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Thanks to Malcolm Gladwell we all know you need to put in the hours to attain mastery, but practice and grit are only part of the equation. You also need this secret ingredient.
Thanks to Malcolm Gladwell’s best seller Outliers, pretty much everyone has heard that it takes 10,000 hours of practice or more to make a master. He’s since pointed out that the popular understanding of this maxim is generally oversimplified, but that doesn’t undermine the essence of the argument -- sustained effort over time is a hallmark of greatness.
But it’s not enough.
And no, the mystery ingredient isn’t talent, though certainly that’s part of the recipe. Of course, innate aptitude plays a big role in what any one of us can achieve (for instance, I could practice all day, every day for the next 100 years and never become an opera singer -- 'Happy Birthday' might even remain a challenge). According to psychological research, what’s the essential counterpoint to all that required intense practice? Surprise! It's rest.
If you think super high achievers are running around like maniacs all day and sleeping five hours a night, you couldn’t be further from the truth, reports UC Berkeley’s Greater Good Science Center which studies positive psychology and recently laid out the relevant science:
In his studies of truly great performers, K. Anders Ericsson, the psychologist and author of several landmark studies on elite performance... found that they practiced and rested a lot more than their good but not elite peers. For example, violinists destined to become professional soloists practiced an average of 3.5 hours per day, typically in three separate sessions of 60-90 minutes each. Good but not great performers, in contrast, typically practiced an average of 1.4 hours per day, with no deliberate rest breaking up their practice session.
So it isn’t just that elite performers work more than others; they rest more, as well. The top violinists mentioned above slept an hour a night more than their less-accomplished classmates. They were also far more likely to take a nap between practice sessions-;nearly three hours of napping a week.
Super-high-achievers sleep significantly more than the average American.
The complete article includes much more on the science of rest and performance, so check it out if you're interested in more details, but its conclusion is the kind of thing many hard-charging small business owners could probably benefit from sticking on a Post-It note and pondering regularly: "Being gritty isn’t just about pushing yourself 24/7 toward your goals, in both good and bad weather. It’s about making progress toward your goals consistently and deliberately, in a way that works with our human biology, allowing for proper refueling and consolidation of knowledge."
Are you resting enough to be your most successful self?
Next up for online education portals Coursera and edX: breaking into the non-English speaking world. To be truly global, they need to expand their reach.
Since their inception, companies like Coursera and edX, both purveyors of massively open online courses or MOOCS, have had grand plans to radically expand access to an elite education around the world. So you live in Lesotho? No problem. Join Coursera, and you can take Harvard courses for free online.
That is, if you speak English.
These days there's plenty of debate about MOOC mania: Are these companies really worth the millions of dollars venture capitalists are pouring into them? Are they really providing students a first class education? Another issue with the outsized ambitions of these companies: so far, they haven't found a way to be truly global and breach the language barrier at scale. Now, that's starting to change.
On Thursday, edX announced it's partnering with 10 Chinese universities to launch the country's largest online learning portal, called XuetangX. The universities will use edX's open source platform to build their own courses in Chinese, as well as license courses from edX's global university partners.
"There's only so many people edX can support," says edX co-founder Anant Agarwal. "We open sourced our platform exactly for this reason."
It's the most recent news in a week that's been chock full of announcements about MOOC providers going global. Late last week, edX also announced its new partnership with the French Ministry of Education to launch France Universite Numerique, a government-run online learning portal that also runs on edX's open-source platform. It was a major vote of confidence for a still-nascent industry. Then came the news this week that Coursera would be launching Coursera Zone, a Chinese-language online education site, hosted on the leading Chinese Internet portal NetEase. Different from edX's model, Coursera Zone will offer courses from Coursera's existing university partners, but with Chinese language discussion forums and other course materials. Translating Coursera courses into Chinese, however, is a project that's still underway.
"Almost any way you slice it, China is the No. 1 country in terms of the potential for growth and impact on students," says Andrew Ng, co-founder of Coursera. "In terms of expanding our reach, China's a huge market and helps us reach their market."
And China is only the tip of the iceberg. After all, "Harvard" probably translates well in a whole host of countries.
