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The State of Big-Box Retailers (and What That Means for SMBs)

Black Friday, likely the biggest day of the year for big-box retail stores, was once again outclassed by Cyber Monday, with nearly $1 billion more revenue made on the newer shopping event, according to stats from Adobe Digital Insights. Although this includes both in-store and online revenue numbers, it indicates that consumers are more likely to log in on Monday than stand in line on Friday, which increasingly reflects year-round shopping habits.

As of 2017, e-commerce makes up 20 percent of total retail, according to Dr. Tenpao Lee, interim dean and professor of economics at Niagara University. However, even this is causing a huge loss in big-box retailers’ profit margins. When even 5 percent of revenue is lost, it has a disastrous effect on profits, if not outright eliminating them.

“Many of the issues that big-box retailers were dealing with started before the rise of online business. The rise of online was the final step for some retailers, not the first,” said John Crossman, president of real estate firm Crossman & Company. “The Great Recession is what exposed many of the problems in retail. Too many retailers grew too fast. They were overleveraged, grew without maintaining customer service, and there were just too many of them.”

Just this year, department stores that were so prevalent in the ’90s and early 2000s are closing locations by the hundreds, including J.C. Penney, Kmart and Sears. Others, such as Toys R Us, are avoiding sweeping closures but have filed for Chapter 11 Bankruptcy, with long-term plans for restructuring their businesses.

As Amazon continues to claim retail’s market share with faster, cheaper delivery, it’s given physical big-box stores a turbulent last decade, but they’re unlikely to disappear just yet.

It’s not all bad news

Things aren’t as bleak for retailers as they may seem. There has been a net of 4,000 retail openings in the past year, according to Crossman. For every retailer that closed, an average of 2.7 open. There’s also a trend of former box-store properties being bought up and redeveloped for medical, educational or even residential use, which has created a rise in value for retail spaces as the supply decreases.

Amazon’s prices remain as competitive as ever, forcing many retailers to accept online price matching, which cuts deep into profit margins. However, there are big boxes that have been able to adopt strategies for success through new channels.

These are some of the success stories:

  • Best Buy has been fortunate to be the No. 1 destination for shoppers to research and get a hands-on look at popular electronics. It does this by offering clean, easy-to-shop stores with helpful and educated customer service, said Danny Silverman, Clavis Insight head of marketing. The key is getting people to buy in the store rather than going home and ordering from Amazon, which Best Buy has attempted with improvements to its online store, in-store pickups and faster delivery.
  • Walmart’s e-commerce model has adapted to compete with Amazon’s by allowing individual vendors to sell on Walmart.com, which greatly expands its online selection, and offering services for these vendors such as in-store pickups and the Walmart branding.
  • Home Depot has benefited from the recent home and real estate boom, according to Graham Onak, owner of GainTap. It’s also unique in that consumers are going there with certain projects in mind, so they’re fulfilling their checklist of items and asking questions from experienced staff along the way.

So what does this mean for SMBs?

The issues hindering large retailers are a mixed bag for small and midsize retailers. Amazon and other e-commerce platforms are pulling market share away from both the big guys and the little guys. Yet the little guys aren’t going away anytime soon and seem to be faring better. According to the U.S. Small Business Administration, in 2017 nearly 48 percent of U.S. workers are employed by a small business.

Staying relevant isn’t easy, and if the big boxes are having trouble competing with the internet on prices, small retailers are no doubt facing that same reality. However, small retailers suffered more from the big-box stores taking their market shares than the e-commerce boom much later, according to Louis Tanguay, marketing director for Circle Marketing. In other words, large retailers had much more to lose, while SMBs have been making new inroads using Google, Yelp and other directories to win back their consumers.

“Do things Amazon can’t. Forge strong local partnerships with other businesses, organizations and with your community,” Onak suggested. “It’s all about customer experience. You need repeat customers to keep a retail business afloat. The only way to keep customers is by respecting them.”

Amazon and other online giants aren’t the only ones that can prosper using the internet. Social media platforms such as Facebook allow local businesses to advertise to their customers.

“Using Facebook advertising effectively, small businesses can create videos and target them to their customers by customer demographics and customer behaviors,” said Jeremy Miller, president of Inspired Blue Media. “The incredible targeting capabilities on Facebook allow small businesses to still find the results that they seek for with small budgets.”

