without waiting to be asked. He's proved, without being asked to prove, that he is capable of making smart decisions and producing on-time, quality work.
When I asked Jason how he felt about taking over Basecamp, he asked if he could take the weekend to think it over. On Monday morning, he came to me and said, "Hell, yeah!"
I'll still be involved, of course. Everyone at 37signals contributes to what we do and how we do it.
But in the end, it'll be Jason who will make the final call. As for me, I'll finally have time to devote my attention to new ideas. There's an important lesson here: By offering Jason a chance to develop his talents, I am also giving myself a chance to grow. And that's the best kind of win-win.
Here's what you need to know about Google's Hilltop algorithm and how to use it to your advantage.
The Hilltop algorithm is one of the oldest still used by Google, and it's more relevant than ever. In the original white paper submitted by Google, the authors describe "...a novel ranking scheme for broad queries that places the most authoritative pages on the query topic at the top of the ranking."
To offer an understanding of authority, the Hilltop algorithm uses "a special index of expert documents" as starting points for authority signals. These "expert documents" are simply Web pages that Google has deemed an authoritative Hilltop. When a Hilltop links to a website outside of this special club, that website earns trust and authority. This increased brand authority earns higher search engine rankings.
The key word to note here is "authority," which has appeared frequently in recent discussions around upcoming changes to Google's search algorithm. A recent video by Matt Cutts, head of Google's Webspam team, forecasts some upcoming changes in Google search guidelines. In this video, he makes references to the idea of Hilltops:
"We're doing a better job of detecting when someone is sort of an authority in a specific space. It could be medical, it could be travel and trying to make sure those rank a little more highly if you're some sort of authority, or a site that according to the algorithms we think might be a little bit more appropriate for users."
Considering the past and current positions taken by Google, it's more important than ever for brands to earn links from topically relevant Hilltops to earn more visibility in search results. This will also scale link building efforts, since authoritative resources are naturally syndicated by a large number of news aggregators, social profiles and other Internet users. We call this "climbing the Hilltop."
When brands climb Hilltops on a regular basis, they'll naturally become a Hilltop themselves. This is the point that really scales organic search traffic, since organic search visibility will increase across the board once the brand earns the Hilltop status. Earning links from Hilltops across the web increases the trust and authority of your website, which boosts brand visibility in search.
Focus on authority when climbing industry Hilltops. No matter how many outbound links you build, nothing will perform as effectively or consistently as reliable, authoritative information that users can trust.
Although buying a small business is a big step, it isn't a step that you have to take alone. Here are several resources that can help you close on the business of your dreams.
Buying a business is exciting. When you enter the market to buy a business, you're greeted by a stunning array of business opportunities, many of which have the potential to become a major turning point in your life and your entrepreneurial career.
But narrowing the list of prospective opportunities down to the business that is the perfect fit for your personal and career goals can be difficult. And once you do find the business that is right for you, seeing the deal through to completion can be even more daunting.
The good news is that you don't have to navigate the process of buying a business alone. At BizBuySell.com, we believe there are at least five important tools and resources every buyer should consider when they enter the business-for-sale marketplace.1. Business Brokers
Brokers have a wealth of information about businesses that are for sale and often know about opportunities that haven't yet been listed publicly. Additionally, good brokers have keen insights about the marketplace and can advise you on which businesses will be best aligned with your buying objectives and your budget. (Not to mention the fact that a broker can help you identify and prioritize your buying objectives and your financial options and, therefore, budget.)
A business broker can also play an important role as an intermediary and advocate in your dealings with sellers. When unexpected roadblocks bring the buying process to a grinding halt, as often happens, business brokers know how to overcome the obstacles and get a deal across the finish line.2. Online Tools
Research is critical when buying a business. Fortunately, there are plenty of online resources available for business buyers. From helpful articles to online business-for-sale listings, your laptop or tablet is a gateway to the tools and information you will need to locate and acquire your business.
Additionally, there are many online tools that can help you assess specific companies. For example, at BizBuySell we offer a Valuation Report that provides you with access to tens of thousands of currently listed and sold businesses (i.e., "comps") to help you assess what your budget can buy and evaluate a seller's asking price.3. Appraisal Experts
While online valuation tools are great starting points for valuation, a detailed valuation of the specific business is critical before entering the negotiation process. Generally, the seller will have already hired an appraiser to determine the value of the company. But savvy buyers know that business valuation isn't as straightforward as sellers make it out to be, so they take the extra step of hiring their own appraisal expert.
