As I write this, stock markets around the world are panicking over the realization that China is losing its monopoly as manufacturer of the world's brands. That shift should be no surprise to Inc. readers, because a good chunk of China's lost share is going to American entrepreneurs. Just this month, you can read about Eleven Ravens, BRD Motorcycles, U-Turn Audio, and cinda b, U.S. makers that chose to assemble their world-class products in Los Angeles, San Francisco, Boston, and Fort Wayne, Indiana, respectively.
Economists can give lots of reasons for U.S. makers' inroads, but the most powerful reason is the simplest: Customers want it. Bayard Winthrop, founder of American Giant, which assembles high-quality knitwear in California from fabrics made in South Carolina, credits the mainstreaming of online retailing and consumer intelligence. "Apparel shoppers can now disaggregate the cost stack," as Winthrop puts it. "In the old model, they had no choice but to absorb the cost of physical stores and of mass branding campaigns; now they can choose to pay only for what matters to them, like quality, design, or a Made in U.S.A. label." Randy Komisar, a partner at Kleiner Perkins Caufield & Byers, calls this the "atomization" of demand. It's good news for artisanal U.S. manufacturers and bad news for traditional giants--including China--that focus on scale at the expense of quality.
But, of course, there is scale and there is scale, and great entrepreneurs have always found ways to grow without losing what made their companies successful in the first place. That's a theme you'll find repeated throughout this issue. In a feature on scaling, editor-at-large Leigh Buchanan takes the precept for a road test (literally) by touring companies--including In-N-Out, Intuit, and Facebook--that have grown massive while preserving their scrappy essence. Later in the issue, executive editor Scott Leibs unveils the results of a yearlong Inc. research project into the practices of 100 companies that pulled off the stunningly rare feat of growing each of the past five recession-marred years.
All this work had just one goal: to offer you some of the inspiration and insights you'll need to construct your own blueprint for scaling wisely. Having poured so much of your soul into your company, after all, why settle for building something merely big when you could build something great?
Many businesses know what they need to do to fire up their growth but still fail to carry it out. Here's why.
No one stays in business for long without getting outside help. Every commercial entity, from freelancer to multinational corporation, relies on some combination of consultants, mentors, attorneys, accountants, coaches, and advisors who don’t count themselves as part of the staff.
Some companies are immensely successful at taking advantage of the help at their disposal to ensure perpetual growth. Others can’t break out of their plateaus no matter how many external resources they hire. Fortunately for businesses that fit into the latter category, making a few simple changes to how you approach your relationship with outside experts can put you on the road to multi-million dollar expansion.Effective Help Is a Two-Way Street
Let’s first take a look at an all-too-common scenario. A business owner finds out about a consultant, coach, or agency that has successfully helped similar companies solve a problem they’ve been struggling with. They sign a deal. The new resource lets the client know that the new process will make employees lives easier in the long run but that they’ll have to put some work in up front. The owner vigorously agrees that the expert will get everything he or she needs, and means it.
So what happens? Employees study some of the material the coach provides. They implement three-quarters of the changes the analyst recommends. They deliver some of the information the advisor needs--eventually. In December, the owner is left wondering once again why revenue is more or less the same as the year before.Make the People You Pay As Important As The People Who Pay You
Here’s a hard truth: When employees don’t fully do their part to help an outside resource succeed, it’s because they don’t view that work to be as important as what they’re already doing. In many organizations, employees know full well they must do whatever it takes fulfill a client or customer order, regardless of how many other things they have to do. As a result, they get resourceful real fast when it comes to executing these indispensible duties. They plan in advance, stay late when they have to, but they always get it done. Ironically, it’s the focus on client work at the expense of all else that keeps so many companies stuck in a rut.
As a business owner, once you’ve identified the right resource to help with a difficult problem, you must place that resource on the same plane as clients. In other words, when someone promises to deliver something to that resource and doesn’t fulfill his or her obligation, you’ve got to hold them equally accountable with identical consequences.
In fact, you’d do well to adhere to a general rule: When it comes to follow through, make it happen regardless of who’s on the receiving end. For companies that implement this simple cultural change, a hundred million dollars is often just the beginning.
The unlikely advocate for Alzheimer's disease research struck a chord because he knew how to tell a story and give a speech. Here's why it worked.
This has to be a joke, right? Seth Rogen, an actor best known for movies like Knocked Up and Zack and Miri Make a Porno, testified in a U.S. Senate hearing this week about Alzheimer's disease.
In fact, it's quite serious, and he did a pretty amazing job.
Recently, I wrote about how to unpack the best speeches ever given, and how to imitate those techniques to get your message across. Rogen proved to be a surprising but perfect example. He kept his true audience in mind, and he ensured his words would resonate far beyond the halls of Congress.
Quick backstory: Rogen, 32, became involved in advocacy for Alzheimer's research after his mother-in-law was diagnosed with the disease. He and his wife cofounded Hilarity for Charity, which raises money and especially tries to get younger people involved with the issue. If you haven't seen his speech, you can watch it here, or read a transcript here.
Here's what you can learn from it.Be authentic.
A good speech isn't just a litany of ideas. It's about connecting with the audience. Rogen did this by starting out with light humor, acknowledging that it was kind of weird that he was there. Yet, he effectively transitioned to his real message in a natural way.
"Thank you for the opportunity to testify today and for the opportunity for me to be called an expert in something, 'cause that's cool," he began, adding, "I should answer the question I assume many of you are asking--yes, I'm aware this has nothing to do with the legalization of marijuana. In fact, if you can believe it, this concerns something that I find even more important."Tell a story.
From there, Rogen didn't dive straight into the facts and figures he wanted to share on Alzheimer's disease. Instead, he made a deeper connection by telling a personal story.
"I started dating my wife Lauren nine years ago, when her mother was almost 54 years old," he explained, and described how his future mother-in-law was already exhibiting early symptoms. At first, Rogen acknowledged that he didn't know much about the disease, and thought its symptoms included innocuous things like "forgotten keys, wearing mismatched shoes, and being asked the same question over and over."
Continuing the story, however, and deepening the personal connection, he described the true effects of the disease, and the dire current prognosis:
After forgetting who she and her loved ones were, my mother-in-law, a teacher for 35 years, then forgot how to speak, feed herself, dress herself, and go to the bathroom herself--all by the age of 60. Lauren's father and a team of caregivers dedicate their lives to letting my mother-in-law be as comfortable as she can be. They would love to do more but can't because, as you've heard, unlike any of the other top 10 causes of death in America, there's no way to prevent, cure, or even slow the progression of Alzheimer's disease.Keep it organized.