More than ever, consumers are shopping on their phones, so there’s no excuse for any retailer, no matter what size, to not have an optimized mobile website or app that’s convenient and easy to use. Apply your mastery of customer care and convenience online. Offering a multichannel customer experience is what will keep your small retail outfit relevant to shoppers and make them view you not as the old mom-and-pop stand, but a convenient and modern alternative.   

 

How Color Can Impact Your Restaurant

A major aspect of starting a restaurant is creating an overall mood or atmosphere. This usually means influencing a customer’s senses so they are primed to have a positive experience in your restaurant. Part of this priming process is removing sonic trash from your environment, dialing up the right music, setting up the dining room in a way that reflects your brand, and building color into your space. This final aspect, color, can have a major effect on your business.

“Color can sway people and their behavioral actions – it’s all about psychology,” said Ashley Anastasia Howell, founder of Avid Creative, a freelance design firm focused on restaurants.

Various experiments have indicated that the color of a food item can impact how we taste it. The Journal of Food Science published a study where respondents easily identified the flavor of a drink they tasted when they could see its color. When they couldn’t see the color, they had trouble identifying each flavor and even mixed up flavors. These findings illustrate the impact our sense of sight has on taste. Our eyes are judging and sending information to the brain about food before we take the first bite.

Regardless of how you approach color, it will have a certain impact on your restaurant. Rosalin Anderson, chief branding officer for international salad and wraps restaurant group Just Salad, said that color directly impacts a customer’s experience.

“Strategic color is one of the most powerful tools for restaurants to use to convey an enjoyable dining experience,” she said in an email. “The selection of the right colors is very important, as it can make diners feel a wide range of emotions from very energized to relaxed, and everything in between.”

Colors to avoid

Blues and purples should give you pause when you’re deciding how to brand your restaurant, build your dining room or design different plate presentations. Howell breaks down each color and describes how it will impact a diner’s overall experience. She warned against using blue without a clear intended purpose.

“Blue is actually known to suppress appetite and reduces hunger,” Howell wrote. “Simply put: [it’s] the most unappetizing color.”

In addition to blues and purples, restaurant owners should avoid using overly bright or neon-like colors, like bright yellow, orange or green. These can bombard the diner and create a rushed, anxious feel. Anderson said that it’s important not to overdo your decor with overly vibrant colors.

“We avoid using high-energy colors, such as orange, red, neon colors, etc., as they vibrate to the eye and can be unsettling, especially with food,” she said.

Color psychology can get a bit tricky, but the overall idea is that extremely bright, vibrant colors create a sense of urgency and speed to your restaurant that may go a bit too far and cause distress.

Know how to break the rules

As with any good design rule, there are some exceptions. Howell said that there aren’t clear-cut right or wrong colors to use when building a brand or redesigning a restaurant. Instead, restaurants should focus on doing research and picking a color that builds up to an overall brand.

“I have seen some cases where odd colors are used in a restaurant setting and it is pulled off magically,” she said. “Context is key … as long as the color is used in the right fashion along with complementary colors and imagery.”

A perfect example of a brand properly using blue or purple is Just Salad, which features navy blue in its logo to give a relaxing and professional feel. “We use a saturated navy blue for our logo to further differentiate ourselves from our competitors that use a lot of green,” Anderson said.

Another great example is The Taco Stand, a taqueria inspired by the taco stands of Tijuana. Julian Hakim, founder of The Taco Stand, said that vibrant colors help relay the cultural feel of the restaurant.

“Vibrant and lively colors paint a ‘fun’ place image in someone’s mind,” Hakim said in an email. “The Taco Stand intends to recreate what it feels like to eat in Mexico at a taqueria. It’s casual, vibrant and fun.”

Colors that may work well

While restaurants should look to avoid blues and purples, just about every other color – if used properly – can be incorporated to create an ideal restaurant experience. In the case of Just Salad, Anderson said that calming colors are ideal for a restaurant focused on a healthy lunch or dinner option.

“Classic colors will be timeless and elegant – soft whites, grays and taupes make for a good base, and then you can add one or two fun colors as an accent for contrast,” she said. “We strategically use calming colors (gray and taupe interiors) to offset the ordering experience, which during the lunch rush can be hectic.”