These international partnerships also hint at a future in which MOOC providers are as much about serving businesses as they are about serving consumers. As I've written in the past, Coursera and edX are busy trying to figuring out ways to improve education on campus, a service for which universities are willing to pay. Nations have much deeper pockets. If more countries take France's lead to launch their own online portals, that would not only help MOOC providers overcome the language barrier without doing the heavy lifting, but it also would enable these companies to charge for support services and for licensed courses from other universities.
"This would open up a very interesting business model for edX," says Agarwal, who says he's in talks with several other governments to set up similar agreements.
So far, however, Agarwal says no money has changed hands between edX, one of the only non-profit MOOC providers, and its international partners. In this space, he says, revenue generation will always be secondary to doing what's right for students, and that includes giving students courses in a language they understand.
"It seems to be par for the course in this high-speed, fast moving MOOC business, where things happen so fast," Agarwal says. "We start by doing the right thing and then the formal arrangements follow."
But follow they must, if these education providers want to deliver on their audacious goals.
The Internet visionary says he's confident entrepreneurs will guide the country's future--but there's a lot of work to do in Washington.
The troubled music start-up launched new features. But can they keep it alive?
Turntable.fm is changing its tune.
In a recent interview, co-founder Billy Chasen told Inc. that his online music start-up is doing just fine. Contrary to past reports and even the company's own blog, he says, Turntable.fm isn't heading toward its demise. It's pivoting to stay afloat.
The latest addition to the site, announced Wednesday, is Turntable Live, a new service for streaming live concerts. The program debuts tonight at 7 p.m. ET with a performance by folk outfit Beat Radio. But in contrast to the traditional free Turntable.fm experience, a front-row seat at this performance will cost you exactly $3.
Chasen plans to adopt what he says is the industry standard of giving performers a 70 percent cut of the profits, while Turntable.fm pockets the rest. The move could prove popular with artists, who rely on sales from tours. But few, if any, similar start-ups have turned a profit with this sort of model, and its unclear whether there is sufficient demand.
So far, none of the acts on Turntable.fm's roster seem particularly well-known, and few shows exceeded their modest sales goals (10 tickets at press time).
When Turntable.fm launched in 2011, it was heralded as the tech world's "next big thing." But those days seem long gone. In a blog posted last month, Chasen opened up about his struggles with Turntable.fm, the majority of which were financial.
Piki, his song-picking service, was being shut down due to lack of traction. And despite partnering with four record labels "to do everything by the book," Chasen's company was hemmoraging money--"tens of thousands of dollars a month in royalties, service fees, hosting."
Turntable.fm was fighting for its life and Chasen knew it.
But when asked what it would take for him to leave Turntable.fm, Chasen sighed. "I don't understand the context of the question," he said. "Turntable.fm has been my focus for two years, three if you include the time it took to build it."
Though the live streaming model seems shaky at best, perhaps it will help Chasen dodge the rights and hosting issues he's been battling since the company launched. Turntable.fm might survive, after all.
New apps and devices are bringing diagnosis and treatment straight to the end consumer.
The Affordable Care Act put a spotlight on the surging cost of health care. That has opened a huge opportunity for companies developing tools to make health care--especially preventive and diagnostic care--more accessible to the masses. Increasingly, such products and services are being delivered online, through mobile apps and Web-connected devices.
The Market Is Big...and Mobile
Apps and devices that encourage consumers' overall wellness have proliferated over the past few years. Two leading products, Nike+ and Fitbit, include wearable sensors that capture their users' vital signs and movement and sync that data to apps on which their users can track their fitness status. Another fast-growing category of apps connects consumers with health care providers. For instance, ZocDoc, which has attracted nearly $100 million in funding, enables its users to research and book appointments with local doctors online. Other health apps aim to address the diagnosis, treatment, and ultimately prevention of diseases. WellnessFX, which launched last year, runs a mobile platform that offers recommendations for lifestyle changes based on the results of its users’ urine and blood tests, which the company supplies.
Mobile apps and devices will continue to drive growth in the consumer health technology industry. The segment’s market value will reach $6.6 billion by the end of this year, according to the research firm MarketsandMarkets, and will top $20 billion by 2018.
How to Get Noticed
New companies can stand out by pursuing services that enable consumers to make sense of the large sum of personal health data already in existence. For instance, the New York City-based company Curious is developing an app, currently in private beta testing, that uses data from platforms such as Fitbit to help its users answer questions about their health, such as “Does urine acidity correlate with body pain?” Even Google, which recently announced its launch of Calico, a company focused on solving aging-related health problems, may be entering the fray. Though few details about Calico’s operations have been revealed, industry observers have speculated that the new venture will analyze consumer data to expedite medical research.
