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Airbnb, a website that helps users find short-term accommodations in the living rooms and recreation rooms of cities around the world, announced today that it has raised $112 million in second round funding from Andreessen Horowitz, DST Global, and General Catalyst on a valuation of $1 billion. The company’s previous round of funding totaled $7.8 million.
Hay House, a book publisher based in Carlsbad, Calif., was founded 24 years ago and has grown to become one of the largest self-help publishers in the world with 125 employees in the U.S. and locations in four different continents. The publishing house relies on e-mail for internal communication and for communicating with writers, often sending manuscripts back and forth. But employees were being deluged with spam – the company receives up to 10,000 spam messages per day – until information technology director Mike Fishell and his staff installed an e-mail security appliance. Elizabeth Wasserman: What are the plusses and minuses of using e-mail in your business? Mike Fishell: It’s much faster for moving information around. Whether it’s information for a book, fact-checking, public relations, or passing on quotes to be inserted into our books, we rely on our e-mail. We also have offices located in time zones that don’t match up. We have offices in the U.K., Australia, South Africa, and India, in addition to the U.S. So if it’s noon in London and someone e-mails us with something that has to be addressed that day, we can get back to them before they go home that night. We also may receive manuscripts via e-mail from our authors. Instead of sending a manuscript via FedEx, they can e-mail it to us directly. Wasserman: What are the security risks to a business posed by relying on e-mail? Do you get a lot of spam? Fishell: We get in the neighborhood of 10,000 spam messages a day. Wasserman: What did you do about that? Fishell: We were using software-based spam solutions in the past, but the spam problem was growing faster than our application could deal with it. I looked at appliances and Axway’s Mailgate was the first one I brought in-house for a trial. It worked so well that we couldn’t even think of taking it out of production. The trial unit we were sent was kept in production for three years. Wasserman: What does it do? How does it help you? Fishell: It helps us with spam by using a context-based algorithm. Some of our books may deal with health and we may have the word Viagra show up in a book, maybe with someone giving medical advice related to it. It’s not in the context of someone trying to sell it, because that wouldn’t be delivered to the mailbox. Our users receive an e-mail every day at 5 p.m. showing everything that was quarantined by the filter. They have an option to release it to themselves or ignore it. Wasserman: What have the results been? Fishell: On the inbound side, the time savings is money savings. I do a report once a year for the directors explaining the cost savings associated with it. I have calculated out in the thousands and thousands of dollars in terms of man hours for our people not having to delete spam. The cost savings worked out to about $54,000 a year in terms of man-hours we would have spent deleting spam. There are a lot of these e-mails being sent around maybe directing people to a website and it’s not enough of an e-mail to be caught as spam or a virus. But it directs them to a website that may have malicious intentions. We’re able to plug keywords into our filter and have it blocked in a matter of minutes instead of waiting for the virus companies to have something out there to block one. I don’t have to worry about anyone clicking on the link. It also allows me to set policies to prevent certain types of sensitive data from being e-mailed outside the office accidentally. Not only viruses, but personal information or confidential information, certain contracts we don’t want leaving the building, or proprietary material we don’t want leaving the building. In terms of time management, it’s nice having something in the business that doesn’t require babysitting. I take a look at the reports once a day. If I skip looking at the reports once a day, I’m not worried. The box gets restarted once or twice a year. That and software updates a couple times a year and you can pretty much set it and forget it.