These colors denote elegance. If restaurants are looking for other good examples, Howell wrote in her Medium post that they should consider using orange.

“Orange encourages impulse and comes off to some as a comfort color. Orange typically stimulates all senses, which of course has a lot to do with the experience of a restaurant,” she wrote. “If surrounded by the color, customers will eat, talk and spend longer periods of time [in the restaurant].”

Best practices

1. Think about your brand.

The best thing you can do as a restaurant owner is think about your restaurant and how you want your customers to feel when they are eating there. Set a clear goal and think about how design, color and layout can get you closer to the feeling you want to evoke. Part of this process will be research, according to Howell. Arbitrarily choosing colors or design elements because you like them isn’t always a good idea. Instead, think critically about how you want to be perceived by the public – this can usually be summed up in a few words or a sentence or two. Then do research to figure out what steps you can take to achieve that mood.

“Do [your] research and do not pick a color just because you like it,” Howell said. “Colors can change meaning over different cultures, geographical areas and eras with various relevancy.”

As you begin to think about color and how it will impact your restaurant design, try not to overdo it.

“There’s a line to be drawn,” Hakim said. “You can easily overdo it and saturate a place with unnecessary images and colors, which will lead to a place feeling like they tried too hard and have no concept at all.”

Avoid this by doing the right research and building color into your brand, not the other way around. Color should accent a diner’s overall experience; it shouldn’t be the main event.

2. Consider other factors.

Color is only part of the equation for your restaurant, so be sure to think about how it will fit into your overall restaurant idea. This should include decor, location and other important factors.

“Your surroundings play a big role in how you feel. Being in a lively place with lots of color sets your mind up for a fun experience,” Hakim said. “Have a clear concept in mind and execute it. It’s easy to want to incorporate 100 different ideas and bring them all into one space, but that is dangerous. The key is in the details, and many times, less is more.”

3. Experiment.

Once you have a clear strategy in mind, start incorporating different design elements into your restaurant and see how your guests react. Do your best to gauge their dining experience – such as by informally talking with them or conducting a survey.

“Testing brand colors can be tricky, but I highly suggest it,” Howell said. “Test the waters, and if you have a certain color palette, try doing a test run of different colors.”

As you try different design elements, remember that nothing is set in stone and color is only one factor in a guest’s entire restaurant experience. Howell said she thinks it’s important to maintain perspective when working on this type of change.

“I honestly don’t think a color can make or break a restaurant,” she said, “although I do feel there is always room for improvements to help your brand be the best it can be.”

Leo Kremer, co-founder of Dos Toros Taqueria, said his restaurant is currently changing some of the design elements in its Chicago and New York City locations. Kremer emphasized approaching a redesign with a certain flexibility.

“You can test it, and if you paint your wall white and it’s the wrong color white, you can repaint it,” he said. “These decisions aren’t set in stone … I think people feel like they make a decision and they’re stuck with that result whether they like it or not, and that’s not always the case.”

Bottom line

While color is an important aspect of your restaurant and the customers’ dining experience, your whole business doesn’t hinge on it. If you’re just starting out or thinking about changing your restaurant’s interior or rebranding, be sure to do research and think critically about the look and feel of your restaurant. Color should contribute to an overall atmosphere. Achieving that feeling and showcasing that atmosphere should be your ultimate goal.

 

18 Ways You Can Make Money Right Now

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Resources for Writers: How to Find Amazing Clients

A quick note if you write for a living: This week you have the chance to get on our list of recommended writers by joining the Certified Content Marketer program. We will close registration on Wednesday, December 13, 2017 at 5:00 p.m. Pacific Time, so if you’d like to learn about the content strategies that
Read More…

The post Resources for Writers: How to Find Amazing Clients appeared first on Copyblogger.

 

Bryan Singer Talks Firing from 'Bohemian Rhapsody' and Fate of Kevin Spacey

Bryan Singer Talks Firing From ‘Bohemian Rhapsody’ And Fate of Kevin Spacey 12/8/2017 1:00 AM PST EXCLUSIVE Bryan Singer was shockingly candid and patient with our photog, who asked him …

The post Bryan Singer Talks Firing from 'Bohemian Rhapsody' and Fate of Kevin Spacey appeared first on Newline Marketing.