Skills You'll Need
Given that many health apps on the market rely upon the collection and analysis of consumers’ personal information, aspiring entrepreneurs seeking to enter the field should have a strong facility with data. At the same time, developing apps geared toward consumers with minimal medical knowledge requires a nuanced understanding of health concerns, most readily found among former health practitioners. As a result, founding teams for health technology companies are usually interdisciplinary. “Understanding how to build a database is very different from knowing the science behind health care,” says Halle Tecco, the CEO of Rock Health, an incubator specializing in digital health. “Very few people have both skill sets.”
Prior industry knowledge will also lend entrepreneurs an advantage in navigating the many regulations that govern the industry. Companies that handle users’ personal data must comply with privacy standards set by the Health Insurance Portability and Accountability Act, or HIPAA. Additionally, companies that provide diagnostic tools or make health-related claims may soon require approval by the FDA before they can launch their services to the public, especially with recent studies raising doubts about the accuracy of certain screening apps.
Above all, in order to be successful, consumer health companies must eliminate the intimidation factor often present in conversations about health and medicine. The most popular apps and devices on the market, such as Nike+, have achieved this goal through an emphasis on design. Some companies have even gone so far as to acquire other firms for their design prowess. Aza Raskin, the designer who founded the mobile app company Massive Health, now serves as a vice-president of Jawbone, which acquired his company in February.
Areas to Avoid
Aspiring health-tech entrepreneurs should steer clear of products that focus solely on sleep. Two start-ups with an exclusive focus on sleep science, WakeMate and Zeo, eventually shut down after high-profile launches. Many wellness apps and devices have taken a broader approach by including sleep tracking as just one of many product features. For instance, Lark, a company that originally focused on sleep science, has since expanded its product offerings to address diet, exercise, and other aspects of health and wellness.
Where to Find Funding
Venture capital funding for health technology has continued to rise, with companies in the industry raising $849 million in the first half of 2013, according to Rock Health. But few health technology companies attract seed funding, as most investors prefer to fund companies that have already shown significant progress in product development. As a result, more companies are turning to crowdfunding platforms like Kickstarter to raise initial funds. Crowdfunding sites dedicated to the industry, such as VentureHealth and MedStartr, have also begun to emerge.
Establishing a sustainable business model remains a big hurdle for consumer health companies. Health care costs in the United States top $3 trillion, but consumers typically pay only 12 percent of that cost. “We still haven’t answered the question of who pays,” says Tecco. “We’re not used to paying out of pocket.” Though consumers have shown willingness to buy sleekly designed hardware, most health apps currently on the market are free. Many companies have sought to monetize their products and services by adding premium features, such as live consultations with doctors.
Despite business models, other tech companies have been eager to scoop up start-ups with promising products. Insurance firms and electronic medical record companies have been particularly active in acquisition deals. In February, for instance, the medical-records company PracticeFusion bought 100Plus, a personalized platform that uses game mechanics to encourage better health habits, for an undisclosed sum.
The Quick and Dirty on Consumer Health Technology
Jawbone, WeightWatchers, Nike. Privately held companies include Castlight Health and ZocDoc.
Investors are very interested...
Digital health care companies raised $1.4 billion from VCs last year, up 46 percent from 2011, according to incubator Rock Health.
...So are strategic buyers.
That includes insurance companies and other tech firms. Aetna bought Healthagen, maker of the health app iTriage, in 2011.
Brace for red tape
Start-ups have to navigate a maze of regulations regarding consumer privacy and health claims. Certain apps, like diagnostic tools, may require FDA approval.
What's the ideal prior job?
Big Data engineer, doctor, or medical researcher. Design skills help, too.
Wearables: Sensor-based technology that tracks users' vital signs. Wearables comprise one of the leading segments in consumer health care.
Sure it is. No it's not. Actually, it's complicated.
In this week's issue of The New Yorker, columnist James Surowiecki weighs in on the Obamacare debate, with a column called “The Business End of Obamacare," which makes the case that “the likely benefits of Obamacare for small businesses are enormous.” Is Surowiecki's assessment correct? Yes and no.
