If you’re one of the 800,000 curators currently operating a shop on Etsy–the online marketplace for everything handmade–Outright wants to give you a gift. The cloud accounting software company has a new Etsy integration that lets users see all of the costs associated with their e-commerce business. The software is free for Etsy users from now until the end of the year. READ MORE
Anybody who uses public transit knows scheduled departure times rarely match up to actual departure times. To improve that situation comes Google to the rescue, which is now providing live transit updates on its Google Maps mobile and desktop platforms, initially in six international cities: Boston, Portland, Ore., San Diego, San Francisco, Madrid, and Turin. FastCompany’s Ariel Schwartz checked in with Google to find out why big cities such as London and New York weren’t included. READ MORE
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.
Portable and affordable, the trendy “netbook” is all the rage among computer makers and the consumers snatching them up in droves — so much, in fact, this young category is estimated to make up more than 20 percent of the entire laptop category by next year. But are these tiny Wi-Fi-enabled netbooks — designed primarily for Web surfing, e-mail, and word processing — ideal for running your business? What’s lost or gained in the transition? If you recognize the limitations of these scaled-down PCs, a netbook might be all you and your staff need to remain productive on the go, experts say. Price and size matter “A netbook is just a laptop whose pivotal axis is price,” says Michael Gartenberg, vice president at Interpret LLC, a market research firm based in London, New York, and Los Angeles. “Basically you need to ask yourself if the netbook has enough horsepower to manage your business, and if so, you can save some money.” However, if you or your staff need to run memory-intensive programs or require larger screens or a full-size keyboard, you might want to steer clear of this category, he says. The lack of an optical drive might be an issue for some, Gartenberg adds, but an inexpensive external drive — that can be shared among employees to install software — might be all that’s required. “Beyond that, many computer users today simply don’t need a DVD drive,” he says. Steve Hilton, vice president for enterprise and small and mid-sized business research at the Boston-based Yankee Group, says along with a relatively inexpensive price tag, netbooks offer two other advantages for mobile workers: “They are fairly easy to replace if lost or damaged — in fact most suppliers can easily ship an exact duplicate very quickly. Plus, an IT department tends to like [netbooks] as they’re easy to manage since they have very few applications resident on the device.” Cloud computing Netbooks might carry few applications because many small and mid-sized businesses are moving towards “cloud computing,” which allows online employees to securely access programs and files on a remote server, as opposed to physically carrying sensitive data on the road. This trend is on the rise thanks to ubiquitous Wi-Fi and 3G connectivity. In addition, more devices are available — such as netbooks and smartphones — with limited local memory. Much of the software is Web-based, too, therefore not requiring one particular operating system over another. “Applications in the cloud are not loaded on a netbook because applications are processing and hard-disk hogs,” explains Hilton. “Netbooks are light on both processing and hard-disk space, which is one of the reasons why they’re priced fairly inexpensively, so in order to get the value from a netbook, applications in the cloud are essential.” Looked at another way, “a Prius and a Boxster have different purposes,” continues Hilton, comparing netbooks with automobiles. “If you need a car that sips gasoline, drives your family of four to the mall, and keeps your auto insurance premiums low, your choice is obvious.” Gartenberg, however, cautions those who rely too heavily on remote applications for business. “The problem with the cloud is that it’s not always available,” he says. “There is this notion that everything will be delivered via browser, but it’s more of a coexistence [with locally stored programs]. One solution isn’t killing the other.” And they’re getting better Just two years ago, a netbook might be limited by a Linux operating system, a petite 7-inch display, and just 4GB of Flash (SSD) memory. Fast-forward to today, however, and there is far more selection, including a Windows o/s, bigger screens (up to 12-inches), a near full-size QWERTY keyboard, a minimum 160GB hard drive and better processors, such as Intel Atom chips. As far as security goes, Gartenberg says you must treat netbooks like a laptop. “You want to be cautious about what information is on the netbook,” he says, “ensure everything is password-protected, and despite its small size, try to remember not to leave it at a coffee shop or in a taxicab.”