Your broker may provide these services or he/she can help you find an appraiser with valuation experience in the industry and geographic area of the business you want to acquire. With the right appraiser, you will be better able to gauge the value of tangible and intangible assets, and strengthen your position during the negotiation stage.4. Legal Counsel
At some point in the process, you will need to engage the services of qualified legal counsel. Although it's technically possible to acquire a business without the help of an attorney, it's not advisable--there are simply too many legal details that can derail the deal and jeopardize your success post-sale. If you are working with a broker, he/she can help you find the best lawyer for your needs. (Tip: Brokers are a great direct resource, but they are also an excellent gateway to other trusted resources.)
During the buying process, your attorney will be responsible for drafting purchase agreements, contracts and other documents related to the acquisition. In many cases, the buyer's relationship with the attorney continues after the deal has closed--with the attorney providing legal services throughout the business lifecycle.5. Accountants and other Financial Advisers
Although many people associate accountants and financial advisers with sellers, it's just as important for buyers to tap into competent financial expertise. At the beginning of the process, your accountant or financial adviser will help you determine how much you can afford to spend on an acquisition and can help you secure the capital you need to be a serious buyer.
During the later stages of the buying process, a skilled accountant can decipher the financial records of businesses you are considering, and help you decide whether sellers' claims line up with historical balance sheets and earnings statements.
Outside resources bring data and objectivity to the process of buying a business. Although we would all like to think that we're rational decision-makers, emotions cloud our judgment. By combining your own research with key online tools and the assistance of third parties, you can minimize risk and increase the likelihood that your career as a new business owner will start on solid ground.
As your business grows, you face a slew of employee compliance and legal issues. So what's the right time to bring HR on board?
Dear Evil HR Lady,
I run a small business with around 45 employees. I'm in the restaurant/retail/convenience store industry. We are looking to keep expanding the food end of our business with more restaurants. From what I have been reading my company is supposedly right in the sweet spot for outsourcing HR. I want to provide the best for my staff while remaining profitable enough to grow my business and have an edge on my competition. What are your thoughts on outsourcing HR?
You're right to be thinking about adding HR to your staff. At 45 people you're on the cusp of being subject to more regulations and you need help. Additionally, hiring, training, and managing people becomes more and more complex with more people (because you can no longer do it all yourself), and it just makes good sense to have someone who is an expert in that area on board to help you out.
But whether that role is in-house or outsourced really comes down to what you are looking for.
If you want someone to be your right-hand man, advising you, handling problems instantly, and participating as part of your planning team to help figure out the best way to develop the staff to handle a changing workload as the business grows, you probably want to hire someone directly.
If you're more concerned about complying with regulations and laws (the more employees you have, the more concerned you need to be), while you still handle most of the employee issues directly, outsourcing is probably your best bet.
If you want someone who can multitask and take on HR as well as oversee other functions, then you want someone in house.
If you are comfortable with most problems being solved by a call center or email, then outsourcing is the way to go.
There isn't a right or wrong answer, here. In fact, your best solution may lie somewhere in the middle. One thing I would strongly think about is doing a hybrid approach: hiring someone part time to be a business partner, helping you with planning, staff development, and hiring, and then work with an outsourcer for your benefits, employee handbooks, and legal compliance.
This is actually more doable than you might think. There are quite a few experienced, intelligent people out there who would love the opportunity to have a meaningful, challenging part time job. It gives you the advantage of having expertise on staff without breaking the bank. Additionally you gain the advantages of an outsourcer (such as the ability to quickly analyze exactly how a new regulation affects you).
But, in the end, it comes down to what your business needs and how you want to approach it. You do need HR on board at this point, if just to be the person responsible for making sure you're complying with employment laws, and so it's a great time to analyze the role you want for HR in the future and plan around that.
This entrepreneur says team dynamics can make or break your company. That's why he hires the nice guy every time.
Luis von Ahn, the co-founder of Captcha, never cared much about culture. But that was then. He tells Inc.'s Jeremy Quittner that in his new venture--Pittsburgh-based language teacher Duolingo--his priorities are very different.
What is the single most important thing you've learned from your previous businesses?
Having a good co-founder really matters. I put a lot of weight on feelings and am weirdly in touch with them, which is not typical for an engineer. My current co-founder, Severin Hacker, is really logical.
I am in charge of product; he is in charge of technology. I do the specs of what needs to be done, and he figures out the best way technologically to do it. He also thinks bigger than me: If I want to have a $100 million company, Severin wants a $100 billion company.