Rightly, he dismisses complaints about the employer mandate, pointing out that 96 percent of U.S businesses have fewer than 50 employees and therefore don’t have to worry about it, and that more than 90 percent of companies with 50 or more employees already offer health coverage. Surowiecki also notes the liberating effect of guaranteed health coverage, which will spur people to leave jobs and pursue entrepreneurial ventures.
The small-business exchanges should also help level the playing field for small companies, which have historically had to pay higher premiums than large firms. As a result, in 2009, only 33.6 percent of firms with fewer than 10 employees offered health insurance. As Surowiecki points out, generous incentives--in the form of a tax credit for small businesses that offer health coverage--under Obamacare could encourage more small businesses to do so.
But this is where things get tricky. The Small Business Health Care Tax Credit is available to employers with fewer than 25 full-time-equivalent employees and average annual wages of less than $50,000. Starting in 2014, the maximum credit will be 50 percent of the employer’s contribution toward employee health insurance. To qualify, an employer must contribute at least 50 percent of premium costs. Analyses by the President’s Council of Economic Advisors and by Families USA and the Small Business Majority agree that about 4 million small businesses, or about 84 percent, could qualify for the credit based on these criteria.
But just because they qualify for it doesn't mean that it'll do them much good.
Because the incentive takes the form of a nonrefundable tax credit, only employers with a positive federal tax liability will be able to use the credit in the current year. According to the 2007 IRS statistics, approximately 43 percent of all small businesses filing a corporate return had no net income and therefore, no dederal tax liability. As a result, a 2011 Small Business Administration report estimated that only about 2.6 million of the 4 million firms eligible for the credit would actually receive a benefit from it in the current year. (The credit can be used to offset federal tax liability in subsequent years, or carry it back one year.)
What's more, for employees at the small firms that would get the credit, getting benefits through their employer might not be the best thing. Depending on how generously employers subsidize their plans, lower-paid worker could be better off shopping for coverage on an insurance exchange, thanks to subsidies. Those earning $20,000 a year, for example, would get about 60 percent of their overall premium covered by the government if they buy through an exchange. So would a family of two adults and one child earning $40,000 a year. These subsidies are only available, though, if an employer does not offer health coverage.
Surowiecki lauds the impact that adjusted community rating will have for small business premiums, writing that it will “sharply restricting insurers’ ability to charge a company more because it has employees with higher health costs.” But he ignores the downside of community rating for companies whose employees are generally young and healthy. Such firms already are seeing their premiums rise dramatically as they are tossed into the same risk pool with older, sicker ones. As a result, there is growing interest among small companies in self-funded coverage, which could result in a disproportionate percentage of “sicker” making up the small-business pool in the public exchanges--and eventually lead to higher rates.
Bottom line: For many small businesses, there will be real benefits in Obamacare. But these benefits are not universal. And if you’ve been blessed with good fortune, and healthy employees, they may not be benefits at all.
How and when to respond when the marketplace changes, when you need to correct a misstep, or when your idea flatlines with consumers.
KFC’s new Go Cup chicken snacks fits in most car cup holders, for consumers who absolutely must have portable, cheap protein they can eat without utensils. While driving. It’s half the price of anything else on the menu. According to Jason Marker, KFC’s chief marketing officer,half of KFC’s sales come from drive-through orders. Americans order about 21 percent of their meals from cars, per the NPD Group, and that number is going up (slightly). Boneless chicken is increasingly a big seller. Not surprising for a country of suburban sprawl and automobiles that get you around those suburbs.
KFC’s move is a lesson for entrepreneurs who, like anyone in business, increasingly trade in consumer behavior. When the marketplace changes or when you need to correct a misstep, when and how do you shift and pivot?
A few years ago, Instagram founder Kevin Systrom started Burbn, which blended elements of Foursquare and Mafia Wars in a mobile HTML5 app. Systrom got funding for the project, and enlisted Mike Krieger to help. They scrapped the original iPhone code for a more universal app, and then realized it was too feature-filled and cluttered. So they removed everything except the most important features, renamed it, and Instagram was born.
Not everything emerges quite so seamlessly, of course. Some ideas are so quirky, or they have a feature that’s so new, that useful criticism is hard to come by. Then what?
Pay close attention to the marketplace.
"My advice would be to try to postpone intuition as much as possible," says psychologist and Nobel Laureate Daniel Kahneman. "You do as much homework as possible beforehand so that the intuition is as informed as it can be."