Nanette Lepore, a New York-based fashion designer high end clientele, rapidly expanded to 10 boutiques in the United States, and one each in London and Tokyo. While the designer’s fashions were making a splash, network specialist Jose Cruz tells IncTechnology.com that the firm upgraded its firewall and network security in the wake of a hacker attack. Elizabeth Wasserman: How does a fashion house use IT? Jose Cruz: Until recently, we didn’t have much of an IT presence. When they brought me in, the company was growing pretty fast. The one thing that they seemed to overlook as the company was growing fast was their IT needs. My objective was to get them on a corporate e-mail system, lock down the network so it was not open to the world, and to implement security standards so that their intellectual data would be their intellectual data alone. Wasserman: Last year, you found out that hackers had compromised some of your customers’ credit and debit cards. What happened? Cruz: I got that call on a weekend. It was a frantic call from our store manager in our Las Vegas location. The FBI showed up and questioned what was going on. They said purchases had been made on credit cards belonging to our clients. We found out our point of sale systems had been compromised. These were in place long before I came on board. It was dated equipment and not up to the task. This was very disturbing to me as I had been auditing the main infrastructure in New York and hadn’t yet had time to see how the other locations operated. Wasserman: What did you do? Cruz: As soon as I got that call, I called up my support providers at Webistix. I’ve relied on them at times to tackle some situations I’ve never encountered before. This was something new for me. Webistix suggested that we get some SonicWALL firewalls in place. These are PCI compliant – they’re certified by the credit card bureau that puts standards in place for retailers. We got the SonicWALL TZ 180 in place. I immediately flew to Las Vegas and pulled the router offline. It looked as if someone had actually gone in and tampered with the firmware settings on it and pre-programmed it with a set of IP addresses unknown to us which meant it shouldn’t have been working but it was still allowing internet traffic to pass through or possibly piggy-back off of equipment that was capturing information. The FBI confiscated the equipment and we had to replace it all. We decided to harden everything through intrusion prevention, anti-virus prevention, and anti-spyware. We are now in a far better place than we used to be. Wasserman: Is it true that you had to shut down stores that weekend? Cruz: We shut the Vegas store immediately. It’s right there in the Caesar’s Palace mall and weekends are very busy. We also shut the two locations in Los Angeles. The location at Robertson in LA and the New York Broome Street location get extreme amounts of foot traffic coming in so we asked them to push off credit card transactions for the weekend, which of course affect business since almost all transactions are done credit card. We lost over a million dollars in business that weekend. The fear alone made Nanette consider closing stores in other areas around the U.S. over the weekend because they had the same legacy equipment. It was legacy equipment in place before I came on and before the company took experience a major growth spurt. When you think about what is going on, some of bigger retail chains have been affected in the same way on a grander scale, with thousands of their clientele level-three credit card information compromised. We’re just a small pea in a pod compared to those retailers for now. But, still, in a company in a growth mode, it’s scary to consider. If we were marching forward with technology in play that was dated and not up to the task, it could have been worse and we might have had more stores breached. Wasserman: Have you had any intrusions since? Cruz: No, we haven’t seen any intrusions since we installed the firewall. A lot of viruses have been blocked. A lot of spam bots have been blocked. I can now pull up this information with our global management system and monitor all our remote locations and get real-time feedback on the status of all our locations. We not only hardened our firewalls and locked down our systems and network but we also implemented security and group policies on our systems for our staff. This way, users are forced to log in before they can use any of our machines. And, depending up the group structure, they only have rights to do certain things on certain machines.
For all the digital age’s promise, the reality of a paperless office remains elusive as mounds of paper continue to accumulate on your desk and those around you. It doesn’t have to be this way. Paperless contracts are real, and they growing more common everyday. It is increasingly routine for any transaction, from the simplest consumer purchase to million-dollar procurement deals between companies, to be completed online without anyone ever physically signing a piece of paper. Thanks to a law passed in 2000 by the U.S. Congress, any signature made electronically — whether it’s typing your name at the bottom of an e-mail, pushing an “Accept” button, or using an electronic pen and pad — is just as binding as an old-fashioned pen-and-paper John Hancock. “The general rule is that any electronic signature is fine,” says Tom Smedinghoff, an attorney at McBride Baker & Coles, of Chicago, who has written extensively on e-commerce law. “You can substitute an electronic signature where you’d ordinarily use paper in almost every case.” Digital signatures upheld in court In most cases, all-digital agreements with clients or customers can safeguard a company’s interests. State and federal laws are squarely on the side of the virtual contract, and courts have repeatedly upheld the notion that electronic signatures — at least in the context of typing a name at the bottom of an e-mail — are valid, as long as it’s clear to both parties that a signature is intended. But contracts, online or offline, are ultimately a matter of trust. Handwriting can be forged, or deals challenged after the fact. To this end, signatures are often made in front of witnesses as an added layer of security to be certain the signer is not a forger. Verifying identities is just as important online. Digital signatures are legally binding, but if one party is pretending to be someone they’re not, problems naturally arise. Here are some tips for ensuring your paperless transactions are secure and binding. Password-protect yourself Under the federal Electronic Signatures in Global and National Commerce Act (ESIGN), as well the similar Uniform Electronic Transactions Act adopted by many states, electronic signatures do not require any encryption or high-tech proof of identity to be valid. Thus, a simple “Click to Accept” form is technically binding. However, many companies add at least a log-in feature, with a unique user name and password, in order to add security to e-commerce or other transactions. Encrypt identities An added layer of security is provided by deploying digital identity certificates, which use strong encryption technology to lock information about a person or company’s identity to the digital equivalent of a calling card. Because this information is protected by strong encryption, it can’t be spoofed, and can be used only by the person who created it unless that person has lost or otherwise given away their private encryption key — a kind of password on steroids. Digital certificates are often issued by third-party companies such as Verisign, an e-commerce security company based in Mountain View, Calif. As a result, the certificates are viewed as an extremely secure way of verifying identity, even though they are not required by law. “The problem with the technology is that implementation, and getting people familiar with it, is so difficult,” says Maury Shenk, a partner with Steptoe & Johnson, in London, who advises clients on digital issues. “But we do see a lot of large organizations starting to adopt digital signature systems internally.” It’s working, slowly Lawyers say the six-year old system in the United States for treating digital signatures as the legal equivalent of their paper counterparts has so far worked with few hiccups. Initial concern from consumer groups has been largely allayed by elements that require companies to use paper contracts if one party asks for them. Yet it is clear that commerce and contracts are moving to an increasingly secure electronic form, if only a little at a time. “It is working,” Smedinghoff says. “But people are still sticking their toes in the water in terms of implementation.”