Outsourcing can allow even the smallest company to go after big game. Just ask Jack Sands. The chief executive officer of Intrep Auto Club Renewals, a Columbus, Ohio-based telemarketer, Sands has outsourced his firm’s website design, logo design, software design, and phone system design. His 75 employees, all of whom work from home, are paid through an outsourced payroll system. Even the company’s telemarketing software is outsourced. Piece by piece, Sands has outsourced to technology service providers in India, China, Turkey, Russia, and the U.S. In seven years, his business has grown to the $5 million to $10 million range. “It’s allowed me to portray an image of being a very large company when I wasn’t one, and at a very low cost,” Sands says. Sands then landed the American Automobile Association (AAA) as a client. “Most small firms couldn’t get a client this big,” he notes. Reasons technology outsourcing is on the rise A growing trend among larger firms for decades, even the smallest businesses are now turning to technology outsourcing as a way to improve efficiency and boost their bottom line. According to Yankee Group, 61 percent of firms with 20-99 employees use a contractor or business partner for IT services alone. In addition to IT, firms are outsourcing marketing, Web design, human resources, accounting, and administrative functions like data entry or customer service. And firms are just as likely to find their needs met by a North American firm found on Craig’s List as by a call center in Southeast Asia, industry watchers note. For many small firms, outsourcing just makes sense, explains Gary Chen, senior analyst and specialist in small business IT issues at Yankee Group. Many small and mid-size businesses “just don’t have someone to do these jobs, or they only have enough of a certain type of work to justify a one-fourth-time position,” says Chen. “You can’t hire someone to a one-fourth-time position.” Outsourcing can also give a company more flexibility. Intrep’s Sands outsourced his payroll operations to Rochester, N.Y.-based Paychex because his work-from-home employees are spread out across the country. “I couldn’t keep track of the different workers comp laws and tax rules,” he says. Outsourcing this allows him to hire the best telemarketers he could regardless of their location. Challenges of outsourcing One of the biggest challenges to outsourcing is losing local control over technology functions. If something isn’t working, you have to learn to rely on your outsourcer to fix it. Business leaders need to determine whether they are comfortable with leaving something to a company in India, Russia, or even in another part of the United States. There’s something to be said about being able to walk down the hall to the IT department and asking someone to fix a problem. When outsourcing, businesses also need to appoint someone to oversee the outsourcing relationship. Problems often arise and you need to make sure that your contract with the service provider allows the flexibility to make adjustments in your service, if need be. Lastly, leaving certain vital business services in the hands of another company can mean you are at their mercy if their service goes offline for any amount of time. You may need to have contingency plans. You may also need to read the fine print in your contract to make sure that you don’t have to pay for services that you don’t receive. Few outsource providers offer to compensate you for the business you lose when their service goes down. How to decide whether to outsource IT So, what should companies consider before they take the outsourcing plunge? Here is a checklist to help your business through the decision-making process: Cost. “Cost should be the first consideration,” says Chen. “It should be cheaper to outsource: that’s the bottom line.” To determine this, companies may need to do a little homework—checking into the potential cost of outsourcing, but also taking a hard look at how much the company is losing by trying to do certain tasks itself, says Chen. Can someone else do it better? “Do what you do best, and outsource the rest,” advises Fabio Rosati, chief executive officer of Elance, a Web-based firm that plays matchmaker between companies seeking to outsource and skilled service providers and freelancers. “You need to acknowledge that you can’t do everything well,” and that sometimes your company will need help, Rosati says. Will you lose control over your business? Are you comfortable with loosening the reigns and leaving control over certain functions to someone else? What will you do if there’s a problem? Businesses need to ensure in their service-level agreements with outsourcing firms that the firm will be responsive and will fix problems within a certain time frame. You also need the flexibility in your contract to do some fine tuning, especially if this is the first time you are outsourcing payroll or customer service. Will this help your business? Ultimately, you need to weigh whether outsourcing certain technology functions will help you focus on your business and improve profit margins. If the cost, time-saved, and expertise doesn’t result in business benefits, then you may need to think twice about outsourcing. Conclusion Outsourcing technology functions must be made after a review of your business. Some businesses, such as Sands’ company, have found that they are able to better focus on what they do best and leave the technical matters involving telecommunications and software to someone else. “We didn’t have anyone to do this stuff for us,” says Sands. “This way, we were able to find the best in breed for every task.” SIDEBAR: Improving Your Odds for Success If you’ve decided to look into outsourcing, where do you look? And how can you ensure success? Check online job-hunter sites. Sands used Elance to find many of his service providers, but settled on Paychex and Saleforce.com separately. Other providers include Careerbuilder, Monster.com, and other sites that specialize in freelancers or per-project workers for specific fields. Check skills, references. Exposing your business to newcomers can be risky. Approach choosing a service provider like you would hiring a new employee. Does the firm have the best match of skills, quality and price for your business? If across many time zones, is their location an issue? Do they have good references? Best not to rely simply on eBay-style rating systems provided by some sites. Articulate your needs. This may sound basic, but Elance’s Rosati says that firms need to be a specific as possible about what they want to get the best product and the best price. Develop a relationship. If you find good providers, treat them well so they’ll want to work for you again, say Sands. “Don’t cheat them on price,” he says. “You need them, and want them to put your needs first.”