What else are you doing differently this time around?
I'm spending a lot of effort on team dynamics. Our team at Duolingo is really cohesive, but this did not just happen. I made a concerted effort to hire people who are going to play nice.
In the past, I just looked at how competent people were, but it sometimes happens the most competent are the biggest assholes. I used to think this does not matter, but I realized this is really important.
Do you take a hands-on approach with the hiring now?
I do. Every person that comes through here, I talk to them for an hour. It is amazing how much comes out in an interview.
You sold your two previous companies. Is that your goal with Duolingo?
I just did what made sense at the time. And I would say that right now it does not make sense for us to sell to anybody. The product is pretty successful, and it is growing, and there's nobody we see as a clear partner. I've made enough money. What's important now is to have a positive impact on people.
Duolingo is backed by some brand-name investors, including Ashton Kutcher and Timothy Ferriss. What have you learned about dealing with the money guys?
This is the first time I've had VC backing, but I've learned a lot. Before, I didn't know that on a Series A round of funding, you sell around 20 percent of the company. So if someone comes around and proposes 40 percent, you know that is not right.
The other one is boneheadedly simple: Competition among investors is good. If you are talking to one big VC and wind up talking to another, they will find out. How much that matters is insane.
Awe.sm founder Jonathan Strauss recalls the wrenching lead-up to his resignation.
The decision to hire outside management for your growing business is never easy. Investors and owners are flooded with questions: Is now the right time? How should founders behave? And most of all, How will I cope?
That's the topic of an honest and thoughtful post by Jonathan Strauss, who founded awe.sm. After devoting blood, sweat, and tears to his startup for four years, investors told him there needed to be a change at the top, or else he'd be forced sell. It was a painful wake-up call that forced him to recalibrate his mindset:
"I put hiring a CEO in the same category as taking an acqui-hire or just closing up shop and moving on--things I would think about at 4am in the office on those darkest nights when I’d have a bout of sobriety about the insanity I’d turned my life into. And ultimately, things that represented the one unacceptable option motivating me to push even further beyond my limits I’d long surpassed: failure.
"In the early days, the only way for me to keep awe.sm from failing was to tie my fate with the company’s. If awe.sm failed, I failed. But as we switched from lean startup to growth company, I didn’t fully realize how making my ego a shareholder went from being necessary for survival to being a limitation on what we could achieve."
Giving up control would be painful, but his emotions were much more complex.
"After three and a half years of fusing my self-worth with the success of the company in the crucible of startup survival, it was impossible to tear them apart without pain. But while my first reaction was disappointment and failure, it was almost immediately washed away by a wave of relief. I knew change was inevitable, but I had no idea how stressful and exhausting maintaining my internal reality distortion field had been until they gave me permission to turn it off."
Strauss details the pros and cons of selling his company versus hiring a new CEO. He doesn't shy away from admitting his mixed feelings--or the fears that kept him up at night.
If you're facing a similar decision or just up for an unvarnished view on one of the toughest decisions a founder can make, the post is well worth a read.
Could you ever resign as CEO of your company?
Modernize all you want, but reinventing the wheel is pointless, says Mario Batali.
With 20 start-up investments and nearly 30 acres of land, Zappos CEO Tony Hsieh is slowly, but surely, fulfilling his promise to revitalize downtown Las Vegas.
When Inc. last checked in with the Downtown Project, Zappos CEO Tony Hsieh's plan to revitalize Downtown Las Vegas, some Vegas natives were skeptical. At the time, local lawyer and restaurant critic John Curtas told Inc., "Some part of me doesn't trust what he's doing yet." He added: "As much as I'm afraid Zappos is going to Disney-fy the area, it's got nowhere to go but up."
So 18 months later, has it?
These days, Curtas is singing a slightly more optimistic tune. "Things are pointing in the right direction," he says of the project's ability to breathe life into a chronically-depressed downtown Vegas. "I think it's a couple years away from being there, but for the first time in 25 years, I have hope."
What's Happening in Downtown Vegas?
The grand vision for the Downtown Project began back in 2010, when Hsieh decided to relocate Zappos's headquarters to the City Hall building in Downtown Las Vegas (from the burbs), a move that will be completed this fall. Along with the move, Hsieh committed $350 million of his own money to invest in his new neighborhood, devoting $200 million to investments in real estate, $50 million to small businesses, $50 million to education and culture, and the remaining $50 million to tech start-ups through the VegasTechFund.