The cell phone has become an essential business tool, but it’s gotten a bad rap as far as health is concerned. In September, the California legislature sent a bill to governor Arnold Schwarzenegger to outlaw the use of cell phones in automobiles, unless drivers use “hands-free” technology — such as headsets or earpieces that keep their hands on the steering wheel. The state would join the ranks of New York, New Jersey, Connecticut and Washington, D.C., which have all criminalized this essential business tool. Proponents point to a body of research, including a California Highway Patrol study from 2004 which found that drivers using cell phones pressed against their ears caused accidents 25 times more than drivers using hands-free gear. But driving is not the only concern about cell phones. In March, a study by the Swedish National Institute for Working Life found that prolonged cell phone use — it defined heavy use as 2,000 hours or more in a lifetime — may put people at increased risk of brain tumors. The Swedish study, which disputed some earlier studies, is the biggest study yet to cover long-term mobile phone usage, involving 2,200 cancer patients and the same number of healthy individuals. The news might cause you to consider urging employees not to make cell calls from behind the wheel. Or, at the very least, you may want to issue employees head-sets or earpieces when purchasing cell phones for their business use. There has been a lot of ink spent on looking at cell phone dangers — from brain cancer to interfering with medical devices to causing accidents. Here is the fact versus the fiction about these claims: CLAIM: Cell phones cause brain tumors. FACT: Cell phones pass along information via airwaves, similar to the way music stations transmit their signals from a giant radio antenna. The difference is that instead of sending those signals to a radio, they are being directed toward your ear. Some scientists, such as the Swedish researchers, have found constant exposure can create cancerous brain cells. But other research has found little or no impact on tumor rates. In January, the London-based Institute of Cancer Research and several universities in Britain reported their results from a four-year study involving 966 people with brain tumors and 1,716 healthy respondents. The U.S. Food and Drug Administration in 2003 found that radio frequency, or RF, waves sent by cell phones are different from other, more powerful currents. “Very high levels of electromagnetic energy, such as is found in X-rays and gamma rays, can ionize biological tissues,” said the report. “The energy levels associated with radio frequency energy, including both radio waves and microwaves, are not great enough to cause the ionization of atoms and molecules.” So where does the truth lie? Researchers are still in the labs determining the answers. In the meantime, more neutral experts recommend using a headset to minimize exposure to RF waves. And one universal warning is to avoid so-called “electromagnetic energy blocking” products, many of which haven’t been proven to work at blocking electromagnetic energy at all. In 2002, the Federal Trade Commission charged two companies, Stock Value 1 of Boca Raton, FL, and Comstar Communications of Sacramento, CA, of making false claims that their EEB products could shield people from potentially dangerous waves. The products were called “SafeTShield,” “NoDanger,” “WaveShield,” “WaveShield 1000,” and “WaveShield 2000,” which you place on your cell phone’s ear or mouthpiece to allegedly keep the radio waves away from your head. CLAIM: Cell phones interfere with medical devices. FACT: RF energy from wireless phones can interact with some electronic devices. The FDA has developed a method to test the levels of electromagnetic interference from mobile phones with cardiac pacemakers and defibrillators. It’s now considered a standard test by the Association for the Advancement of Medical Instrumentation, a trade group, and manufacturers use this as a guide to make sure that these medical devices are safe from wireless phone interference. In addition, the FDA has conducted tests on hearing aids for interference levels from cell phones. The agency helped develop a voluntary standard with the Institute of Electrical and Electronic Engineers that includes testing methods and performance requirements for hearing aides and wireless phones to ensure no interference between “compatible” phones and hearing aids. CLAIM: Cell phones cause traffic accidents. FACT: A New England Journal of Medicine study from 2001 found that drivers using cell phones were four times more likely to get into accidents than non-cell phone users. A 2005 study by the U.S. National Highway Traffic Safety Administration (NHTSA) found that six percent of drivers actively used hand-held phones — roughly one million people. A different group, making up four percent, used a hands-free phone. Another recent study, published in the journal Human Factors, found that cell phone users were more likely to get into an accident than individuals who were legally drunk. Hands-free units, now being built into higher-end cars, are universally considered safer than handheld phones. In fact, like California, a growing number of states including are banning handheld cell phone use while driving. The American Automobile Association (AAA) advises drivers to: avoid talking while behind the wheel, let voice mail pick up calls, and pull over to a safe spot if you absolutely have to take the call. Whatever the research eventually shows, business leaders may take note of a recent study at Santa Clara Valley Medical Center in San Jose, Calif., of business people in all different types of professions that found strong evidence that use of headsets can — at a minimum — reduce neck, shoulder and upper back muscle tension as much as 41 percent.
