The video game World of Goo, who we've seen experiment in the past with models like DRM-free games (which did not suffer any worse piracy rates than DRM'd games) and a "pay what you want" model, is back at it again. This time, they've released the The Humble Indie Bundle -- they've teamed up with a few other games and released a five game bundle with the "pay what you want" model once again. In addition to the five games involved, two charities, Child's Play and the EFF, also benefit from each sale -- by default, the money paid is split evenly amongst the seven parties, but customers can easily tweak the revenue split as they see fit. The site's clean, simple payment interface is particularly impressive and contains an amusing easter egg if you try and buy the bundle for less than $1.
In a similar spirit of transparency that we've seen before from Goo, real-time statistics about the sales are shared on site. Currently, the average contribution stands $7.89 -- higher than the $2 that World of Goo saw in its previous experiment. So, while Mike may still not be convinced yet that "give it away and pray" is a viable business model, it should certainly not stop faithful entrepreneurial minded folks from trying to prove him wrong.
In one survey, 77% of freelancers said they'd had issues collecting payments from clients. Independent contractors can feel like they have to take on the second career of bill collector. The time it takes to collect on an overdue invoice can cost you dearly in productivity and the ability to finish other jobs effectively. What's an independent contractor to do when they are not covered by the same laws for wages as permanent employees are at businesses?
First and foremost, insist on a formal contract when possible. Having everything spelled out and agreed to in writing can make it easier to follow up on claims later. Also, make sure to include a clause describing a late payment penalty or fee schedule. Some freelancers have found success in offering a discount for early or lump sum payments. It'll depend on the client whether that will be attractive enough to get the check in the mail sooner rather than later.
Send out invoices on time. If there is a payment schedule spelled out in the contract, then follow that. If you are sending one invoice at the end of the project, send it in with the final product. Always include a due date on the invoice (you'd be surprised how many don't).
Once the payment is late, call the client -- call them the first day you realize it is late. The sooner you start the process, the faster you can hopefully resolve the problem. You should send a second invoice (with the revised amount if a late fee was agreed upon) and make another call to the client. Third, fourth, fifth, etc. invoices can be sent but your best bet to getting them paid is to talk with the client by phone (even better, in person). Be polite but firm and don't be embarrassed to ask for what's due to you. Patience, persistence and flexibility can go a long way in negotiating for payment. Another tactic, can be to write a letter to the client, your lawyer, their lawyer and/or any regulatory agency overseeing the client with an explanation of the situation and ways to remedy it short of going to court.
If the client still refuses to pay, there are always small claims court or collection agencies. But these should be absolute last resorts. You'll spend copious amounts of time gathering evidence, getting the client served, arguing your case, and the end result can be disappointing in small claims court. Collections agencies will take a significant portion of the money owed to you as payment for themselves if they collect.
As more people move to become independent contractors due to the struggling economy and difficulty in finding jobs, the problem of getting paid on time is sure to grow.
Just recently, we discussed yet another in a long line of studies suggesting that imitation is often the most successful strategy for businesses to take. It appears that this topic may get a lot more attention soon, which is a good thing. Copycense points us to a fantastic Boston Globe article that discusses "the imitation economy" and the "myth" that copying is a bad thing. It's based on a forthcoming book, called Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge that tries to dismiss the myths about copying being automatically "bad."
The article mentions -- as we've pointed out for years -- that for all of Apple's success, it's really mostly been good at taking existing ideas and packaging them up nicely. But that's incredibly valuable. There's very little that's new in the iPhone or the iPad -- but the way they're put together and the way they're sold is what has made them a success and made them so valuable. It highlights the value of the process of taking ideas and making them useful, rather than just assuming that the idea is the most important part.
As a part of that, the article highlights how the common argument against copying is effectively a myth. The idea that if you have a good idea some big company will just come along and copy it, rarely works:
That means when companies copy they often do it clumsily. Shenkar offers the example of the legacy airlines in the United States and their response to the low-cost threat of Southwest Airlines. Most set up copycat airlines of their own: United with TED, Continental with CALite, Delta with Song. All quickly failed.
The problem, Shenkar argues, is that in their scramble to copy Southwest, the bigger airlines failed to see the ways that central pillars of Southwest's strategy -- lower pay, short point-to-point flights, a fleet of identical smaller planes -- were incompatible with the union contracts, hub-and-spoke route structures, and larger craft the traditional carriers were saddled with.
Indeed. We've pointed out this kind of "cargo cult copying" in the past as well. Copying is not nearly as "easy" as some make it out to be, because those doing the "copying" often are only copying the superficial aspects, without recognizing the underlying reasons why something works. It's why IBM failed at copying Microsoft years ago. It's why Microsoft failed at copying Google. They tried to directly imitate on the surface, rather than understanding the underlying aspects of what's happening.