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3 Ways to Make Your Blog Posts Go Viral | Viral Marketing Blog Tips!

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Small Independent Trucking Businesses Especially Worry About New Government ELD Mandate

Truck Drivers Across the Country Holding ELD Protests

A new mandate is set to take effect for trucking companies this month, requiring the use of electronic logging devices (ELDs) in every vehicle. And some truckers and business owners aren’t happy about the change, some even organizing ELD protests across the country. The concern seems especially of concern to small trucking firms because of the cost of compliance.

The devices are meant to ensure drivers maintain safe driving practices, monitoring time on the road and the speeds they drive. The mandate, which was actually passed four years ago, with the actual rules being finalized two years ago, is set to go into effect on December 18. But the government is also phasing in its enforcement efforts, so it won’t be fully enforced until April 1, 2018.

Opponents of the mandate say that ELDs can actually lead to more safety risks, causing drivers to speed through low speed areas to make up for any traffic jams or issues that cause them to slow down on highways. It could also lead to a loss of money for truckers and productivity for trucking businesses due to the strict rules about how long the vehicle must be parked between shifts. If the driver has to just move the truck a short distance during their rest time, for example, it could reset the clock.

However, not everyone is convinced that this is a negative for the industry. Brian Fielkow is the president and CEO of Jetco Delivery, a trucking company that has been using ELDs for years. While he acknowledges the upfront cost involved in adopting the technology can be a bigger deal for smaller trucking firms, he thinks that the safety benefits and improved productivity more than make up for it.

Fielkow said in an interview with Small Business Trends, “This is a regulation where everyone wins. It levels the playing field and makes sure that everyone is playing by the same set of rules.”

Though there are some costs involved in getting the devices in place and maintaining them, Fielkow likened it to regular truck maintenance and replacement of parts. Additionally, since the alternative to ELDs is keeping paper records, Fielkow says the improved productivity could more than make up for any cost involved.

Of course, anything that impacts the trucking industry could also impact any business that ships products across North America. Fielkow believes that the electronic logging system will lead to easier tracking and improved transparency, which will benefit ecommerce businesses especially. However, opponents of the change think the stricter rules could lead to higher shipping costs, due to the potential loss of driving times for truckers.

Image: Amil Freight/Instagram

This article, “Small Independent Trucking Businesses Especially Worry About New Government ELD Mandate” was first published on Small Business Trends

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How Color Can Impact Your Restaurant

A major aspect of starting a restaurant is creating an overall mood or atmosphere. This usually means influencing a customer’s senses so they are primed to have a positive experience in your restaurant. Part of this priming process is removing sonic trash from your environment, dialing up the right music, setting up the dining room in a way that reflects your brand, and building color into your space. This final aspect, color, can have a major effect on your business.

“Color can sway people and their behavioral actions – it’s all about psychology,” said Ashley Anastasia Howell, founder of Avid Creative, a freelance design firm focused on restaurants.

Various experiments have indicated that the color of a food item can impact how we taste it. The Journal of Food Science published a study where respondents easily identified the flavor of a drink they tasted when they could see its color. When they couldn’t see the color, they had trouble identifying each flavor and even mixed up flavors. These findings illustrate the impact our sense of sight has on taste. Our eyes are judging and sending information to the brain about food before we take the first bite.

Regardless of how you approach color, it will have a certain impact on your restaurant. Rosalin Anderson, chief branding officer for international salad and wraps restaurant group Just Salad, said that color directly impacts a customer’s experience.

“Strategic color is one of the most powerful tools for restaurants to use to convey an enjoyable dining experience,” she said in an email. “The selection of the right colors is very important, as it can make diners feel a wide range of emotions from very energized to relaxed, and everything in between.”

Colors to avoid

Blues and purples should give you pause when you’re deciding how to brand your restaurant, build your dining room or design different plate presentations. Howell breaks down each color and describes how it will impact a diner’s overall experience. She warned against using blue without a clear intended purpose.

“Blue is actually known to suppress appetite and reduces hunger,” Howell wrote. “Simply put: [it’s] the most unappetizing color.”