Savvy businesspeople know the details of their business down to the brass tacks, but most have no clue how their cell phones work — despite, according to the trade publication Cellular News, spending almost $1,000 annually to service each individual phone. The technology may seem dense, but what helps is to understand that there are three main categories of cell phones represented by an alphabet soup of foreboding anagrams: GSM, TDMA and CDMA. GSM is a type of TDMA. And, if that isn’t confusing enough, GSM and CDMA are the main competing cell phone technologies. In order to make the right decision on cell phone technology for your business and employees, it’s important to understand the basics. Here’s a rundown on what the letters stand for and how the technology works: GSM IS MOST WIDELY USED GSM stands for Global System for Mobile Communications. If you are making a phone call, it almost certainly is on GSM, the de-facto cell phone technology standard today. More than two billion customers worldwide use GSM phones, an estimated 80 percent of mobile phone users globally, according to the GSM Association, the London-based trade group that represents 690 GSM mobile phone operators in 214 countries and territories. GSM uses several different frequency ranges to connect calls. Like radio stations, each region has a different band of frequency that GSM networks utilize. The Americas use 850 or 1900 MHz, and other continents use 900 or 1800 MHz. A few countries — in Scandinavia, for example — use 400 and 450 MHz. GSM is known as 2G (second-generation) technology, meaning it is part of the second major upgrade in modern cell phone technology. “GSM differs from first-generation wireless systems in that it uses digital technology and time division multiple access [TDMA] transmission methods,” says the GSM Association. Advantages: The technology is mature. The network is stable. The features are robust. This leads to more consistent service and less signal deterioration inside structures, such as buildings. Disadvantages: GSM transmission has a pulse nature which can interfere with some electronics, including pace makers and hearing aides, according to the GSM Association. This is why hospitals require people to turn off their cell phones. GSM IS A TYPE OF TDMA TDMA stands for Time Division Multiple Access. A common radio technology, TDMA is the foundation of GSM. As the name suggests, time division multiple access takes designated broadcast frequencies and divides them up so multiple users can use them. Advantages: This technique frees up other broadcast signals for other uses. Disadvantages: A well-noted challenge is the interference caused by multiple users sharing the same bandwidth. The new 3G Wireless technology, which uses CDMA, provides less call interference. CDMA IS THE FOUNDATION FOR 3G WIRELESS CDMA stands for Code-Division Multiple Access. Originally invented during World War II in England to thwart German wire interference, CDMA splits each phone conversation into pieces that follow unique but random routes. The Costa Mesa, Calif.-based CDMA Development Group describes it as a “‘spread spectrum’ technology, allowing many users to occupy the same time and frequency allocations in a given band/space.” Other technologies use one particular wireless frequency to transmit information. CDMA uses multiple paths (hence the name code-division multiple access) on each transmission, making it difficult to stop or eavesdrop on a particular conversation. Qualcomm brought CDMA technology to cell phones in the late ’80s and currently owns the patents to code-division multiple access. Thus, when you use CDMA, Qualcomm is making a profit. More recently, CDMA became the foundation for the newest cell phone technology, 3G Wireless. Advantages: CDMA can accommodate more users in a frequency range than other cell phone technologies. It uses less power while covering larger areas. Less likelihood of dropped calls. Disadvantages: Most CDMA technology must be licensed from Qualcomm, limiting the number of competitors offering service. Service may, at times, be inconsistent. As the number of subscribers rises, the range drops.