That's why copying, by itself, isn't as "dangerous" as some make it out to be. And, in fact, it's quite beneficial in many cases. And, it turns out that this hatred of imitation is a rather recent phenomenon:
Shenkar traces our innovation fetish back to the late 18th century. Before that -- for most of Western history, in other words -- copying was valued just as highly as creation, and sometimes more. "In the Roman Empire, where imitation was used to align the diverse cultures and institutions of the far-flung empire under a single umbrella, it served as the official pedagogy," he writes in his book. Centuries later, Adam Smith wrote that imitation should be given "the status of a creative art." But the Romantic Age, with its celebration of the sui generis and the solitary genius -- philosophers like Rousseau, poets like Shelley, and scientist-inventors like Humphry Davy -- began to change that. Copying came to be seen as disreputable, as a refuge for the unimaginative.
The book sounds great. It points out that there are benefits to allowing copying -- since it allows for more actual innovation in the form of taking what others have done and improving on it, while pointing out that pure copying usually isn't enough to be effective. In other words: allowing copying is good because it drives innovation, but the actual practice of innovation goes beyond just a straight copy. So we shouldn't be so against copying at all. We should be encouraging smart copying that drives innovation forward.
On April 15, 2010, Congress passed and the President signed, H.R. 4851 Continuing Extension Act of 2010. This extends the Small Business Administration's loan adjustments program, started under the American Recovery and Reinvestment Act through May 31st.
This extension sets new guarantee levels at 90 percent on SBA 7(a) and 504 loans and reduces borrower fees for these loans as well. That is significantly more than the old guarantee of 75 percent. This is great news for small businesses. Banks are more likely to loan at a 90 percent guaranteed return than they would have before this and small businesses will be able to reduce their capital costs a bit.
But, as always with government programs, there are a couple of hitches. Loans that were taken before the extension was passed or that were funded under non-ARRA terms are not eligible for renegotiation. And since this program started, Congress has been slow in enacting the extensions -- recently, it's been a month-to-month process. This has caused the small business lending market to suffer from fitful starts and stops, which has made it difficult for many to plan appropriately for the loans they want. Congress needs to get its act together and extend the bill through the federal fiscal year (September 30, 2010) as proposed by the President and small business interest groups. Even so, applicants should be ready to deal with fast timelines, volumes of paperwork, and long wait times for approval from the SBA.
A 90 percent guarantee will certainly make many small business plans look like safer investments than they did even one year ago. The banks received their cash from Uncle Sam. Now's the time to get yours.
On April 1st, Grist posted an April Fools story about McDonald's that claimed the fast food chain would no longer follow through with its global composting initiative after scientists at the University of California-Berkeley found that none of the items on McDonald's menu were suitable for composting -- and none of the "food" would break down even after 1,000 years.
The story was certainly inspired by a recent blog post by Joann Bruso claiming that the Happy Meal she had purchased and placed on a shelf for an entire year looked virtually unchanged -- no mold, no decomposition or smells. In this case, McDonald's reacted by posting a response on its website, calling Bruso's story an urban legend.
Apparently, many people fell for Grist's joke because it just seemed so plausible. Allison Arieff, a writer for GOOD and The New York Times, tweeted the news -- and just minutes later, McDonald's Twitter contact tweeted back a very odd reply:
Arieff: "McDonald's scraps composting program because the items on their menu WON'T DECOMPOSE. Yikes. http://ow.ly/1tClQ (via@edibleIA,@edibleSF)"
Molly at McDonald's: "They say April Fools jokes are a form of flattery! This one had us laughing too! ^Mol"
Here's a story that's further spreading the idea that the food at McDonald's is so unnatural that it won't even decompose, and what does McDonald's do? Laugh it off, of course. Was this the right response? Well, it was definitely not one that people were expecting. McDonald's had a chance to address the criticism, but instead they chose to just brush it off. Maybe they didn't want to open a can of worms, and since they're so big, they figured that they could get away with it. And they're probably right -- the number of people who were turned off by their response (or even aware of the story) was likely to be insignificant for the fast food giant.
However, it's likely a different story for smaller businesses. They really need to pay attention to and deliver what their customers want. It's probably not a good idea to attempt to brush off customer complaints with "humor." Perhaps even McDonald's should be more careful with its tweets now that everything they say will be archived for posterity. We'll see how long it takes for tweets to decompose.