For brands, that means looking at your market with a deep dive into the habits and buying patterns of your consumers, researching the history of similar products in the marketplace, and looking carefully at what people like about your product now--and how they really use it.
In 2004, Jeremy Stoppelman started a company that was an automated system for emailing business recommendation requests to friends. Their market didn’t bite. They did notice, however, that that users appreciated the ability to write spontaneous reviews of local businesses--just for the hell of it. The team did a shift and pivot, created a community review system, and Yelp was born. It now has 50 million users a month and more than 17 million reviews online.
Look at your project as a failure before you begin.
That means examining your idea from every angle, including the negative ones. As annoying as that sounds, it helps avoid potential failures later. Kahneman talks about the idea of a "premortem"--where you imagine your idea has failed and then list all the reasons why it happened. The beauty of premortems is that they’re easy and cheap to do, and they won’t cause you to abandon an idea, but rather to tweak it in beneficial ways.
I know a retail fashion consultant who wanted to start a personal shopping and styling business because she was tired of working in big department stores and pushing their merchandise. We worked on the first scenario before she hung up her shingle, which was to charge customers an hourly fee of $150. As a "trial" customer, I felt I wasn’t getting enough out of the consultation, which lasted only about 90 minutes and cost $225. Paying for another 90 minutes was too expensive, and at $450, not a good value. So what about a consult based on what's needed rather than per hour, say, for a flat fee of $399 for a closet consult, styling session, and shopping trip? She agreed. Now she’s booked four days a week.
Engage in honest soul searching.
Ask yourself, do I love this idea because I loved something similar in the past? Do I want to stick with it because it reminds me of something or someone pleasant? It’s always useful to figure out where your feelings of attachment are coming from. If there aren’t any, great--but if there are, you’d be wise to unpack those feelings and see if they are clouding your judgment. Otherwise you run the risk of being influenced by inappropriate personal interests or attachments.
When deciding between two different approaches to a problem or a design, choosing the one that seems easier or cheaper to execute should give you pause. We’re hardwired with positive emotions for convenience; we like the path of least resistance. The Instagram founders weren’t overly attached to their busy iPhone app, so it was easy for them to shift gears to something simpler and more functional.
So when your audience doesn’t like what you’ve got or they can’t figure out how to use it, think again, and think about what to let go of. Then you’ll have a clearer closer picture of what’s a misstep is so you can design a winner.
Multiply the impact and effectiveness of your people by opening up your leadership circle to all employees, not just a select few. Here's how.
It's far too easy to let your organization get stuck in the leader/follower rut, where you end up doing all the leading, and everyone else just follows along. Remember these five words: You can't do it all.
You hired great employees for a reason, so put all their skills to work by enlarging your leadership circle. When you encourage your employees to expand their roles in your company, you give each one of them a chance to show their creativity in different ways. The result? Better ideas and a happier, more engaged workforce.
Here are some tried-and-true ways to expand your leadership circle and get the best from your people every day:
1. Create a Supportive Environment
If you want your employees to take initiative at work (and believe me, you do), they have to know that you support them. Give your people the freedom to take chances and experiment with new ideas, and to make decisions within their areas of responsibility. Shine a spotlight on your employees by letting them take the credit for their own successes. Be sure that all managers understand the importance of sharing leadership--and reward those who delegate well.
2. Provide All Your Employees With Leadership Training
Most organizations only offer leadership training to supervisors and managers, but in order for all employees to successfully take on leadership roles, they must first be properly trained. Since not all hires have experience in leadership, it's important to offer training to all employees. Pair experienced leaders with followers and encourage them to learn from each other and to switch roles when appropriate.
3. Encourage Employees to Act
Every employee has the ability to make a positive impact on your organization and on your customers and clients. Show your employees that you value them and their contributions while actively encouraging them to take initiative to act and to try new approaches to old problems. The most successful companies have figured out the importance of making their employees feel important--and they actively take steps to do it.
4. Throw Out the Org Chart
Okay, while you might not be ready to toss your organization chart into the trash, why not stick it in a drawer and forget about it for a while? Instead of deciding who the leaders in your organization are or who they should be, let them emerge on their own. Leaders tend to lead, and you will soon know who wants to step up. You'll also soon know which employees would prefer to let others lead. That's okay--every organization needs leaders and followers.