My career from ages 18 to 28: In 1991, as a college freshman, I had an idea for an online service offering “real life” education to college students: practical advice about jobs, personal finance, and health. I made the simple observations that no one was teaching us these subjects in the classroom, and that computers — rather than books or TVs — had become the primary medium of communication and entertainment. During my sophomore year, Dick Sabot, a very smart Oxford-trained Ph.D. in economics and the professor of a class in which I received a B-minus, agreed to collaborate with me on my concept. He did so not because I was his best student, but because he had had a near-death experience during which a higher power advised him to do “something different.” By 1994, when I graduated from college, our project had indeed become something different: an Internet start-up company we named Tripod. Using what little cash I could raise from friends and family, I hired a team of computer programmers. I did this because I did not know how to install a web browser on my own computer, which is a significant barrier if you plan to run an Internet company. Unbeknownst to me, and surely with some sort of anarchic motive, these lawless, long-haired, multi-pierced, tattooed, incredibly charming and smart hacker hooligans built a piece of software on Tripod that had nothing to do with offering practical advice to anyone. Instead, this software gave individuals the power to publish their own “personal homepages.” By 1995, the popularity of the Tripod Homepage Builder was growing rapidly and had far surpassed my original idea to offer college students “practical advice.” It occurred to me that I might have a business on my hands. Having never written a business plan, I went to the local library and checked out a book called — you guessed it — How to Write a Business Plan. In August 1995, Netscape went public and proved that Internet companies had value. Or at least proved that Wall Street investment bankers had convinced the stock-buying public that Internet companies had value. One month later, I was able to convince New Enterprise Associates (NEA), one of the world’s most respected venture capital firms, to review the Tripod business plan. They agreed to do so only because Dick’s wife’s brother’s college roommate knew someone who knew someone at NEA. NEA liked the plan because it mentioned the Internet several hundred times. It provided $3 million in financing. By the beginning of 1996, one year after it was launched, the Tripod Homepage Builder had fundamentally changed the nature of consumer media. For the first time, anyone with access to a computer and a connection to the Internet could publish pretty much whatever they wanted; and anyone else with access to a computer and a connection to the Internet could view it. By the middle of 1997, Tripod had attracted nearly one million registered members. Tripod never posted a profit. Tripod generated barely any revenue. On December 30, 1997, in the middle of the stock-market bubble, I was offered $58 million for Tripod. On December 31, 1997, I agreed to sell Tripod in exchange for $58 million in stock of a publicly traded company named Lycos, which at the time was an Internet company only slightly more stable than Tripod. I agreed to a “lockup” that forbade me to sell all of my Lycos stock for two years. Over those two years, I watched the value of my Lycos stock increase tenfold. By December 31, 1999, at the height of the bubble and just a few months before the market crashed, I had sold nearly every share of my Lycos stock. I invested the majority of those proceeds in bonds and real estate because they were the only two investment vehicles I could thoroughly understand. And because I needed a house. By now, I hope my theme has become obvious. Luck is a part of life, and everyone, at one point or another, gets lucky. Luck is also a big part of business life and perhaps the biggest part of entrepreneurial life. At the very least, entrepreneurs must believe in luck. Ideally, they can recognize it when they see it. And over time, the best entrepreneurs can actually learn to create luck. Luck in business is different from regular old luck, like when you find $20 on the sidewalk. First of all, being lucky in business has an intoxicating underbelly called believing you’re smart. No one actually believes that he should take credit for finding $20 on the sidewalk. But when people get lucky in business, they are often convinced that it is not luck at all that brought them good fortune. They believe instead that their business venture succeeded thanks to their own blinding brilliance. The big challenge is that everyone — the press, your shareholders, your colleagues, your significant other, and your parents — will work hard to convince you otherwise. They will tell you, over and over again, that you are in fact a genius and should take complete credit for all the great things happening to your company. Why? Because to them, you are one of the following: A source of professional gain A source of financial gain A boss A lover Their pride and joy None of these relationships provide incentive for any of these people to tell you the cold hard truth about your entrepreneurial success: You may have gotten just plain lucky. The second difference between business luck and everyday luck is that luck in business can be created, whereas everyday luck cannot. You can’t will yourself to find $20 on the sidewalk. But you can create a company that gets lucky more often than the average company. Indeed, there is a pseudo-scientific formula for creating business luck. The key element is this: Lucky things happen to entrepreneurs who start fundamentally innovative, morally compelling, and philosophically positive companies. Why? Because lots of smart people will gather around companies with these qualities. As it turns out, precious few such companies exist. And the vast majority of human beings, and certainly most of the smart ones, are constitutionally caring creatures who would, if given the chance, prefer to spend their valuable time in a positive setting contributing to the betterment of society rather than in a negative setting contributing to its detriment. Shocking, I know, but true. And when smart, inspired people gather around a fundamentally innovative, morally compelling, and philosophically positive company, they work very hard. And when smart, inspired people work very hard, serendipity ensues. Serendipity — the faculty of making fortuitous discoveries by chance — causes lots of unexpected things to happen to a company. Some of these unexpected things are good. Some are bad. But because no one planned for the good things to happen, they appear as luck. In other words, the best way to ensure that lucky things happen is to make sure that a lot of things happen. It’s really that simple. Much of what makes a company fundamentally innovative, morally compelling, and philosophically positive is contained not in the company’s business model, but in how the entrepreneur communicates the mission of the company. A company’s mission, communicated by the entrepreneur with charisma and passion, is what creates the environment that attracts smart people and gets them inspired in the first place. Which is exactly what gets the luck rolling. Tripod made what money it did by selling advertising to clients such as Ford and Visa. That was our business model. But Tripod’s mission, as I described it to my colleagues, was to revolutionize consumer media, allowing anyone to publish his or her views to the entire world using the Tripod Homepage Builder. Suddenly, almost overnight, the stories, viewpoints, and opinions of every individual, interest group, or culture could be made available for others to grapple with. “Tripod isn’t here just to make money,” I told my colleagues. “We are here to fight the most important battles on the frontier of the First Amendment!” Mezze, the restaurant group I later co-founded in the Berkshire Hills of Massachusetts, serves food and drink to locals and to tourists from New York City and Boston. That’s our business model. But the mission of Mezze is larger: to set an example of quality and service for all the Berkshires’ retail establishments. I tell our staff that by working hard to refine Mezze, we raise the bar for everyone. And that by doing so, we will together attract more visitors to our small part of the world. Village Ventures, the venture capital firm I co-founded in 2000, makes money by taking advantage of the supply and demand imbalance that results from the concentration of venture capital in only a few large cities. That’s our business model. But the mission of Village Ventures is different: to enable entrepreneurs to start companies in the towns where they want to live. Rather than having to flee to Boston or San Francisco to find venture capital, entrepreneurs in Boise, Idaho, and Providence, R.I., can get capital from Village Ventures right in their own hometowns and build their companies in the same place they’d like to raise their families. Missions such as those of Tripod, Mezze, and Village Ventures create an aura of authenticity, which is the elixir that attracts smart people and inspires them. There is little authenticity in the modern business world. But it’s just the thing that people crave most in their work. When people find themselves aboard one of these vessels, they don’t want to get off. They form a fierce protective boundary around it and will do anything to keep the vessel afloat and its inhabitants alive. These people are liberated by finding not only a way to make money but also a way to feel good about it. This is what takes inspiration and turns it into hard work. And the results of smart people working hard are serendipity and luck. Marty Liebowitz, the vice chairman and chief investment officer of TIAA-CREF, one of the world’s largest pension funds, once said to me, “Thank God they created the word ‘muffin’ or I’d be eating a cupcake for breakfast.” Words are incredibly powerful, sometimes causing us to do things that we would never normally do. It is for just this reason that I harbor a tremendous amount of guilt about my place in entrepreneurial culture. I fear that perhaps thousands of well-intentioned people wasted hundreds of thousands of hours pursuing entrepreneurial projects in part because of what they read in the press about me. I created a sort of playboy persona for myself as the CEO of Tripod. Pictures of me skiing, mountain biking, drinking beer, skateboarding in the office, and attending meetings in shorts, Birkenstocks, and a baseball cap graced several major media outlets. From Forbes to ABC’s Nightline, from BusinessWeek to People, from MTV to Spin, the media broadcast images of me doing just about everything but working. I absolutely, completely, 100% sold myself to the media to promote Tripod. Together, we created this image of the Slacker CEO: an athletic, shaggy-haired, perpetually mellow 24-year-old making millions while barely lifting a finger. This image was broadcast not just in the United States but also to most of Europe. In five days during the summer of 1999, I jetted from Madrid to Milan, to Hamburg, to Paris, and finally to London, attending launch parties for Tripod Europe, staying in first-class hotels, and internationalizing the Slacker CEO myth of which I had become the archetypal example. Hell, who wouldn’t want to be an entrepreneur? I was a rock star. And I was the only person who knew it wasn’t true. Friends would ask me, “What’s it like to be a famous international Internet CEO?” “I’m not a famous international Internet CEO,” I would answer. “But I play one on TV.” Working with the media was the most important job I had at Tripod. Period. Twenty-four-year-old Bo Peabody, with his hip Internet company in the mountains, was a perfectly packaged pied piper for the story of the decade. I was not only Tripod’s poster child, I was shilling the whole goddamn Internet. And when it came to promoting these two things, the only self-respecting thing I ever did was turn down an interview on Montel. How noble. I’ve often kidded that 90 percent of Tripod’s value was in the amount of press we received in such a concentrated period of time. Sitting at a board meeting, lamenting our anemic revenue, I once joked to the board of directors that rather than actually running ads on the Tripod site, I’d sell potential advertising customers the opportunity that I might mention them in an article or wear their logo on my baseball cap. The board didn’t laugh. They asked me to look into whether or not this plan was possible. A lot was left out of all those articles. The hundred-hour workweeks. The anxiety attacks. The crashed cars and missed planes. The times I had to tell colleagues that we couldn’t make payroll. The years of a $12,000 salary. Night after night after night of pasta dinners and stress-relieving Advil “cocktails.” The countless meetings with absolute assholes who had no interest in learning about the Internet, the single most significant business innovation of