One of the easiest ways to lose an audience is to get lost yourself. Once he had set the stage with his story, Rogen did a great job of telegraphing how the rest of his speech would roll out, and then sticking to it: 1, 2, and 3.
"I came here today for a few reasons. One, I'm a huge House of Cards fan," he began. (By the way--humor works for Rogen. It might work for you as well, but being authentic is more important than being funny.)
He continued: "Two, is to say people need more help.... Studies show that Alzheimer's and related dementia is the most costly condition in the United States.... The third reason I'm here, simply, is to show people that they're not alone."Choose words carefully.
This wasn't exactly Martin Luther King Jr.'s "I Have a Dream" speech, but Rogen included some smartly chosen phrases. Let's take a look at how one of them worked.
Rogen didn't just say that Americans don't like to talk about Alzheimer's and that the government doesn't make its research a priority. Instead, he repeated words and phrases, and created an image:
Americans whisper the word Alzheimer's' because their government whispers the word Alzheimer's, and although a whisper is better than [the] silence that the Alzheimer's community has been facing for decades, it's still not enough. It needs to be yelled and screamed to the point that it finally gets the attention and the funding that it deserves and needs.Keep it short.
Rogen clocked out at about six minutes. I don't know if that was by design or because that's all the time he was allotted, but it worked very well. It also added credence to his later complaint that only two senators actually stayed in the room to listen to him.
Side note: I watched as my grandmother went through a very similar, tragic experience with Alzheimer's over many years. I saw the effect it had on both her and my family. On a professional level, I think Rogen did great work; on a personal level, I'm glad he's speaking out.
For further reading, check this out: 9 Habits of Highly Effective Speakers.
Want to read more, make suggestions, or even be featured in a future column? Contact me and sign up for my weekly email.
A look back at some of the key milestones in the way products are delivered, from the Pony Express to FedEx.
Amazon is definitely an innovator, but it wasn't the first company to disrupt the delivery space. Here are a few milestones in the quest to make delivery quicker and more efficient.
The Pony Express begins carrying mail from Missouri to California. Before the transcontinental telegraph, it represented the most practical means of East-West communications.
Milk had been delivered for centuries using the pail-and-ladle method. 1878 is credited as the advent of milkmen leaving milk on customer doorsteps in glass bottles, boosting delivery speed and hygiene.
DomiNick's in Ypsilanti, Michigan, opens. Eventually rechristened as Domino's, the chain launches its famous "30 minutes or less" delivery guarantee in 1973.
FedEx pulls its first all-nighter, delivering 186 packages to 25 cities across the U.S. It's the dawning of the air/ground express era.
Netflix launches its subscription DVD-by-mail service. Blockbuster Video has no idea what is about to hit it.
The company has announced a new competition for app makers to bring its Jeopardy!-winning supercomputer technology to the masses.
Calling all app developers--IBM has an opportunity for you.
At the Mobile World Congress in Barcelona this week, the tech giant announced the Watson Mobile Developer Challenge, a competition for mobile app developers to come up with ideas for apps based on its Watson supercomputer technology, Advertising Age reported.
Last month, IBM created a business unit and venture capital fund around Watson--best known for its 2011 appearance on Jeopardy!--with the goal of bringing the computer's cognitive computing technology to consumers.
"Imagine a new class of apps that deliver deep insights to consumers and business users instantly--wherever they are--over the cloud. It's about changing the essence of decision making from 'information at your fingertips' to actual insights," said Mike Rhodin, senior vice president of the IBM Watson Group, in a company press release.
IBM will be accepting ideas over the next three months and then will choose three winners. IBM chief executive Ginni Rometty tells Advertising Age that the winners will get seed funding to build out their businesses.
The tech titan is reportedly in talks with record labels to launch a new service into the increasingly crowded market.
Amazon is reportedly in discussions with major music labels to launch its own streaming service, in a move that could have serious repercussions for music startups. According to Re/code, the subscription service would be bundled with Amazon Prime, the $79-a-year program that offers free two-day delivery and streaming videos.
Many in the music industry have predicted this move for awhile, but that doesn't make it any less shocking. With so many entrants in the music streaming space, it's hard to imagine how Amazon would stand out. Apple launched iTunes Radio last year, and outside of Beats Music, the curation-focused startup helmed by Jimmy Iovine, Trent Reznor, and Dr. Dre, and Shazam, which has designs on taking over the world, few have proved to be viable businesses yet.
Amazon has significant reach, however, with more than 20 million Prime members worldwide, so rolling out a new service could make things even tougher on startups in the space. And Amazon has demonstrated how effective throwing in an extra freebie can be by offering streaming video as part of Amazon Prime. Who's to say free music wouldn't sweeten the deal?
Amazon also has the right talent to pull off the move. As Re/code points out, in October 2012 the company hired Michael Paull, a former Sony music executive, to lead its digital music operations. And around the same time, Drew Denbo, who previously handled business development for Rhapsody and MOG, two other streaming services, joined Amazon. Adam Parness, a licensing exec for Rhapsody, joined the company last year.
In a best-case scenario, small businesses might emerge slightly ahead of patent trolls in the evolving legal world of patents.
The Supreme Court heard two appeals Wednesday that are likely to affect the way you protect yourself against patent trolls in the future.
Patent trolls are people or shell companies that buy up rights to expired or soon-to-expire patents with no other purpose than launching lawsuits against small companies. Up until now, the cost of a patent suit has been enough of a threat for most small business owners to make them settle out of court rather than pursue costly litigation.
The cases before the High Court are Octane Fitness, llc v. Icon Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Management Systems, Inc.
The complaints, while highly technical, deal with how easily prevailing parties in patent cases can collect attorney's fees. Also at a stake is the review standard that the appellate court must use when hearing cases sent up from a district court.
The best outcome in the first case is probably a "win some, lose some" situation where it will be easier for you to collect legal fees if you pursue litigation, but it also makes it more likely the other side could collect from you if you lose. The second case could give more authority to lower court judgments, which could affect the way the higher court rules on appeal.
Bottom line: "Litigation costs will go up," says Carter Phillips, chair of law firm Sidley Austin's executive committee, who argued on behalf of Icon in yesterday's proceedings before the Supreme Court. Phillips represents Icon.