The entire premise behind copyright law is that by making sure there is enough financial remuneration, people will be more interested in creating more great content. The argument of those who push for ever stronger copyright law is always based on this very premise, with the often explicit claim being "if artists can't make enough money making art, they'll do something else instead," while suggesting that would be a net negative to society. Now I'm all for artists making money and being able to create more art. It's why I spend so much time discussing business models that work for those artists. But what if that entire concept -- that we need this monetary incentive to create -- is bunk?
His jumping-off point is the academic work done over the past few decades that consistently shows that financial rewards hinder creativity. These studies have been around for a while. But Pink follows through on their implications in a way that is provocative and fascinating. The way we structure organizations and innovation, after all, almost always assumes that the prospect of financial reward is the prime human motivator. We think that the more we pay people, the better results we'll get. But what if that isn't true? What the research shows, instead, is that the great wellspring of creativity is intrinsic motivation--that is, I do my best work for personal rewards (out of love or intellectual fulfillment) and not external motivation (money).
Indeed, the more you think about this, the more obvious it becomes. There are lots of reasons why people do things, and economic motivation is for marginal benefit, which some (bad) economists equate directly to cash. But many people value other things much more than cold hard cash -- and it's quite interesting to see that the pursuit of money may actually hinder aspects of creativity.
Again, this is not to say artists should not get paid. I'm very much in favor of business models where artists do get paid. But it absolutely calls into question the very central argument for copyright, and suggests that, if anything, copyright may hinder the incentive to create, rather than promote it. This is a big, big deal -- and if we had an evidence-based copyright regime, rather than a faith-based one, it's something that Congress would consider. Tragically, that seems quite unlikely any time soon.
Many companies have long been taking advantage of young, bright-eyed students and recent college graduates who are eager to work for nothing (or practically nothing) in the hopes that their work experience will eventually land them their dream job. But is it legal for a for-profit company to not pay a full-time intern? Talk to your lawyer, but generally, the answer is no. Only government and non-profit organizations are allowed to use unpaid interns without worrying about breaking the law. Given the rampant (ab)use of unpaid interns during this recession, the Department of Labor is starting to crack down on employers who don't pay their interns fairly. The confusing part, though, is that labor laws are somewhat outdated and open to interpretation.
The six federal legal criteria that must be met in order to hire an unpaid intern are based on a 1947 Supreme Court decision about whether the Fair Labor Standards Act (FLSA) was applicable to prospective train yard brakemen. (Hmm. When was the last time you heard about a good train yard internship?) Under the current FLSA, employers can hire an unpaid intern if all of the following conditions are met:
The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school or academic institution. The idea here is basically that any work should be for training purposes only -- not for the sake of getting real work done at the company.
The training is for the benefit of the trainee. This is generally true. Interns are happy to work for no pay if it means that in the end, they can put a company's name on their resume or even get a paid full-time job at the company.
The trainees do not displace regular employees, but work under close observation. This implies that interns shouldn't be doing actual work that might displace a paid employee.
The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer's operations may actually be impeded. When doesn't an employer gain an advantage from having an intern? This is where many companies can get into trouble. The definition of "immediate advantage" leaves a lot of room for interpretation.
The trainees are not necessarily entitled to a job at the completion of the training period. Companies often use internships as "working interviews" where the intern is hired as an employee after the internship is over if they perform well.
The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training. This is generally not a problem, since both parties should agree to the scope of the internship.
So it's quite difficult to meet all six criteria, and hiring an unpaid intern based on a loose interpretation of the laws could cost employers more than just compensating for minimum wage and overtime. Think potentially huge fines and legal bills -- as well as long drawn-out legal proceedings. However, since the enforcement of the intern criteria has been lax for some time, many companies haven't put too much thought into their internship programs. Some startups have even incorporated somewhat questionable unpaid internship work into their business models. Just last year, the Huffington Post famously had an auction where the winner actually paid $13,000 (which went to charity) for an intern position. Clearly, the rules governing internships have not been well-established according to the 'modern' workforce.
The upshot of all this, though, is that unpaid interns have hidden costs and liabilities -- which can be significant. Labor laws seem to favor the benefit of the intern and seem to frown upon companies that might be trying to just get free labor. But besides running afoul of labor laws, unpaid interns without proper supervision can also come back to haunt employers, especially when interns represent the company and are trusted with interacting with clients. Add the Department of Labor looking into the issue, and there are even more reasons to double-check and make sure internship programs make sense.
What has your experience been with internship programs and training interns? What are your motivations for offering intern positions? Do you think labor laws need to be adjusted to reflect more current trends in the workforce? Tell us what you think in the comments below.