their lifetimes. Pleading to venture capitalists for financing. Firing perfectly pleasant people when they didn’t perform. In the late nineties, this reality did not sell newspapers and magazines. Baseball caps and Birkenstocks did. Had I actually begun to believe what was being said about me in the press, I would never have sold Tripod when I did. I would have reasoned, instead, that I was in fact a genius, and that I should take complete credit for the great things happening to my company. Never mind that Tripod had little revenue, no profits, and an unproven business model; we should take this horse public! “Yeah,” I could have said, “I am smart, not lucky, and I can defy economic gravity. I am in control!” Wrong. Tripod was all hat and no cattle. Had we taken it public, we would most likely have failed, and everyone, including many unsuspecting individual in-vestors, would have lost a lot of money. I was not, however, completely immune to the media frenzy. Following the sale of Tripod to Lycos, what personal money I did not invest in bonds or real estate I invested in more than 20 Internet start-ups. Only five of these companies are still in business. The others are gone, along with a few million of my dollars. The quickest way to tank your company is to believe what you read in the press, especially if it happens to be about you. The vast majority of journalists are not interested in covering what is actually happening. They are interested in covering what they think people want to think is actually happening. Everything is sensationalized. In 1999 it was sensationalized on the positive side, and in 2002 it was sensationalized on the negative side. It’s never exactly accurate. As it turns out, accuracy can be quite boring. And quite boring does not sell newspapers and magazines. Learn to keep your ego in check. That’s how you’ll be able to distinguish the crucial difference between being lucky and being smart. Your ego is both the most dangerous and the most useful weapon in your entrepreneurial arsenal. When used wisely, ego helps entrepreneurs craft their mission, work hard, and keep faith in their companies, even in the face of heavy scrutiny. Ego also gives entrepreneurs the confidence to sell their start-ups to partners, customers, and investors, and the courage to act like famous international CEOs even when they know they really are just playing a role. And ego is the force that allows entrepreneurs to get comfortable with their powerlessness and learn to love the word “no” instead of panicking in the face of it. On the other hand, when allowed to run amok, ego keeps entrepreneurs from knowing what they don’t know and tempts them to believe their own press. Ego is also the culprit when entrepreneurs cling to their role as founder rather than turning their companies over to more capable managers. And ego is to blame when entrepreneurs can’t work with odd people who are clearly smarter than they are, or when they fail to remain calm and gracious in all business situations. Use your ego when it is called for, and check it at the door when you sense that it will get in the way. Unchecked egos are the most destructive force in business. I have often dreamed of a study that somehow measures the impact of ego on workplace productivity. The results, I imagine, would be staggering, with as much as a 50 percent increase in productivity resulting from the eradication of egos. In an ego-free company, all good ideas from all sources would be implemented. Managers would hire only people smarter than themselves, and would never spend valuable time worrying about who gets credit for what. Meetings would be shorter, as no one would feel the need to drone on in an effort to impress his colleagues and managers. In a business world devoid of egos, profits would rise, salaries would increase, and unemployment would plummet. In all seriousness: A number of the planet’s problems would be solved. But it will never happen. As it turns out, businesses consist of human beings, and most human beings have either tragically fragile egos or uncontrollably big ones. All we can do is make an effort to control our own egos. As hard as it may be, there are real incentives to do so. If I had let my ego go unchecked, I would never have let those crazy programmers put the Homepage Builder on Tripod. The Homepage Builder, after all, was not my idea. Moreover, it was the idea of people who were clearly smarter than I was. Someone who was insecure would have declared the Homepage Builder a distraction, a waste of time, inappropriate for the Tripod audience, too expensive, too risky, or any of the other excuses that those with fragile egos use to fortify their own power bases. But the fact is, the Homepage Builder was the foundation of Tripod’s success. The day we launched that little piece of software, we enrolled more members than in the entire previous month. It was like watching the Gold Rush all over again: The automated-membership counter ticked away as hundreds of strangers from all over the world signed up on Tripod and staked a claim to their little piece of Internet real estate. In the end, my original idea for Tripod — practical advice for college students — was completely consumed by the popularity of the Tripod Homepage Builder. At one point, Tripod was the eighth most trafficked site on the Internet. Our membership base spanned every age and more than 40 countries. Now, as part of the Terra Lycos network, Tripod has 40 million members, from virtually every country on the planet. Had I stuck religiously to my original idea, the best thing that could have happened to Tripod would have been my being fired as its CEO. More likely, it would have ended up on the pile of failed dot-com start-ups that now symbolize an age of ego and excess. Without the Homepage Builder, Tripod most likely would have failed, and my life would have taken a different direction. Without the success of Tripod under my belt, Village Ventures would probably not have received the funding and support it has. And without Village Ventures, the four other start-ups I helped found — Mezze, VoodooVox, Waterfront Media, and FilmFree Entertainment — would most likely not be flourishing to the degree they are. Was I lucky? You bet your ass I was lucky. But I was also smart: smart enough to realize that I was getting lucky. This article was adapted from Bo Peabody’s book, Lucky or Smart? Secrets to an Entrepreneurial Life (Random House, December). Peabody (bpeabody@villageventures.com) is the managing general partner of Village Ventures.