5. Reward Leadership Behavior
Taking on a leadership role can be very intimidating for many employees--especially those who have never been in a formal position of leadership before. Encourage your employees to lead by rewarding and reinforcing leadership behavior. Give raises or promotions when your people are willing to take on higher-level roles and responsibilities--or to set the bar even higher--and you will find more employees from all levels of your organization who are willing to lead.
By expanding your leadership circle, you will tap into the full potential of your people and your organization. With the economy still on the mend, you need your employees' contributions now more than ever.
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Tower Legal Solutions CEO Leslie Firtell explains how to continuously grow beyond your competition.
The birth of modern cities allowed entrepreneurship to blossom as innovators and entrepreneurs were forced into close quarters.
The focus on Wall Street and corporate careers has led to a drop in America's dynamic innovative growth.
Changing education, youth attitudes and government policy are all prescriptions for increasing innovation and growth in our economy.
The risk of pork barrel politics is that businesses start to expend resources on lobbying the government instead of innovation.
Nobel laureate Edmund Phelps tracks the rise and fall of dynamic economies and explains the problems facing innovation and entrepreneurship in America.
Edmund Phelps outlines the historical emergence of flourishing economies, which value career satisfaction, creativity and individualism.
All show and no go? Here are three signs a founder loves the idea of building a start-up more than the actual work it requires.
Wannabes exist in any occupation, hobby, profession, or undertaking. It's like a variation on the old joke that people who can't do something, teach it. Except in this case instead of teaching, wannabes talk. And just like everything else, entrepreneurship has its own set of wannabes, which JP Mangalindan at Fortune cleverly calls wantrepreneurs.
He's referring to a certain type of person in and around Silicon Valley:
I'm not talking about the hardworking folks who live and breathe their ideas, sleeping on shared office sofas, paying themselves just enough to scrape by. I mean the rest. Ask them what they do, and they'll say they're working on a startup. Ask them what the startup is, and the answer can be comical. One first-timer said he was still working on the idea, that he'd think about it, and that he'd get back to me. Well, thanks, buddy, but people don't say they're mothers or fathers before they even have kids.
Being an entrepreneur is tough. You can usually bet on very long hours and hard work early on with no promise for success. It can be much more glamorous to imagine that you're an entrepreneur and skip the messy part.
However, the line between entrepreneur and wantrepreneur is blurred. A little bit of the latter won't kill you, but stray too far and you could find yourself one of the modern lotus eaters, stuck in a dazed state while others are off on the real odyssey. Here are some clues that you may have started to step over the line.
- Too much talk--Entrepreneurs are excited about their ventures and naturally enjoy talking about them. Some amount of conversation and discussion is necessary. But talk can drain you of the necessary energy for actually accomplishing something. The more time you spend in meetings, conferences, and networking events, the less you invest on creating the product or service you should be selling, meaning that you stray further from having an established business.
- Too much focus on ideas--How can ideas be a danger? Don't entrepreneurs trade on having a better idea? Yes, to a point. But ask experienced and accomplished entrepreneurs and investors and you'll likely hear that ideas are a dime a dozen. What matters is turning them into reality. If you keep focused on the theory of what could happen and not an actual implementation, you never learn what works and doesn't and won't see if your idea can actually sustain a stable business. More doing, less daydreaming.
- Too much focus on raising money--Surely I've gone off my rocker here, right? Lack of capital is one of the big hurdles for the entrepreneur, and I can speak from experience how difficult it can make life. But if you spend all your time raising money, you're not building something that an investor might see as evidence of your ability to bring a business to fruition. If you don't get the money you want, are you going to give up? No? Then actually get to work and raise the money in addition to everything else you need to do.
Notice that all three points involve the words "too much." Not all the inclinations of the wantrepreneur are automatically bad. It's just when they become unbalanced that they can scuttle your efforts. Forget about fame. Forget about prestige. Work hard to bring your sensible idea (and not the pitch Mangalindan got for the "Airbnb for medical scrubs") into fruition. Get something working. Challenge your assumptions. Make your business real.
Patty Klein, CEO of A-Plus Meetings & Incentives, explains how you can get potential buyers to transfer their loyalty to you.
It's the ultimate smackdown--which company wins the revenue race?
Twitter's IPO is all anyone can discuss at the Keurig machine. But what people really want to know is how much the microblogging service makes off its 218.3 million monthly active users.