We spend a lot of time talking about innovation and ideas. Part of that discussion often turns to patents, and questions of whether it is better to "protect" or "hoard" your ideas, or to focus on sharing them. Patents live in this nebulous world between the two, where you partially (sort of) "give away" the idea, in exchange for the right to protect it. This seems counterintuitive when you think about it. Plenty of research has shown that people invent and innovate more often because they want what they're inventing themselves -- not because they want some sort of monopoly right over it. Other research has shown how innovation (rather than invention) is really an ongoing process, that often involves building on various ideas. For years, we've discussed how the "idea" is quite often overvalued, while the execution is undervalued. Lots of people have ideas. How you execute on them is where the real innovation occurs.
I was thinking about all of this after hearing of the launch of a new service called Mixtape For You, which let's you create a limited time mixtape, which only a single person (who you email) can download. What does this have to do with ideas, execution and innovation? Well, let's go back a bit... and follow this (somewhat convoluted, but fun) trail:
On Memorial Day weekend in 2009, at the annual Sasquatch Music Festival, some shirtless dude started dancing, and someone else started filming him with a cameraphone. Then someone else started dancing with the shirtless dude. Then someone else. Then a few more people. Then a bunch more. Then pretty much everyone. The guy who filmed it put the video up on YouTube, where it went viral (nearly 3 million views at this point). I remember seeing it passed around as a video that "just makes you smile." And it does.
As the video became popular, some started to think about it a bit more, and all around smart guy, Derek Sivers, wrote up a nice little blog post in June, analyzing the sociological aspects of the video.
That discussion turned into an absolutely wonderful 3 minute TED Talk, given in February of this year, that Sivers gave, using the video as a way to explain and demonstrate the importance of "first followers" in creating a true "movement."
That talk got a ton of attention, with lots of people telling Sivers that he should turn the whole "first follower" meme into a book or something like that. Sivers, however, said he wasn't that interested in doing much with the concept and decided, in the very nature of the "first follower" to give away the idea and embrace anyone else who wanted to take the idea and run with it:
If this "First Follower" idea inspires you to elaborate on it, please do. Feel free to write a hit book about it, tour the corporate speaking circuit talking about it, or anything else. I won't.
You don't have to ask my permission, pay me, or even credit me.
I've been very lucky with lots of opportunities. This one's all yours.
Another all around smart guy, Andrew Dubber, picked up on the idea and considered doing exactly as Sivers suggested above, and writing a book based on this concept. But, after sleeping on it, he decided to innovate and execute in a slightly different way. Instead of taking the "first follower" idea and preaching it, Dubber wanted to be a first follower of Siver's other concept: giving away ideas. He decided that he would give away 30 ideas in 30 days -- just like Sivers "gave away" his idea.
Starting March 3rd, Dubber did exactly that, giving away an idea a day.
On March 16th (day 14), Dubber's idea give away, was called I Made A Tape, and was based on the idea that, back in the old days, when people made mixtapes, they were usually for someone specifically. And while there are a bunch of "mixtape" services out there these days (though the RIAA likes to shut them down every so often), Dubber thought it would be cool to create one that allowed someone to be more personal:
So that's why my idea is an online music sharing site -- but one that can only be shared with one person. You craft a "tape" with a single person in mind, and then that mix is sent to that person with a unique URL that only they can access.
They can download or stream the mixtape, and it comes with the liner notes that you've written.
And then... on April 6th, some other guy, Ray Kuyvenhoven launched MixTapeForYou.com, based very much on Dubber's idea from just a few weeks earlier.
I'd been following the whole chain of events from the very beginning, but what struck me about it, and what caused me to write this post was when I read Dubber's followup post, gleefully talking about how cool it was that Kuyvenhoven actually executed on his idea, this one line stood out:
I invented something, and it came true because I said it out loud.
That's a really powerful statement when you think about it. And, of course, it goes way beyond that. Just look back at the trail of things that happened that resulted in this particular offering coming about -- how many of them were disconnected and simply shared. Yet, we keep hearing people talk about the need to "protect" an idea? Innovation doesn't come out of protection. It comes out of building on the ideas of others and sharing and others taking a different view on it and finally someone executing, not because they want a patent, but because they want the product.
And to tie this all together, Sivers (who kicked off a lot of the chain of explosions above) has also pointed out himself that it's the execution that matters, and ideas, by themselves, are "worth nothing unless executed."
But think about all this in context, and you realize that it was the openness and sharing of ideas that resulted in execution. It happened by building on different ideas -- not "copying," but innovating. And, it's not just this one idea. Remember, Dubber put forth 30 ideas, and others have been doing the same, building on those ideas themselves. In fact, some have committed to delivering on other ideas that Dubber put forth as well.