As for small businesses, the court's decisions "will clearly affect their calculations to pursue litigation, and they could end up in situations where people with valid [patent] claims will say it is too expensive to take the risk," Phillips adds.
He further noted that the courtroom was packed Wednesday, and the Justices were in good spirits, as they asked lively questions. They also did not give a strong indication of how they would rule, although they have until June to make a decision, Phillips says.'Win Some, Lose Some'
In Octane, it's important to remember that neither Icon nor Octane is a troll, Phillips and other legal experts say. The case began as a patent infringement issue between two companies that make gym equipment, and it has since evolved over the past couple of years into one debating the context under which attorney's fees are awarded in "exceptional cases." The term comes from section 285 under Title 35 of the U.S. Code, which involves patents.
Exceptional cases must meet two standards for you to collect legal fees, says James Blank, partner and a patent litigation specialist at Kay Scholer, a law firm in New York. That includes proving that the case was "objectively baseless," or frivolous, and that the case was brought in "subjective bad faith."
Over the past 50 years, those two standards have been ambiguous and extremely hard to prove, resulting in rewards in about 1 percent of cases, Blank says. (That low success rate is also one of the reasons patent trolls have launched so many cases.)
"In Octane, the Supreme Court will resolve whether that two-prong standard will remain intact, or will it be lowered to a kinder, gentler standard," Blank says.
While that may make it easier for you to collect attorney's fees if you win, it also makes it more likely you'll have to pay your opponent's fees if you lose.
In some ways, that might bring things full-circle to where they are now, with small businesses afraid to pursue litigation against patent trolls because of the expense. "The cost of losing will be enormous and could bankrupt a small company," Blank says.
Except, there's a difference: Patent trolls will also have something to lose. "The specter of a patent troll having to pay attorney fees if it loses should result in fewer cases being brought by patent trolls."Giving Deference
Meanwhile, the second case, which involves Allcare, an alleged troll, might give the district courts' decisions more weight. At issue is something called a "de novo" review, where the Federal Appeals court typically considers an appeal from scratch. In this case, the court did just that, reaffirming Highmark's win, but reversing the monetary award for attorney's fees the district court had granted it.
The Supreme Court will decide if it will change the standard to something called "abuse of discretion," whereby the Federal Appeals court will take the lower court's ruling into account. Many judicial districts, such as East Texas, have developed patent expertise that may exceed that of the appeals court, the Supreme Court acknowledged on Wednesday.
The upshot? "If you win in the lower court, and the standard of review is abuse of discretion, you’re likely to win on appeal, but if it's de novo, you have a 50-50 chance on appeal," Phillips says.
Serving a great product is the easy part. Growing a quality business is a far tougher task, say the owners of Big Gay Ice Cream and Murray's Cheese.
Photo, from left to right: Douglas Quint, Bryan Petroff, and Rob Kaufelt
Small food merchants are having a moment, according to new data from American Express. Overall spending on small food businesses increased 5 percent in Q4 2013 compared to the same period a year earlier. The desirable Generation Y consumer demographic (roughly, adults under the age of 32) accounted for 28 percent of spending, the largest portion among all age groups.
Douglas Quint and Bryan Petroff, co-founders of Big Gay Ice Cream, and Rob Kaufelt, owner of Murray's Cheese, weren't the least bit surprised by the news. Both New York-based ventures have experienced considerable success with their stores, and Murray's has expanded nationwide to grocery chains such as Kroger's.
But during a panel in New York City Wednesday presented by the American Express U.S. Small Merchant Group, it was clear the founders' road to success has been anything but easy. In fact, it took years of sleepless nights and trial and error before they finally felt secure. Here are three of the challenges they went through that as a food entrepreneur you also are likely to face as your business grows.1. Growth Without Sacrificing Quality
Finding a niche was no problem for Big Gay Ice Cream, which Quint jokingly described as "a summer project that consumed our lives." He and Petroff were so passionate about making ice cream fun that they were "willing to be a little bit crazy," he said, and do whatever it took to keep customers coming back.
But when it came to expanding their business beyond New York City's West Village, things got trickier. "How do we serve more people and not [feel the need] to micromanage quality?" Quint recalled asking. "You want your name out, but you don't to relinquish power." And the only way to grow, added Petroff, "is to let people take care of it." You have to "know you're hiring the right people who believe in your business" as much as you do.2. Seizing the Right Opportunities
Not every opportunity is worth taking, said Kaufelt, who spent two years deliberating whether to take Kroger's offer of a store-within-a-store concept across the country. He was concerned about losing the old-school charm of Murray's, a Greenwich Village staple for 74 years.
When he figured out what it would take to maintain his brand, "I sent Kroger a huge list of things" that it was highly unlikely to agree to, Kaufelt said. To his surprise, the grocery company complied.
"It was clear the market in New York City was changing," Kaufelt said of his decision to partner with Kroger. "There were more chains--eight Whole Foods, eight Fairways, five Trader Joe's--and the mom and pops were dropping out." As a small business, he needed Kroger's support.
"We're good at sourcing, speaking up, creating passion, training, marketing, and events," Kraufelt said of his strengths as a small business owner. "[Kroger] is good at data, systems, professional management, training, and finances."3. Putting Customers First
"We built this little freakazoid army, and I'd do anything for them still," Quint said of his stores' fan base. But repeating the same level of service isn't easy. As the company grows, you become consumed with accounting, hiring, and strategy, and it's all you can do not to snub customers when they get you at a bad time.
But as a food entrepreneur, "you have to have the hospitality gene," said Tracy Nieporent, the director of marketing and partner for Myriad Restaurant Group, which handles communications for New York stalwarts such as Nobu and the Acela Club at Citi Field. "A lot of people think they have it, but it's a bad way to start a relationship if you think of a customer as a number."
Quint put his stance on customer service another way: "I don't care what kind of morning you had," he tells his employees. "Someone just waited an hour to pay you $4. Smile at them. Or I'll kill you."
In a recent blog post, CEO of Treehouse Ryan Carson explained why he decided to eliminate management.
You've no doubt heard about companies that have embraced the "no manager" org chart. If you've ever wondered whether you should implement the strategy at your company, good news: Ryan Carson, CEO of education platform Treehouse, recently spoke with 99U about why he decided to do just that at his 3-year-old company.
"My main tenet as an owner is to treat other people like I want to be treated. We look at our employees as adults. The basic premise is we all should be able to make adult decisions and take care of ourselves," Carson told 99U. Carson had also written in a blog post last year explaining that as the young startup grew to 60 employees, divisive politics were suddenly introduced into Treehouse, where they hadn't been before.