In addition to blues and purples, restaurant owners should avoid using overly bright or neon-like colors, like bright yellow, orange or green. These can bombard the diner and create a rushed, anxious feel. Anderson said that it’s important not to overdo your decor with overly vibrant colors.

“We avoid using high-energy colors, such as orange, red, neon colors, etc., as they vibrate to the eye and can be unsettling, especially with food,” she said.

Color psychology can get a bit tricky, but the overall idea is that extremely bright, vibrant colors create a sense of urgency and speed to your restaurant that may go a bit too far and cause distress.

Know how to break the rules

As with any good design rule, there are some exceptions. Howell said that there aren’t clear-cut right or wrong colors to use when building a brand or redesigning a restaurant. Instead, restaurants should focus on doing research and picking a color that builds up to an overall brand.

“I have seen some cases where odd colors are used in a restaurant setting and it is pulled off magically,” she said. “Context is key … as long as the color is used in the right fashion along with complementary colors and imagery.”

A perfect example of a brand properly using blue or purple is Just Salad, which features navy blue in its logo to give a relaxing and professional feel. “We use a saturated navy blue for our logo to further differentiate ourselves from our competitors that use a lot of green,” Anderson said.

Another great example is The Taco Stand, a taqueria inspired by the taco stands of Tijuana. Julian Hakim, founder of The Taco Stand, said that vibrant colors help relay the cultural feel of the restaurant.

“Vibrant and lively colors paint a ‘fun’ place image in someone’s mind,” Hakim said in an email. “The Taco Stand intends to recreate what it feels like to eat in Mexico at a taqueria. It’s casual, vibrant and fun.”

Colors that may work well

While restaurants should look to avoid blues and purples, just about every other color – if used properly – can be incorporated to create an ideal restaurant experience. In the case of Just Salad, Anderson said that calming colors are ideal for a restaurant focused on a healthy lunch or dinner option.

“Classic colors will be timeless and elegant – soft whites, grays and taupes make for a good base, and then you can add one or two fun colors as an accent for contrast,” she said. “We strategically use calming colors (gray and taupe interiors) to offset the ordering experience, which during the lunch rush can be hectic.”

These colors denote elegance. If restaurants are looking for other good examples, Howell wrote in her Medium post that they should consider using orange.

“Orange encourages impulse and comes off to some as a comfort color. Orange typically stimulates all senses, which of course has a lot to do with the experience of a restaurant,” she wrote. “If surrounded by the color, customers will eat, talk and spend longer periods of time [in the restaurant].”

Best practices

1. Think about your brand.

The best thing you can do as a restaurant owner is think about your restaurant and how you want your customers to feel when they are eating there. Set a clear goal and think about how design, color and layout can get you closer to the feeling you want to evoke. Part of this process will be research, according to Howell. Arbitrarily choosing colors or design elements because you like them isn’t always a good idea. Instead, think critically about how you want to be perceived by the public – this can usually be summed up in a few words or a sentence or two. Then do research to figure out what steps you can take to achieve that mood.

“Do [your] research and do not pick a color just because you like it,” Howell said. “Colors can change meaning over different cultures, geographical areas and eras with various relevancy.”

As you begin to think about color and how it will impact your restaurant design, try not to overdo it.

“There’s a line to be drawn,” Hakim said. “You can easily overdo it and saturate a place with unnecessary images and colors, which will lead to a place feeling like they tried too hard and have no concept at all.”

Avoid this by doing the right research and building color into your brand, not the other way around. Color should accent a diner’s overall experience; it shouldn’t be the main event.

2. Consider other factors.

Color is only part of the equation for your restaurant, so be sure to think about how it will fit into your overall restaurant idea. This should include decor, location and other important factors.

“Your surroundings play a big role in how you feel. Being in a lively place with lots of color sets your mind up for a fun experience,” Hakim said. “Have a clear concept in mind and execute it. It’s easy to want to incorporate 100 different ideas and bring them all into one space, but that is dangerous. The key is in the details, and many times, less is more.”

3. Experiment.

Once you have a clear strategy in mind, start incorporating different design elements into your restaurant and see how your guests react. Do your best to gauge their dining experience – such as by informally talking with them or conducting a survey.