Now, before people get upset and say "well that's great, but it doesn't mean patents aren't useful," you're right. I'm not saying that any of this negates the need for patents (there are other reasons for that), but I found it to be such a great example of how ideas travel and morph and lead to eventual execution, totally separate from focusing on the need for protection, that it felt worth sharing. And hopefully, someone else might share it, build on it and do something different and innovative with this idea themselves.
Over the past few years, the review site Yelp has been no stranger to controversies regarding its treatment of comments and criticisms aimed at local businesses. Negative reviews on Yelp have spurred variouslawsuits, accusing Yelp of unfair business practices that have been called "Extortion 2.0" -- referring to the accusation that Yelp salespeople put pressure on companies to pay up for better ratings to appear more prominently on Yelp (and to remove the bad reviews that coincidentally seem to appear on the site when these salespeople allegedly suggest that better ratings could be bought).
In response, Yelp has explained (over and over again) that its algorithms are optimized to display the most "trustworthy" reviews of local businesses -- in a way that's completely unrelated to its sales efforts. Trying to put a friendly wrapping around its umpteenth explanation, Yelp has even created a cartoon to help educate everyone on its methods:
However, no matter how simply these explanations are conveyed, they have not been particularly convincing to small businesses who feel punished by bad reviews and see Yelp's services as a veiled threat to their livelihood. So Yelp has taken another step by announcing some changes to its services to avoid further confusion:
Businesses can no longer buy a "Favorite Review" like they could before -- so that there's no confusion over businesses being able to influence reviews by paying Yelp. This sounds like a pretty big step towards making it clear that companies can't just buy better reviews, but what does this mean for companies that formerly bought "Favorite Reviews?" Those companies are being penalized with the unexpected removal of this service, and there's still no guarantee that ratings can't be manipulated by cunning business owners or competitors. Though, the conspiracy theorists may never actually be satisfied on this point, and gaming online rating systems will likely always be a nagging concern.
Yelp is still keeping its review filtering algorithms a secret, but it will now display reviews that have been removed by its automated filters in an effort to allow users to see a bit of the reviews that Yelp deems suspicious or untrustworthy. However, Yelp is not exactly highlighting these filtered-out reviews -- just making them available to be viewed in case anyone is curious to see what kind of reviews are tossed out on a regular basis.
Yelp is adding video ads as a service for businesses -- presumably to offset the loss of its "Favorite Review" feature.
Yelp says it's created a Small Business Advisory Council for companies to give feedback to Yelp management. This is an interesting development, but it's not exactly easy to find out more information on how this council works. Granted, it was just announced, but its announcement seems to lack a bit of commitment when there aren't any obvious links about it on yelp.com (yet?).
Yelp proudly states that it's increasing transparency with these changes, allowing businesses and users to peek into what its algorithms are filtering out behind the scenes. But it's not clear that anyone really asked for that feature -- and getting that look at the filtered reviews isn't going to ease the concerns that Yelp's algorithms are inherently weighted against small businesses who don't pay up for advertising space on Yelp.
The more significant change seems to be that Yelp is shifting away from a "Pay for Placement" business model with its reviews. Replacing its "Favorite Reviews" with video ads seems a bit odd, though -- but apparently video ads were a top request from merchants. So at least Yelp is listening to its customers and responding -- and if Yelp really wants to increase transparency, maybe we'll see how Yelp actually handles feedback someday. But since Yelp doesn't allow commenting on its own blog, chime in here and tell us what you think Yelp is doing wrong or right with its approach.
Continuing gov't efforts to try to boost the economy are creating some additional tax breaks for entrepreneurs and small businesses. Just last week, the Small Business and Infrastructure Jobs Tax Actpassed in the House and is now on its way to the Senate -- though the progress of the bill will be held up until after the Easter break in Congress. But so far, this $14 billion piece of legislation (aka H R 4849) aims to help small companies with a few tax exemptions and deductions (as well as a bunch of other provisions). Here are some highlights:
100% exclusion for capital gains on qualifying small business stock acquired after Mar. 15, 2010 and before Jan. 1, 2011.
New limits to the penalty for failing to disclose certain reportable transactions. (avoid the Code Sec. 6707A penalty, folks!)
Higher tax deductions allowed for business start-up expenditures -- increased from $5,000 to $20,000. At the same time, the threshold amount for reducing the limit will be increased from $50,000 to $75,000.
The Senate is also expected to try to increase the exports from small businesses with incentives and to improve loan availability from the Small Business Administration. But we'll have to wait a bit to see what the actual law will be when it's passed.