So how does anything get done at a company with a flat organizational structure? At Treehouse, employees use an internal company program to propose new ideas. If enough people want to work on them, they begin the project, Carson said.
Treehouse isn't the first company to adopt the approach. Zappos, video game company Valve and web application company 37Signals have banned virtually all managers. 37Signals President Jason Fried recently echoed Carson's desire to do away with the less beneficial aspects of manager-to-employee interactions.
"One of the things I like about the arrangement is that it frees us from the often toxic labor-versus-management dynamic, in which neither party truly understands what it's like to be on the other side," Fried wrote.
Even if the flat org chart manages to successfully eliminate company politics, the strategy does have its drawbacks.
Carson said Treehouse had to let three people go when the change was made. It was clear that they simply wouldn't be able to fit in with the new structure. After that, two more people were let go because they were underperforming.
There are a few other things you need to be aware of too. As Inc.'s Erik Sherman recently put it:
Egos will not magically disappear. You and your executives might find yourself accidentally resorting to your old ways, forgetting that you don't have a team working under you anymore. It's a hard habit to break.
Hire with the structure in mind. With this system you'll need employees who are very good at many things. "They should also have enough flexibility of outlook and attitude that they could take up something else in the company if it were necessary," Sherman said.
The company will require more transparency. "If everything isn't transparent, this entire experiment will fall apart," Sherman warned. Treehouse's Carson seems to agree with that point. He said the company is thinking about publishing all salaries because it will help everyone plan their projects better if they know how much it will cost.
"If you don’t understand that a developer is paid twice what a support person makes, you can't make the decision unless you have all those facts," Carson said.
Elon Musk's $5 billion plan to build the world's biggest battery factory could mean big business for solar and other tech startups.
By now, you've heard the news: Tesla is about to spend $5 billion to build the world's largest battery factory, known as the "gigafactory." The facility will ensure a steady supply of batteries for Tesla's third-generation electric vehicles and, not coincidentally, a steady supply of energy storage for founder Elon Musk's other brainchild, SolarCity. But what you might not realize is how this outsize investment in batteries is poised to create and expand business opportunities for countless entrepreneurs in the solar industry.
In short: for entrepreneurs already operating in or thinking of operating in the solar market, this changes everything.Why It Matters
Traditionally, the primary pain point for solar companies has been energy storage. Until now, the lithium-ion batteries Tesla intends to manufacture have been prohibitively expensive. That means solar installers had to sell customers on the fact that solar is a good investment, even though current technology only reliably supplies power while the sun is shining. Tesla claims its factory, which aims to produce as many batteries by the year 2020 as are being produced in the entire world today, will likely reduce the price of batteries by some 30 percent. That means solar companies could begin bundling storage with their solar panels, sweetening the deal for consumers without crippling profits.
"This is the development a lot of people have been waiting for," says Joel Makower, Chairman of GreenBiz Group. "In a few years we’ll look back and laugh that we ever had solar panels without a way to store the energy."
Initially, Makower predicts the lion's share of new solar sales will go to SolarCity and other large entities that can use scale to ensure profitability early on. But within a year or so, as the price of the batteries comes down, smaller players will begin to reap the benefits.
"The market potential is way bigger than any one company can handle. There are enough niche markets that there will be opportunities for everyone," he says, adding that he anticipates a swell in market demand. "Storage is like the 'killer app.' It means solar can provide extremely cheap energy all day and all night, not just while the sun is shining. That completely changes the value proposition."
And it's not just solar installers who stand to gain. As consumers begin to unplug from traditional utilities and rely instead on their own solar panels and home storage units, new technology will be required to meter and manage that energy. Makower says there's also a big business opportunity in managing the financial side of solar. Now that people will be storing their own energy, they'll likely have excess they can start to sell off. Imagine, for instance, an eBay for energy.
"Whole new services we can't even imagine will be enabled by the fact that we will soon be buyers and sellers of electricity, rather than just consumers. Anyone who uses energy will now be a 'prosumer,' because they're producing energy, too," Makower says.
And if your company isn't in the solar industry? Tesla is still doing your business a serious solid. This new ability to unplug from the grid entirely will make cities more resilient in the face of a natural disaster like Hurricane Sandy. "Backup power is going to be of value certainly to businesses that worry about disruptions from hurricanes, storms, or even droughts that make water scarce for utilities," Makower says.
"Solar has been a 40-year, overnight success," he says. "With this factory, Tesla is saying, 'The future is now, and it's time to turn this into a big business."
Founders Carly Zakin and Danielle Weisberg have designs on building their popular email newsletter into something far bigger.
Editor’s note: This feature is the first of an occasional series of profiles of the emerging standouts in the new media landscape.
It happened in November 2012, about five months after they quit their day jobs as associate producers at NBC, the network that broadcasts Today. "Being back in the building in such a different way with anchors we knew and worked with meant a lot to us," Zakin says.
TheSkimm is one of a new crop of media startups that have emerged as the industry continues to remake itself, drawing attention for both its audience traction and deep-pocketed financial backers.
Several other of these companies repackage news stories in various ways, which makes attracting a critical mass of readers and advertisers a formidable challenge. But what helps theSkimm stand out is its ability to simplify and contextualize the headlines so its female millennial audience feels informed and a part of what the founders call "the conversation."
To date, the company has raised $1.1 million in seed financing led by Homebrew, the venture capital firm founded by early Googlers Hunter Walk and Satya Patel, and supported by RRE Ventures, Troy Carter of Atom Factory, and Clear Channel CEO Bob Pittman.
The venture was born of the frustration of savvy young people seeking a voice in a struggling media landscape desperately in need of disruption. "We saw a lot of people we know get laid off and struggle to keep jobs," says Zakin, who, like Weisberg, is 27. "We knew that the industry was changing."
Before taking the leap into entrepreneurship, the two considered careers in public relations, enrolling in law school, or pursuing an MBA. Their love of news, though, made all of those paths appear unsatisfying.
"We started talking about the role that we played in our friends' lives by briefing them on current events," Weisberg says. "[Our friends] would say, 'What's going on in Syria? I see the latest news, but I don't really have context.' We really saw that there was a void in the marketplace for news delivered by email."