MP3 capabilities. Fancy cameras. Bluetooth connections. The more advanced cell phones get, the more purchasing one feels as arduous as deciding on a new computer. The same principles are involved in both. But there are several basic questions that will make buying a new mobile phone easier. “If you are someone who needs persistent access to multiple modes of communication, then consider battery life, network speed, and the feature set,” says Kurt Collins, a mobile technology analyst. The total number of cellular connections in the world has reached 2.5 billion, passing the 2 billion mark just a year ago, according to Wireless Intelligence, a global mobile tracking venture sponsored in part by the GSM Association, which represents dealers of GSM mobile phones in more than 200 different countries. Cell connections are on track to surpass the 3 billion mark by the end of 2007, the organization says. A growing number of cell phones contain features that resemble their PCs’ most valuable offerings — e-mail, a keyboard, and Web browsing. Others contain entertainment applications — for example, a digital music player or a camera. While these features are great for consumers, the first thing a business owner has to decide is what features make the best sense for you, your business and/or your employees. Here are some key features to look for and business questions to consider: Bluetooth capabilities: A wireless system, Bluetooth is the new way advanced cell phones can communicate with other phones and even your office computer. But there are security vulnerabilities associated with the Bluetooth technology that could leave your company’s confidential information vulnerable. Keyboard: Typing cryptic love notes out on the cell phone’s traditional number-oriented alphabet pad is fine. But that won’t cut it for company e-mails, particularly those to clients or customers. Look for a device with a full QWERTY (or standard) keyboard. Some new phones have a QWERTY keyboard in a hidden compartment, on the number pad or as a larger attachment that you can use for lengthier correspondence. >E-mail: It’s not quite standard yet, but many cell phones now can connect you to popular e-mail services like Yahoo!, AOL and Hotmail. That could mean your small business could utilize one of these e-mail accounts. But if you are a larger firm with many employees, you need to consider whether you want your employees sending personal e-mail from these accounts while on your dime. Instant Messaging (IM): Many cell phones have IM options or other real-time text messaging now, too. Many companies use this type of instant chat to conduct business and foster communication between employees. If your firm doesn’t do business over IM, or it you want to better track what your employees are sending, then avoid this feature if you can. Battery power: The general laptop rule applies here: the more applications you have running on a phone, the faster the battery gets drained. If your business needs two to three days service with no recharging, consider purchasing a simpler phone. Camera: Photo capabilities are almost a cell phone standard now. But the average resolution is 1 mega pixel — three times weaker than the average digital camera. Unless you don’t mind blurry shots for your website or presentations, it may be better to get a real camera. MP3 player: Recent devices from Motorola and Verizon have headphone jacks and enough memory to hold music. The challenge comes in storage and delivery. The capacity is, at best, a handful of songs, well below even the smallest iPod, the Shuffle. A bigger issue comes when purchasing music from the phone company. Their selection pales in comparison to the Apple Music Store or the new MTV Urge catalog. This may be a great perk for an entrepreneur or trusted employee who travels. But having an MP3 player in a cell phone may lead to abuse on company time. Multi-band: If you’re doing major international travel, it is worth investing in a “multi-band” phone. Multi-band means that it will be compatible with phone systems throughout the world. The more bands the phone understands, the higher the chances of you getting a clear cell call when your business trip includes stops in both Paris and India. Compare carriers: Your business may have the “best” phone, but that doesn’t matter if your employees have proper coverage to make phone calls. Metropolitan areas usually have great coverage, including in subway systems, but in the suburbs or the country service can be spotty. Advises Collins: “If you do a lot of… outdoor activities or live in a rural neighborhood in which you want a phone, keep in mind network coverage.”