“Testing brand colors can be tricky, but I highly suggest it,” Howell said. “Test the waters, and if you have a certain color palette, try doing a test run of different colors.”

As you try different design elements, remember that nothing is set in stone and color is only one factor in a guest’s entire restaurant experience. Howell said she thinks it’s important to maintain perspective when working on this type of change.

“I honestly don’t think a color can make or break a restaurant,” she said, “although I do feel there is always room for improvements to help your brand be the best it can be.”

Leo Kremer, co-founder of Dos Toros Taqueria, said his restaurant is currently changing some of the design elements in its Chicago and New York City locations. Kremer emphasized approaching a redesign with a certain flexibility.

“You can test it, and if you paint your wall white and it’s the wrong color white, you can repaint it,” he said. “These decisions aren’t set in stone … I think people feel like they make a decision and they’re stuck with that result whether they like it or not, and that’s not always the case.”

Bottom line

While color is an important aspect of your restaurant and the customers’ dining experience, your whole business doesn’t hinge on it. If you’re just starting out or thinking about changing your restaurant’s interior or rebranding, be sure to do research and think critically about the look and feel of your restaurant. Color should contribute to an overall atmosphere. Achieving that feeling and showcasing that atmosphere should be your ultimate goal.

 

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HP and ASUS “Always On” 4G PCs Give Small Businesses Greater Flexibility

Microsoft, HP and ASUS Team Up to Offer the First Versions of the Always Connected PC

If someone said there is a device that is always on and always connected with battery life for days, guessing it is a smartphone wouldn’t be a bad answer. However, these are features of the new ASUS NovaGo and HP ENVY x2 laptops with built-in LTE connectivity.

The announcement of always-connected PCs is ushering the next evolution in computing, which blurs the line between smartphones and computers even more. The computers from Asus  (TPE: 2357) and HP (NYSE: HPQ) are part of a collaboration which includes Qualcomm and its Snapdragon processor and Microsoft.

This type of connectivity and availability is going to give small businesses greater flexibility to make their office where ever they want. Having a PC running Windows 10 with a new, optimized version of Office 365 means new levels of productivity when working remotely.

This is the future of computing, and Terry Myerson, Windows and Devices Group Executive Vice President, said as much in Microsoft’s announcement of both PCs. He said, ” When I think about organizations and whether they are going to leverage the massive networks of mobile operators and adopt these new PCs — the answer is simple: It is not a matter of if, it’s a matter of when and how fast all mobile PCs become Always Connected PCs.”

Specs

Asus NovaGo

  • 3-inch LED screen with 1920×1080-pixel, full HD LTPS touchscreen with ASUS Pen support (1024-level pressure)
  • Qualcomm Snapdragon 835
  • 4GB or 8GB RAM and 64GB or 256GB storage
  • Windows 10 S (upgradable to Windows 10 Pro before Sept. 30, 2018)
  • Gigabit LTE, X16 modem (4×4 MIMO), 802.11ac (2×2 MIMO)
  • Up to a 22-hour battery life with over 30 days of modern standby
  • Weighs 1.39 kg (or 3.06 pounds)

HP Envy x2

  • 3-inch diagonal touch WUXGA+ (1920 X 1280) touch display with Gorilla Glass along with simultaneous pen and touch support
  • Qualcomm Snapdragon 835 Mobile PC Platform
  • Up to 8GB of RAM and 256GB of storage
  • Up to 20 hours (up to 700 hours in modern standby mode)
  • Windows 10 S and option to switch to Windows 10 Pro
  • 4G LTE
  • Weighs only 1.54 lbs

[youtube https://www.youtube.com/watch?v=Rd7R9G1An3s?rel=0]

What is the Significance of an Always Connected PC?

Just like your smartphone, these PCs come on instantly when you need to use them. And just like your phone, they are always connected with a battery life that won’t have you worrying about where your charger is.

In addition to the convenience, the Envy x2 and NovaGo are powerful computers capable of using all of the Office 365 applications on a Windows 10 OS. Collaborations will now be seamless, and small businesses will be able to connect with all of their employees just like on a smartphone, says Microsoft.

And just like a smartphone, the screens let you touch, draw, annotate and more to give your workflow more functionality.