In July 2012, the pair left their jobs to commit to theSkimm. With scant funding from angel investors and almost no blueprint for their product, the outlook didn't seem bright. But Zakin and Weisberg weren't afraid to ask for help. Little by little, with advice from their friends and others in the tech industry, theSkimm--whose name, Zakin says, "conveys information on-the-go"--came together as a early-morning roundup of news bites that read as though they were written by your best friend.
The catchy subject lines--"This is the warmest you will be today"--ensured the daily open rate (the frequency with which recipients open the company's emails) remained higher than the 16.4 percent average in media and publishing. In fact, Zakin put theSkimm's daily open rate around 50 percent in November 2012.
Zakin and Weisberg, who are roommates as well as business partners, worked out of their Manhattan apartment to keep overhead low. "We were so nervous to spend that we had a half [of our budget] left over," jokes Zakin. "We're the definition of a lean startup. We saved as much as we could to bootstrap this."
By November 2012, theSkimm had 100,000 subscribers and an invitation to appear on the Today Show. The taping went well, but there was one problem: As soon as they finished, their website went down. "We were on Cloud Nine, walked into the green room, talked to our parents, and our server had crashed," says Weisberg. "Then we spent the next few hours on the floor, watching people go by and yelling at our host provider. We switched immediately after that."
Still, she calls the taping "the second-most special day for us." The only day that surpassed it came in November 2013, when the two landed their funding from Homebrew.
"Although we knew that raising funding was a new experience for Carly and Danielle, their talent, vision, and passion came through clearly," Walk writes in an email. "Three qualities stood out: unique founders matched to the product, wild organic growth and an engaged community, and a target demographic that drives large amounts of spending, online and off. The combination of these suggested there was a substantial business to be built."
Although theSkimm's logo features a woman in pearls and high heels reading her tablet, Zakin and Weisberg envision theSkimm as a lifestyle empire for both sexes. It's a model followed by Esquire, Martha Stewart, and a host of other media brands that have expanded into multiple platforms in recent years.
The venture has a long way to go before reaching its lofty goals, however, says Ken Doctor, who runs Newsonomics, an Aptos, California-based media-analysis website. "I think it's got a hell of a tough road," he says. "You have two immediate needs for something like this: circulation and advertising. There's not much original content and there's not much of a model of people paying for a subscription to a news aggregator, even if it's well done. If they keep it small and can build a big audience, they'll bring in some advertising. But it will probably take two to three years to break even."
The company's founders say they hope to grow their subscriber base 10 to 100 times in the next few years. Expanding the team also will take time. Currently theSkimm has only five employees, including Zakin and Weisberg. The company is now beginning to tackle that challenge, advertising openings for editors, a business development director, and a growth strategist.
"This year will be the first, foundational step," Walk says.
What do the one percent have in common? In this case, billion-dollar companies.
What does it take to be part of the one percent? A new report suggests that, for entrepreneurs, the answer is as simple as it is daunting: Build a billion-dollar company.
Of the 1,824 tech companies that sold or went public in 2013, just 19 (or just over one percent) were worth a billion dollars at the time of the exit, according to new research from CB Insights. This select crew includes heavyweights like Twitter, Zulily, and Criteo.
And while you may similarly dream of launching a billion-dollar business--which is perfectly possible--the reality is, that most exits are dramatically smaller.
Of the 320 exits with disclosed valuations tallied by the researchers, 45 percent were for less than $50 million. Seventy-two percent were for less than $200 million. About a third of all tech companies that sold or went public last year were backed by venture capitalists or other institutional investors at some point in their corporate lives, while two-thirds were bootstrapped.
Most companies were acquired early, after raising a relatively small amount of funding.
- Of the 350 companies that disclosed how much money they'd raised, 195, or 46 percent, had raised less than $10 million.
- Of those who had institutional backing, 67 percent of exits came after the seed or series A rounds.
- A few companies were at the opposite extreme: 29 companies raised more than $100 million before being acquired or going public.
The report also listed the most active acquirers of tech startups. The usual suspects rounded out the top five: Yahoo, Apple, IBM, Facebook and Cisco Systems. But among the top 20, there were some surprises: Autodesk, a maker of 3D design software, was the 10th-most-frequent acquirer. Trimble Navigation, which makes GPS receivers, laser rangefinders, and navigation systems, came in at 14th. TripAdvisor was also an active acquirer, at number 17, and advertising and marketing agency Publicis Group came in at number 18.
Controlling the way your brain responds to emotions isn't as complicated as it sounds. A psychologist explains the steps that will change your behavior.
As a leader, you can't let emotions like stress, fear, or anger control your behavior. Although it takes time to perfect, there are ways to control your negative emotions and guide your responses.
Dr. Casey Mulqueen, a psychologist and the director of research and product development at leadership training company Tracom Group, says executives can leverage psychology to be better leaders and get more out of their employees. Mulqueen, who has done consulting work for companies ranging from Victoria's Secret to Lockheed Martin, trains executives to harness what he calls "Behavioral Emotional Intelligence." The concept is based on Emotional Intelligence (EQ), the ability to recognize, understand, and control your own and others' emotions.
Behavioral Emotional Intelligence (BEQ) goes one step further--it is the ability to recognize and understand the emotions you and others are feeling and behave appropriately. To illiustrate the difference, if a manager sees that an employee is depressed, his emotional intelligence is only valuable if he does something to help.
The human brain automatically reacts to physical or psychological threats by releasing hormones. It's a fight-or-flight response that's a remnant of our evolution from primates, Mulqueen says. When the hormones are released, it's hard to control your actions. But Mulqueen says that you can "effectively fight your own evolution" and "rewire your brain" to act appropriately by "recognizing your automatic responses, labeling them, and figuring what you have control over in the situation." Once you've mastered these techniques, you can lead by example to foster BEQ among your employees.
Check out Mulqueen's tips on how to recognize your emotions and control your behavior below.Engage your prefrontal cortex.
Mulqueen says that the amygdala, the part of your brain that releases stress hormones, activates whenever our grey matter registers a physical or psychological threat. This can happen if a colleague puts down your idea during a company meeting, if someone yells at you, or if you're doing a presentation and are afraid of public speaking. To battle this automatic response you need to engage your prefrontal cortex, the area of the brain responsible for logical reasoning and problem solving, while you're in the situation and before you respond. He suggests you slow down, think about what just happened, dissect why, and rehearse a response. "These two parts of the brain are directly linked and what you do is train your prefrontal cortex to clamp down and control the amygdala so you don't have a stress response," Mulqueen says.Write down what you're grateful for
Every employee wants a grateful leader. But since the human brain suffers from what psychologists call "the negativity bias," where we are more attuned to threat than opportunity, you may have to work at firing up your feelings of gratitude. "This sounds a little funny and soft, but it is grounded in research: One of the best ways to increase your personal optimism and happiness is to keep a gratitude journal," Mulqueen says. "Every day you write down three things that went well during the day and what you're grateful for. Believe it or not, research shows it's one of the best ways to increase optimism and happiness." So every time an employee does a great job, for example, send them an email expressing your gratitude for their hard work.Give back.