In just the last year, Hsieh has made quick work of that money. According to the Las Vegas Sun, Downtown Project has dumped $93 million into the purchase of 28 acres of land across Clark County. In late March, Downtown Project inked a deal to purchase 100 Tesla Model S electric cars for Hsieh's car and bike-sharing initiative Project 100. Meanwhile, several projects are still to come. This summer, the 150-seat performance space, the Inspire Theater, is set to open, followed by Downtown Container Park, an outdoor mall of sorts made of repurposed shipping containers, which will open this October.
"One of our goals is to have everything you need to live, work, and play within walking distance," says Hsieh via email. "In an ideal world, we'd like to help people get rid of their cars."
The Biggest Winners So Far
The primary beneficiaries of Hsieh's investment have been the founders of VegasTechFund's 20 portfolio companies, including start-ups like Wildfang, an e-commerce clothing company, and Skillshare, a platform for taking classes online. For many of these founders, including Maren Kate Donovan, CEO of Zirtual, Hsieh's offer was too good to pass up. Having grown up in Las Vegas, Donovan always believed that in order to get her entrepreneurial career off the ground, she'd need to get out of Nevada. So, after graduating college, she moved to San Francisco to launch her start-up, which connects executives to virtual assistants all around the world, in 2011. "It seemed to me that San Francisco was like Los Angeles if you want to be an actress," Donovan says.
Soon enough, however, she began to feel the strain of being a small fish in a big pond. Hiring talented engineers, she says, was prohibitively expensive in San Francisco, as was office space. So when Zach Ware, a Zirtual client and VegasTechFund partner, put Donovan in touch with Hsieh, it didn't take much convincing to get her to relocate Zirtual's headquarters to Vegas.
Since opening an office at The Ogden, a luxury condo building occupied largely by Zappos employees and VegasTechFund portfolio companies, Donovan says one of the biggest perks of being part of the Downtown Project is having unfettered access to Hsieh and his fleet of influential friends.
"I'm obsessed with logistics and operations, so Tony put me in touch with the president of UPS," Donovan says. "In San Francisco, there are hundreds of people trying to court and woo and get advice from a select group of mentors. It's easier to be dismissed."
But while founders may be lured by all Downtown Project has to offer, attracting enough employees to those businesses is proving to be a tougher sell. For Keller Rinaudo, CEO of Romotive, relocating to Vegas back in 2011 was a no-brainer. After completing TechStars Seattle, where he and two co-founders were developing his Romo product, which combines hardware and software to turn any iPhone into a personal robot, Rinaudo got a call asking him to come to Las Vegas and meet Hsieh.
"I came in, talked to him about what we were doing, and Tony was like, 'Here's a free apartment. Move in here, and build your robots,'" says Rinaudo of their first meeting in 2011. "That sounded pretty good to us, so we took him up on it."
Over the course of a year and half, Romotive grew to 18 employees, secured a $5 million Series A investment from VegasTechFund, and was shipping tens of thousands of Romos to more than 30 countries around the world. Romotive quickly became the poster child for Downtown Project, but in just a few short weeks, Romotive will be relocating to more obvious pastures: San Francisco.
Challenges to Hsieh's Bet
"It's getting to the point where if we're going to build a company around this idea of making affordable robots for everyone in the world, we're going to need to be able to hire 1,000 people, not 20, and we're going to need access to the best roboticists in the world," Rinaudo says. "Those people are in Boston or Palo Alto, and we concluded that we really need to go where they are."
Many in the tech community viewed this decision as bad news for Vegas, but Rinaudo disagrees. "I think having a robotics company in San Francisco that's a shining example of how you can start a weird, ambitious company in Vegas and grow it quickly will serve Downtown Project more than it will hurt it," he says.
Hsieh, for one, was supportive of Rinaudo's decision. "Nine years ago, Zappos moved from San Francisco to Las Vegas, but that didn't become the standard trajectory of Silicon Valley start-ups," Hsieh says. "I think we'll see some companies moving, but most staying. What's important is the constant influx of new talent, the pace of which is actually accelerating in Downtown Vegas."
While he may have laid down a solid foundation already, Hsieh says he knows there's still lots of work to be done, and it won't happen overnight.
"I come from a tech background, so I'm used to moving fast. Anything related to buildings and real estate just takes a longer time," he says. "I think the most important lesson I've learned from other cities is you can't just build a pretty building and hope that things will work out. You need to focus on the people and the community first."