When it comes to security, the always-connected PC bypasses unsafe networks by using 4G LTE, which is much safer than public WiFi.

Price and Availability

The HP ENVY x2 will be available in Spring 2018, but the price is going to be announced when product availability approaches. As for the Asus, the company didn’t announce availability in its press release, however, Engadget has reported it will cost $599 ($799 for 8GB of RAM and 256GB of storage), but did not give a release date.

Both PCs will be sold in collaboration with wireless service providers.

Images: ASUS, HP

This article, “HP and ASUS “Always On” 4G PCs Give Small Businesses Greater Flexibility” was first published on Small Business Trends

What Happens When Your Startup is Acquired by a Big-Name Brand?

Editor’s Note: Jeff Seibert spoke at Stanford University to discuss what he learned by building and selling startups. This post is a summarization of the talk.

It finally happened. Your promising little startup finally found its niche, got noticed, and got acquired by a big-name technology company. So what’s next? One need only look at Jeff Seibert, former senior product director at Twitter, to learn valuable lessons about how to proceed when your startup is acquired by a larger brand.

Jeff’s first company, Increo, was sold to Box in 2009. His second startup, Crashlytics, was sold to Twitter in 2013, and then, when he became the senior product director at Twitter, he got to see things from the other side of the table. What happens from the big brand’s perspective? How is the startup integrated as smoothly as possible? Jeff played a major role in several notable Twitter deals as well – Periscope being the largest of those. Here are just a few of the many lessons he learned.

Start by Building Tools to Help People

Increo was a company founded on the sharing of ideas and collaboration. The company’s first product Feedbackr, was build around the simple premise of uploading a document, and then getting feedback on those ideas and making changes to the file accordingly. Feedbackr was designed during Seibert’s senior year of college, and was launched in May – just a few weeks before graduation.

The product was featured on TechCrunch, where it enjoyed an initial spike of traffic, and then flat-lined. Seibert mistakenly thought that getting showcased on TechCrunch was their big break into the world of startups — but it was only the first step on what would become a long and ever-changing journey.

Throughout that summer, Seibert and his team continued to work on and refine the product – eventually paving the way for it to accept 100 different file formats — a feat that was fairly complex for the time. Since everything was in real-time, people could be drawing on the document while others left comments and notes. The product was immensely popular with freelancers, but never really broke the 20,000-user mark.

Back to the Drawing Board

The pressure was on to keep the company afloat. Despite over three-dozen interviews around Silicon Valley to acquire funding, nothing was happening. Keep in mind that this was 2009, a time when investors were wary of spending a lot anyway because of the lessons learned from the first dot-com bubble burst.

The team went back to the drawing board to look at their core product. There were lots of companies out there that dealt in documents, but very few of them would let you display those documents in the browser, much less add markup and such to them. So the team theorized that instead of having a standalone product – they could partner with other companies to allow their document conversion to power their own platform.

Not a Partnership – An Acquisition

The companies that Seibert and his team approached had a few notable constraints. They wanted exclusive use of the technology and they had to be able to host it themselves, since using a third party would’ve opened them up to all kinds of legal snafus.

Jeff and his team stepped back — realizing this looked a lot less like partnership and more like an acquisition. Suddenly, offers were on the table. Pros and cons were quickly hashed out, and some really pertinent issues percolated to the top. Most importantly:

  • The technology had to be right – One of the companies Seibert was considering used Ruby on Rails to power their platform, whereas Feedbackr used Java. It would take over a year to rewrite the product.
  • The culture had to be a good fit – If the company culture isn’t quite right — for example, the business is older and set in their ways about how to do things, it may not work out to everyone’s benefit.
  • The roadmap for the future had to be clear – One of the companies was looking to build a presence in the Wiki space, whereas the team at Feedbackr really didn’t see the potential or the purpose.
  • The company had to have growth – A company that was fairly stagnated wouldn’t show much promise for the future of the product. They had to need the product as much as the product needed them.
  • The product had to be scalable – Where would the product be five years from now? Could it grow to accommodate demand?

All of these questions helped the Increo team rule out different offers before finally being acquired by Box. Not only was Feedbackr Seibert’s first experience with having a company acquired, but it was also Box’s first experience acquiring another startup.