Mulqueen says giving back to your employees is another important behavior that helps to change your mood and attitude. "One way to give to other people is to be a mentor to them. You have become a leader for a reason--you have skills, education, and experience you've developed over time. You can give some of this to an employee who just graduated college, who doesn't have any of that and is just flying on their own," he says. "Spend time every week, or every couple of weeks, giving yourself to that person. Answer questions, talk about your experiences. Your time is a profound gift to someone else. The act of giving also helps you improve your optimism and outlook."
Sometimes for senior-level positions, no less.
Everybody knows the trouble with standardized testing. Not everybody tests well. Some people have different strengths than others. And the ability to pass a test says jack about work ethic and cultural fit.
That's not just me talking, and it's not even just about business. Increasingly, higher education feels the same way. More than 800 accredited colleges and universities in the United States no longer require SAT scores, including some of the top schools in the country.
So why, why, why are companies asking candidates--and in some cases, senior management candidates--for some abstract look at their intelligence levels when they were 18-years-old? Even the College Board, which administers the test, says SAT scores are predictive of only first-year college success, the Journal reports.
What's more, even some candidates recognize the tactic is BS. See this quote from the article: "For me, it was great," a McKinsey employee said. "I test much better than I am intelligent."
The article gives some of the companies who value the scores the chance to defend themselves. Those defenses range from a need for a data set for first-time employees to an emphasis on the value of a math score for finance positions.
But a point further in the article really undoes any of the logic, in my opinion. Quoting from the Journal:
Asking for SAT scores may turn off candidates, too. [Stephen Robert] Morse, now head of marketing and communications at freelance marketplace SkillBridge, said a firm's request for test scores "made me a little bit skeptical of wanting to work with them," despite scoring "in the 1450 range" on the 1600-point test. "I don't see why it's relevant," he said.
The potential benefits of seeing a candidates' SAT scores, which I'm extremely skeptical of in the first place, is entirely undermined if it has the potential to rub candidates the wrong way--an idea I'm a lot less skeptical of.
A negative candidate experience can only hurt a company. It's not just a kumbaya idea of treating people nicely. When candidates have a bad time interviewing for your company, it can have a serious effect on how you're perceived. And not just in the job market--9 percent of disgruntled candidates will tell others to not even purchase products from the offending company.
That's not to say every candidate experience has to be just peachy. As a manager, you have every right to figure out how candidates fit at your company, by whichever means you deem appropriate. But if you're thinking of asking about SAT scores, you should really consider whether they're actually going to tell you anything about that fit in the first place--and even if they do, whether it's worth the raised eyebrows you're sure to draw from the candidate in question.
A thoughtless or rash message can wind up online in an instant, as Kelly Blazek recently learned. Here's how to avoid this form of self-sabotage.
Being nice to people isn't just a good idea because that's what mom would want. It's about burnishing your image--and in an age when technology is everywhere, that means you've got to keep that forked tongue securely hidden, always.
Surely you already know this, but after Kelly Blazek's recent flame out over LinkedIn, a refresher course may be in order.
First, a bit about Blazek. She runs a job bank in Cleveland. Or rather she apparently used to because she's pretty much shut down her entire public life. Her Twitter is gone, her blog is gone, and her LinkedIn Profile is either hidden or gone. (I couldn't find it anyway.) What happened?
Blazek must have forgot that the days of private communication are over when she responded to a rather polite LinkedIn connection request with the following email:
[H]ow about starting with NOT presuming I would share my nearly 1,000 personally-known LinkedIn contacts with a TOTAL stranger? How bush league to pull that stunt. It's what kids do--ask senior executives to link in to them, so they can mine contacts for job leads. That's tacky, not to mention entitled--what in the world do I derive from accepting a stranger's connection request? You earned a "I Don't Know ______" from me today, for such an assumptive move. Please learn that a LinkedIn connection is the equivalent of a personal recommendation. If I haven't heard of someone, met them, or worked with them, why would I ever vouch for them on LinkedIn?
What happened here is that Blazek identified herself as a "powerful person." And as such a person, she has the ability to do or say whatever she wants. While that may have been the case before, it's certainly not true now.
In this case, the supposedly powerless job seeker took advantage of this brand new little invention called "the internet" and published the email online. Everybody picked it up and tossed it around and Blazek, an award-winning communicator, found out how the world communicates in 2014.
Similarly, you aren't immune to this. Every thing you put on the internet, every email you send, and even--in this age of smart phones--every thing you do in a public place can be easily spread across the Web. And if you do something mean enough, or stupid enough, or funny enough, everyone will know about it.
Snide comments about coworker A sent to coworker B? Totally private, right? Until coworker A gets promoted and coworker B decides to throw you under the bus to get on the new boss's good side. Naughty selfies sent to your current boyfriend? Well, what happens if he becomes your bitter, angry, ex-boyfriend? Hmmm?
And then, let's talk legalities. Your quick note back to HR that the job candidate won't work out because he's "too old," is grounds for a lawsuit and is discoverable. It does't matter that what you meant is that it's been five years since he's done X and his experience is too far in the past. What about the dirty joke that you send at work? Yep, someone forwards that to HR and you find yourself out on your rear end because the last thing a company needs is a sexual harassment lawsuit.
Repeat after me: The internet is forever. Once you hit send, or post, it doesn't go away. You can delete it, cancel your accounts, or post anonymously, but it doesn't go away. (For instance, Blazek took her website down, but I found it with the way back machine.) And think you're anonymous? Ha! If someone wants to figure out who you are badly enough, they can.
It's easy enough to avoid this type of thing, by the way. How? Be polite. You can be blunt. You can be clear. You just need to be polite. Additionally, assume that everything you post on the internet can be traced back to you. And especially when emailing strangers? If you're rude to them, what on earth would motivate them to be nice to you?
Forget money or touchy-feely stuff. These three clear questions will change the way staff approaches work.