So how is the company doing compared to the likes of Facebook and LinkedIn? We talked to Morningstar senior equity analyst Rick Summer about how these companies stack up--and which site has the most profitable users.
Estimated revenue per user: $0.64
Though Twitter refrained from disclosing this information in its IPO filing, Summer estimates that the micro-blogging service earned $0.64 per monthly active user in the second quarter of 2013. The majority of Twitter's quarterly revenue (87 percent) came from advertising, about $389 million. The rest came from data licensing. The company may find new paths to revenue, says Summer, as Twitter is "heavily investing" in other areas including its sales and technology platforms. It also has a firm grasp on mobile; about 60 percent of its users check Twitter via their phones at least once a month.
Estimated revenue per user: $1.60
Summer speculates that Facebook earned $1.60 per monthly active user over the same quarter, driven mostly by advertising. Facebook also has a payments service, which padded its profits (though growth has stalled as not everyone feels comfortable sharing their credit card info with the social network). Still, despite its shaky stock market debut, the company is solidly profitable, thanks to its engaged user base and ads that effectively target users based on their age, location, and interests.
Estimated revenue per user: $0.60
According to Summer, the professional social network earned $0.60 per monthly active user in the second quarter. Unlike the other companies mentioned here, LinkedIn makes three-quarters of its revenue from subscriptions and premium services. LinkedIn's users are not as active on its site as they are on Facebook or Twitter. But LinkedIn has managed to create a wealth of content that keeps visitors hanging around longer.
Jennifer Walzer, founder of Backup My Info!, describes how she makes sure her customers are happy.
From corporate infighting to Jack Dorsey's incompetence, Nick Bilton's forthcoming book about Twitter promises no shortage of epiphanies.
Today, The New York Times posted an excerpt from Nick Bilton's forthcoming book, Hatching Twitter: A True Story of Money, Power, Friendship and Betrayal. It's a riveting read, with no shortage of executive infighting and revelations about Jack Dorsey, who quickly became lead engineer at Twitter and helped push co-founder Noah Glass out.
Here are five of the most interesting nuggets from the excerpt, including other names the founders kicked around before they settled on Twitter and the time Dorsey fired off a very self-centered company-wide email.
It wasn't entirely Dorsey's idea.
Dorsey envisioned Twitter as a service for posting status updates along the lines of "in bed" and "at work." But Noah Glass, Odeo's co-founder, believed it was destined for more. "This status thing wasn’t just about sharing what kind of music you were listening to or where you were," Bilton writes. "It could be a conversation. It wasn’t about reporting; it was about connecting."
It was almost called Vibrate.
Another rejected name? Friendstalker. Glass actually considered the name Vibrate because that's what his cell phone did when its ringer was switched off. "He dismissed that too, but he continued through the “Tw” section of the dictionary: twist, twit, twitch, twitcher, twitchy . . . and then, there it was," writes Bilton. "The light chirping sound made by certain birds" fit the bill.
Jack Dorsey wasn't the most loyal guy.
For whatever reasons, he wanted Glass out, which was no issue for Williams considering Glass's erratic behavior and growing anxiety. One day, Dorsey gave Williams an ultimatum: Either Glass leaves or I do. After Williams gave Glass the choice of either six months severance or being publicly fired, Glass vented to Dorsey, who acted surprised and blamed it on Williams.
Nor was he the best manager.
When asked to send a company-wide email stating Twitter's goals, Dorsey began every sentence with "I" and used the off-putting subject line, "3 Things I Want for Twitter (Goals)." He had a bad habit of punching out around 6 p.m. and "pushed people to use Twitter over text message, which produced a monthly bill for the company approaching six figures," writes Bilton. Worse still, "Dorsey had also been managing expenses on his laptop and doing the math incorrectly ... On Dorsey’s watch, Twitter, which had never been completely upgraded from its prototype, was suffering major infrastructure problems that regularly knocked the site offline for hours at a time."
Facebook almost bought Twitter.
When Dorsey was finally pushed out of the company, he briefly considered going to Facebook. There was just one problem: The social network wanted to buy Twitter. When Dorsey shared the news over the phone with Mark Zuckerberg, Zuckerberg asked if there was a way to prevent the firing to save the deal. Dorsey was shocked, but assured him there wasn't. After that, writes Bilton, "Zuckerberg switched his plan from trying to buy Twitter to trying to hire Dorsey."