Lost a job recently? There’s a life preserver floating out there that wasn’t around in the last recession a decade ago: eBay, the online electronic marketplace. eBay rescued Steven Levi, who was laid off from his sales job just before the tech bubble burst in early 2000. He hasn’t taken a corporate job since. On a recent day he was presiding over 230 camera auctions on eBay. At his home office, phones are ringing, e-mail is flashing, and faxes are humming, part of his typical 100-hour workweek. His proceeds provide a nice life for his family of four in Manhattan, including two summer months at a beach house in Virginia. “I’ll put my kids through college on eBay,” he says. The recent economic shocks — from the tech bubble burst and the Sept. 11 terrorist attack to corporate scandals and the market’s decline — have boosted the national unemployment rate to a stubborn 6%. Some jobless workers, and others who don’t show up in the statistics, are getting by — or even getting ahead — by selling on eBay and other online marketplace services. “There’s always been a surge of entrepreneurship in economic downturns,” says Mark Vitner, senior economist at Wachovia Corp., Charlotte, N.C. “What’s new here is eBay can make it easier for new entrepreneurs.” He finds it a positive sign that many Web newcomers have the courage to take the step from dabbler to full-fledged eBay trader. “Necessity is the mother of innovation,” he says. A Booming Business The recession certainly hasn’t hurt eBay. The company already moves more than $5 billion a year in merchandise over its sprawling Web site. Its once motley collectibles and dolls are now just part of a larger universe that includes sales of cars, real-estate and professional services. The San Jose, Calif., firm said recently that its fourth-quarter revenue soared 89% to $419.9 million from the year-earlier quarter. It has already raised its profit and revenue projections for 2003. For some of the jobless, dabbling in online auctions covers short-term expenses and provides an emotional boost. Aron Danburg of Houston worked for a couple of dot-coms, and the second one, which he believed was more stable, collapsed in two months. The technical writer snagged some contract work, but it ended a few months later. Expecting to move for his next job, he began clearing out his house, selling old college textbooks and compact discs on Amazon’s new service, similar to eBay. (Sellers set a firm price on Amazon; it’s not an “auction” as at eBay; eBay also has a “fixed-price” sales format that allows buyers to purchase without haggling or waiting.) Though he landed a job after four months at the Halliburton Co., an oil-field and construction-services firm, the uncertainty was wearing, especially as he watched fellow job searchers struggle for months on end. “I had no idea how long it would take,” he says. “It was quite frightening.” He found just unloading a single book could add a spark to a gray day of online job-search rejection. “I’d get an e-mail saying something positive,” he says. “I’d think, hey, I just made $15 bucks.” His sales were enough to cover the rent for a month, allowing him to stretch his savings. He’s still at Halliburton, and still sells the occasional book or CD online. For the underemployed, including entrepreneurs hitting slow patches in the weak economy, eBay can fill an income gap. Boston-based Constance Mazelsky saw her communications and marketing work with Internet and software companies losing steam. “During the last few years it’s not been a real vibrant market segment.” Moreover, after she had a baby last year, she began working from home. Now she’s selling her expensive handbags, which she now rarely uses, on eBay. “When I worked outside the home I tried to be totally accessorized and fashionable,” she says. Her collection of upscale designer purses that matched particular suits have fetched excellent prices, including a recent sale of a Dooney Bourke purse for $150. “People respond to a good photograph and accurate description,” she says. “Name brand things sell very, very well.” ‘Powersellers’ To be a serious seller requires a certain degree of commitment, but the eBay Web site walks beginners through the process. eBay charges small fees to post items, and a small percentage of the sale, depending on the price. And eBay deploys a middleman payment system that allows buyers to securely use credit cards, forwarding the payment to sellers. Digital photos of the items help attract interest, as does punchy descriptive writing. Serious sellers need systems for packing and shipping their goods. eBay user sites help with suggestions. eBay particularly courts “powersellers,” such as Mr. Levi in Manhattan — those with big sales and high customer-approval ratings — with special perks including travel deals and health insurance. Powersellers must meet minimum monthly sales ($1,000 for the lowest level; $150,000 for the highest) and must have an approval rating above 98%. When Mr. Levi, who sells used cameras from his Manhattan apartment, was laid off from his position at Carolee Designs, a fashion jewelry firm in Greenwich, Conn., the layoff came as a shock. He’d been a globe-trotting salesman, spending much of his time on the road in Hong Kong, London, Sydney and other cities. “I’d never lost a job,” he recalls. After a brief spell consulting in his old field, he more or less fell into eBay selling refurbished cameras. “I was unemployed and messing around,” he says. The seeds of his new venture were sown after he made his first eBay purchase: four copies of Microsoft Office 2000. He used one for himself, and resold the other three on eBay. Those three covered the price of his copy. Always a techie, he loved digital cameras and began buying and selling them on eBay. As the business improved, he realized he had to get better organized. These days, he often buys cameras returned to electronics chains. He puts a lot of work into his auction pages, and tailors different auction formats to different camera gear. For instance, some items do better with a fixed price. Suppliers handle shipping for a fee, so he doesn’t have to handle and store the actual merchandise. He tries to combine high volume with high service and is avid about maintaining his eBay customer rating — a sort of grade card from each buyer published on the site for all to see. Over 99% of his are positive. He makes it a point to never mislead about the quality of a particular camera, distinguishing “class A” from “class C,” which may, for instance, have cosmetic blemishes. “There’s no fine print,” he says. “I’m very Ralph Nader about it.” He’s thought about selling other types of merchandise, but doesn’t think the return will be as great. “I’m looking for growth in volume, margin and product offerings,” he says. He declines to disclose sales, but says that they rose 75% in 2002 over 2001. He works 365 days a year, he says, but adds, “Working is different when you’re doing it for yourself.” Ms. Thomas is a free-lance writer in Pittsburgh. Copyright © 2003 Dow Jones & Company, Inc. 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