Making Up for Lost Technology

One of the biggest lessons Seibert (and Box) learned from this acquisition was that even though the deal was small and simple, they couldn’t afford to rest on their laurels. Other companies, like Crocodoc, were leveraging new technology to make document conversions and previews even more user and technology-friendly. Not one to be left behind, Box purchased them as well.

If you’re the purchaser – the one place you don’t want to find yourself in is making up for lost technology — by concentrating too much on what you have, and not what else is out there, it gives your competition time to seize upon something newer and fresher — and being an afterthought is not what you want to be.

Ideas in Sync

Jeff’s second product was actually born out of a frustration with the complexity of syncing systems together. After some time working with document previewing technology, he began working on Box’s sync project to help users keep versions of files neatly synced up and updated. Working on systems to make this happen is highly complex, buggy and cumbersome. These kinds of clients crashed constantly — which in turn lead to the idea of Crashlytics.

In short, Crashlytics detected crashes and uploaded reports to the server. In the beginning, it was cryptic at best, but through further refinement, the process could be automated: detect when the crash happened, where it happened, and save it to the server. As you might imagine, developers and programmers loved the idea — the waiting list was long and people couldn’t stop talking about it.

Happy Tweets

One of Crashlytics big brand customers was Twitter. They became very attached to the technology and used it in their apps. So focused were they on how useful Crashlytics was that they continued to invite the team to come out to their headquarters and consider working for Twitter. Seibert and his team had no intention of leaving Crashlytics or even selling it to Twitter. They were 100% focused on their own goals and creating a product that people loved.

With a bit more prodding, a few of the Crashlytics team, including Jeff, met with Twitter executives. That’s when it became apparent that Twitter had a set vision for the future of mobile and software development kits — a vision that perfectly gelled with Crashlytics own vision. Here was this complete strategic alignment that meshed together so fully that it was impossible to deny.

Yet Crashlytics was still its own company. Twitter invested heavily in the company and helped them further build and refine their own product, while the Crashlytics team helped Twitter reinvent their brand and rework their focus on bringing in the very developers that helped make Twitter great.

So here you have one person with two very different acquisition perspectives — one of having their product become part of another brand that needed what they had created, and another where the result is less of an acquisition and more of a “melding of the minds” to create something bigger and better than either could have done alone.

What Big Companies Look For in Startups

Beyond the cultural and technology fit, as well as future plans, there’s the team. It may sound like a small and insignificant piece of the puzzle, as there are countless highly qualified individuals out there. But they must be willing to work within the established company’s culture and brand.

Can they build a solution that’s powerful, scalable, and elegant to solve a pressing need? Have they already built such a solution? And perhaps most importantly, can they, and the solution they’ve built, help win over this market? There’s a big focus on building a team that’s highly energized, highly intelligent and highly productive. The people are what makes the product, and the product is what solves the need. If some of these things aren’t in alignment or agreement, the deal doesn’t happen — which is more often than not.

That’s right. According to Seibert, almost all deals fail. This is just something you come to expect as you do it a few times. From the startup’s point of view, you can’t afford to be burnt out, tired or simply floating about day-to-day, unsure of where or how to best spend your energy. From the company’s point of view, they can’t afford to invest in something that’s just a hobby or an experiment. They need a long-term solution because they have strategies in place both today and well into the future. If both groups aren’t completely committed – things are not going to end well.

Striking the right balance is the bottom line. Making sure everyone is clear and amenable about the path forward is what’s going to make or break an acquisition. Sometimes it works out, sometimes it doesn’t — and there’s nothing wrong with that.

Have you been part of a startup that has been acquired, or were you the one involved in the acquisition? We’d love to hear your perspective on buying, selling or valuing a startup. Share your thoughts and comments with us below!

About the Authors: Sherice Jacob helps business owners improve website design and increase conversion rates through compelling copywriting, user-friendly design and smart analytics analysis. Learn more at iElectrify.com and download your free web copy tune-up and conversion checklist today!

 

About Kissmetrics

Kissmetrics combines behavioral analytics with email automation. Our software tracks actions of your users across multiple devices allowing you to analyze, segment and engage your customers with automatic, behavior-based emails in one place. We call it Customer Engagement Automation. Get, keep and grow more customers with Kissmetrics.

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