We all want to be motivated -- and, as entrepreneurs, we love the idea of being able to motivate others. That’s great in theory, but it’s not always clear how to accomplish this within the day-to-day grind of a fast-moving business. What’s a busy entrepreneur to do?
It’s a widespread problem: According to Gallup’s most recent engagement research, 71 percent of Americans are “not engaged” or “actively disengaged” in their work. Those workers are less likely to be productive.
The traditional methods -- higher pay, for example -- produce mixed results. As Tomas Chamorro-Premuzic writes in Harvard Business Review, “If we want an engaged workforce, money is clearly not the answer. In fact, if we want employees to be happy with their pay, money is not the answer. In a nutshell: money does not buy engagement.”
So if the evidence is convincing, that higher pay doesn’t motivate, what does? The science tells us that intrinsic motivation, when there is interest or enjoyment of a task, is what really drives satisfaction at work. Dan Pink, author of the book Drive: The Surprising Truth About What Motivates Us, says there are three key drivers of motivation: autonomy, mastery, and purpose.
The problem is that most people don’t know how to create intrinsic motivation for themselves, much less be able to ask for it from their bosses. On the flip side, as bosses, trying to motivate can seem like an endless rabbit hole that’s far easier to ignore than to dive into. Instilling mastery and purpose seems too touchy-feely, and granting employees autonomy seems scary.
Motivation is a goal that ultimately falls into the hands of an individual -- there’s only so much you can do as a boss, after all -- but it’s important to create an environment where full motivation is possible. It’s your job to be the catalyst.
With that in mind, I have created a few easy questions that can make the task of motivating employees more standardized and manageable. Try asking your team these questions once a month -- and create a regular dialogue that keeps the topic of motivation front and center.
1. What has been the most exciting work experience for you this month and why?
2. Do you consider your current role your ideal job? What more could you be doing that would benefit the business -- and make the experience more enjoyable for you in the process?
3. Do you feel that you get purpose from our mission and vision? If not, tell me what gives you purpose -- and how you can leverage that mission for our business.
Use these questions as a catalyst for conversation. Let your employees know that its OK to not feel motivated; you can’t improve motivation without talking about it. Let them know that you are there to engage in the conversation and support them in doing their best work. Encourage them to come to you each month with ideas on how to increase their interest and motivation. To stay away from the touchy-feely, ask for specificity. Request that they bring projects, ideas, and a personal mission statement that aligns with the company’s.
If an employee is consistently unmotivated and dispassionate, it will soon be apparent to both of you that there isn’t a fit. However, more often than not, the conversation will catalyze employees to motivate themselves with the company goals in mind -- which, at the end of the day, is your goal too.
Look, you don't need to learn to code. But you do need to convey to customers (and the rest of the world) that you have a good grasp on technology. Start here.
I know. With everything else you need to do in a day, boning up on your technology credentials probably won't ever float to the top of your to-do list. That's OK.
What isn't OK, however, is making seemingly small tech faux pas. At best, they'll make you look a little silly and out of touch; at worst, they'll chip away at your credibility with customers and partners.
To avoid the newbie label, check this list to make sure you're not making these mistakes:1. You use an unusual font in your email signature.
If you are using a swirling green font that looks like custom handwriting in your email signature, know this: it's very likely that people are seeing garbage--or at least not what you intended. The trend is to go lean and mean, so many people turn off the HTML formatting for email. The best signatures are those that are simple and just include pertinent info.2. You don't have a unique profile background in Twitter.
Here's another dead giveaway. When you go to someone's profile page on Twitter, if the background image is the default wallpaper for a new Twitter account, it's a sure sign the person is not taking their social media marketing seriously. Twitter offers many unique backgrounds, but the best approach is to design your own in Photoshop with custom branding and upload it.3. You just had a blind copy fail.
I love when someone forgets to blind copy because it can be a goldmine of new contacts for me--many of which the sender probably did not intend to reveal. Nothing says "I just started using email" like copying everyone you know or, even worse, replying to all by mistake. It's always a good idea to do one last check on who is getting your message before hitting send.4. You don't have a custom Facebook URL.
Here's one that's quite revealing. If you own a company and have a Facebook account or business page but haven't registered the Facebook address yet, you're behind the times. Also, it makes your accounts harder to find. To register the user or business page, just go this site.5. Your business presentation is not online.
Still using Microsoft PowerPoint? That's a newbie mistake right there, although there aren't that many good desktop options around. But an even more revealing faux pas is when you don't have the presentation posted online for people to revisit after the meeting. I like the simplicity of a site like SlideShare; better yet, just use Google Docs Presentation.6. You don't sync your files.
We're living in the age of Dropbox and Box, where every file you create can sync immediately out to the cloud. This includes photos, slideshows, your music, and just about any file you create on a computer these days. Not syncing is sign of a tech neophyte. I'm still waiting for the day when syncing is not needed, though--when everything you do is online already.
Just as important as getting leadership on board is engaging the company's middle tier of informal leaders, notes expert Jon Katzenbach.
When Jon Katzenbach speaks, you should listen.
His essay, "The Myth of the Top Management Team" (originally published in 1997 in the Harvard Business Review), will forever change the way you think about the role and structure of your leadership team (including whether it really is a team, or if it's just you and a group of followers).
His recent essay in strategy + business (coauthored with Rutger von Post and James Thomas, his colleagues at Booz & Company) demonstrates his deep knowledge about the strengths and weaknesses of top teams.
The subject of this recent essay is how to change a company's culture. And one of the essay's main insights is that--while getting the top team on board is important--what really spurs cultural change is engaging the company's middle tier of informal leaders.3 Elements for Cultural Change
Identifying and working with these informal leaders is one of three elements that Katzenbach, a senior executive advisor at Booz, and his coauthors recommend in any effort to effect cultural change.
The other two are what they call "critical behaviors" and "existing cultural traits." Critical behaviors, they write, "are those ways of doing things in your current operations that can easily spread from one employee to another." Existing cultural traits are the three or four emotional elements of your current culture that do not need to be changed. They are "distinctively clear, wisely profound, emotionally powerful, and widely recognized."
I recently spoke to Katzenbach to flesh out these ideas. Here's an edited version of our conversation:
In the essay, you give an example of how a company identified its informal leaders and provided them with a "safe space" where they could talk frankly. Crucial to this honest forum was that senior leaders were advised beforehand not to behave as "the boss," but to listen and learn. Who, then, actually leads this meeting in the safe space?
The meetings work best when they are actually "led" (rather introduced and kicked off) by one of the authentic informal leaders in the group, ideally not the "senior-most" member of the group. It is important that the senior leader or leaders at each meeting be one or more of the most senior line executives from the relevant employee population. The CEO or his/her equivalent is the one who tells participating senior leaders beforehand "not to act bossy." However, it is important that senior leaders who are likely to be "bossy" anyway simply be excluded from the process. One "bad apple spoils the barrel" quickly. Not all senior leaders can or should plan this role. Some of the best research on "safe space" was done by Amy Edmondson at Harvard.
What are two or three prompts or questions that can help to jumpstart the conversation at a meeting like this?
It is important early on to position the purpose of the conversation. [So prompts could include questions such as]:
- What do you understand the purpose of this discussion to be? (To learn from others in the group how they see and experience important elements/aspects/or traits of our culture that now drive key behaviors, e.g., emotional forces, positive and negative, that determine how most people behave. That is, how we do things around here?)
- What do you see as some of the key behaviors that we should discuss today--either because we need more of them, or because we need to change them? Which 2 or 3 are the most important to get more of, or to get rid of? Can you think of examples to share?
- What aspects of our current cultural situation can energize the most important behaviors?
- What aspects of our current situation will cause strong resistance to those behaviors?
It also important that they talk about both behaviors and cultural traits as they see them. [So prompts could include questions such as]:
- What comes to mind when I say "cultural traits"?
- What specific behaviors demonstrate those traits?
- How do you now deal with the emotional aspects of culture and behavior?
So, then, what is the most common stumbling block or mistake they make?
They miss who the real informal leaders are. They [make the mistake of] going down through the hierarchy or using the HR info that identifies good performers and high-potential people. And that doesn't really do a good job of picking out who the informal leaders are. Because the informal leaders have to be employees who are using elements of the company culture that are already in place. You have to tap into who's doing that. And the managers and leaders in the hierarchy are not necessarily doing that.
It seems like there's no short cut a company can take to finding these informal leaders. That the only way to find them is through so-called "management by walking around" or participating in informal conversations that take place well below leadership levels.
It doesn't come out easily in the normal HR info that's collected. Someone has to spend time down there, to try to find them. The informal leaders who are the outstanding ones are actually easy to identify because everyone knows who they are. But if you need more than that--and you usually do--what helps is to get [the informal leaders you've already identified] to help you think about who the others might be.
And then you can construct a confidential short survey based on what you learned from the ones who are the obvious choices. What I see companies [incorrectly] doing is that they get a good start with first group, and they're [often] careless about how they spread it through the rest of the organization.
When it's time to go, it's time to go. These red flags indicate you should let go--of your job, your project, or your company.
Over the years, I've had hundreds of conversation with people who now love their jobs even though they were formerly miserable at work. Based on those, here are the infallible red flags that signal that you must let go--of your job, your project, or your company.1. You know that your product is second best.
Unless you're a sociopath, you won't be happy at work if you feel in your gut that your customers are making a mistake every time they buy from you.2. Your dread of Monday is ruining Sunday.
A little bit of Monday-morning blues is normal, but when that feeling starts rippling into your weekend, your job is starting to ruin your real life.3. You don't respect the people you're working with.
If you see unethical behavior or persistent stupidity among your peers, staying where you are will damage your self-respect.4. You don't believe your company strategy.
It may have made sense to you before, but if your strategy doesn't make sense now and there's no way to change it, you're pursuing a lost cause.5. You sense you're not making a difference.
If you're not actually changing the world for the positive in some way, you're either wasting your time or you're making things worse.6. You find yourself complaining too much.
Assuming you're not naturally negative, if you notice that you're always grousing about work, it's a good indication it's not the right work for you.7. You're bored more than you're "in the zone."
When you're doing what you love, the workday whizzes by. By contrast, if your workday drags on and on, the job you're doing is not the job for you.8. You know you can't fulfill your potential.
Twenty years ago, a management consultant pointed out that I would never be able to do my best work inside a big firm. He was right. I left and never looked back.
Pre-order my new book and get an exclusive bonus chapter (for you and a friend) and a signed bookplate.
The flu appears to spread a little bit easier when employees don't have personal space to protect them.
At least in theory, open floor plans allow employees to collaborate, discussion to flow, and culture to grow. They might also make it a whole lot easier for the flu to spread, according to new research.
The study, which was recently covered on Quartz, comes from Sweden and was published in late January in the journal Ergonomics. Its findings are based on data from the Swedish Longitudinal Occupational Survey of Health, examining the rates at which employees took short-term sick leave across companies employing each of seven different types of office designs. The different office types ranged from large open offices to cell offices to uber-private cell offices.
Open office plans in the study--small, medium, and large--saw significantly higher rates of employees who took short-term (less than a week) sick leave compared to those in closed offices.
The implication: people are more likely to get sick when they're working in an open office. Men, specifically, showed a greater propensity to call in sick at offices with flex plans, or offices with no assigned seating.
These findings, of course, are fairly intuitive. Putting people in the same space makes it all the more likely that something contagious could spread.'Sickness Presenteeism'
But the authors also considered some of the psychological factors that might play a role in their findings. Offices with more privacy might mean smaller teams, they say. They then site previous research showing that employees on small teams show a higher rate of "sickness presenteeism"--that is, they work despite being sick, perhaps because they feel like they play an important role on those teams.
Such heroism, of course, does nobody any good if it just gets everybody else sick. More likely, people in private offices are protected by the ability to segregate themselves from others.Don't Change Your Floor Plan; Just Be Smarter During Flu Season
That points to one possible solution for this issue. If you manage an open office, it might behoove you to encourage more remote work during cold and flu season; if an employee feels a little bit under the weather, good enough to work but maybe feels like he or she is coming down with something, perhaps they'd be better off taking a day working from home with easy access to soup and tea.
The Wall Street Journal also reports furniture companies are creating office chairs and desks that kills bacteria. In the meantime, providing plenty of hand sanitizer and reminding everybody to wash their hands won't hurt in a fight against germs.
The potential for greater sickness isn't the first negative attribute assigned to popular open floor plans. Another recent study suggests that productivity can take a hit in open offices too, because employees don't feel comfortable taking shortcuts to get more work done while in front of their managers. (This has a positive benefit as well, as it suggests open floor plans could prevent employees from seriously violating protocol.)