Why I Fired My Father From the Family Business

Posted by | Posted on 28-11-2011

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Can a small business really create a plan on a postcard?

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Why I Fired My Father From the Family Business

I started sweeping floors at the family company, Arkay Packaging, when I was fifteen. After I graduated college in 1989 I moved to a position in planning and customer service. Seven years later, my father made me president. But the promotion was in name only; my father was having a hard time giving up control. He remained CEO and continued to make a lot of the decisions.

My father and I have different styles of management. He is more interested in technology, equipment, and the practical work of making boxes than in cutting overhead and growing revenues. I am the opposite. He is very authoritative and prefers giving orders to listening to suggestions. I am interested in listening and learning from my associates.

When our company faced a crisis, it became clear that our two styles were incompatible. To lead our company into the future, I needed to take control – even if that meant pushing my father out of the way.

The Company was in Trouble

In 1998, we experienced unprecedented growth of 33% and were having a hard time keeping up. Deliveries were late, the quality of our products was slipping and customer patience was growing thin. We were having problems with an acquisition, and were also expanding to a new location in Roanoke, Virginia. At the same time, my father was spending millions on developing a label press so we could get into the labeling business.

To make matters worse, competitors had circulated emails that falsely implicated us in an environmental scandal. Newsday published an article saying we owed the government $55 million dollars, which was untrue. Customers were calling us wondering if we were going to have to file for bankruptcy. The company was spread too thin, the chain of command was ambiguous and confusion reigned.

I Took Control

In 1999, I mustered the courage to tell my father we needed to stop spending money on the label press and focus more on our core business. To my surprise, he acquiesced.

I also knew it was time to change the company’s management style. When I first stepped into a senior role at the company, I mirrored my father’s behavior. When bad news arrived, I pounded on the table and screamed. It didn’t take long before I realized that reaction intimidated employees and kept them from sharing information. So I tried a softer approach.

When my father ran things, only the C-level executives had access to the company’s financial information. In order to make the company more transparent, I began to share that information with all employees. I also encouraged employees to share information with management.

Once a week, my employees gather and share vital company information related to sales, productivity and turnover. During one of these meetings, we discovered a glitch in our computer system. Our computers were counting deliveries that were up to seven days late as on time. As a result, we had been unaware that 66% of our deliveries were late. We also discovered by reviewing data collected in system that a when we did deliver boxes, orders were often incomplete.

Within a few months, 90% of our deliveries were on time and complete. It was my first major achievement at the company.

I Fired My Father

By 2004, things had gotten more or less back on track, and corporate culture had changed dramatically. But there was still uneasiness among management about the split chain of command.

One night I got a call from our COO. My father had called him into his office while I was away and ordered him to transcribe a dictation for a letter. The COO told me he didn’t appreciate being treated like an assistant when he had a company to run and that he was resigning. I knew he wasn’t the only one having problems: The entire staff was finding it impossible to work for two men with such different visions for the company. I knew I had to act.

I called my father. When he picked up, I berated him for his treatment of the COO and then I told him he would either have to buy me out, or he was fired. It was the hardest call I’ve ever made, and I was speaking through tears, expecting my father to be angry and hurt.

Instead, he told me, “I am so proud of you. You’re right. It’s time for me to leave.” I was surprised, but I think he respected how difficult it was for me to make that call.

We’re Still Friends

Since my father retired in 2004, Arkay Packaging has kept going strong. The COO stayed on after my father left, and our revenues have been holding at $50 million annually.

It was a difficult transition for both of us, but now we are able to laugh about our past differences. We go on weekend trips together and our relationship is stronger than ever. He is still my sounding board when it comes to tough business decisions.

Mitchell Kaneff is the author of the book “Taking Over: Insider Tips from a Third Generation CEO.”

- As told to Harper Willis

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Welfare mom creates million dollar biz: how she did it

Posted by | Posted on 26-11-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

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Welfare mom creates million dollar biz: how she did it

Trisha Waldron was 28 years old when she realized that the life she had drifted into was a dead end. She had gone from being a daughter to a wife to having her first baby at 22. Now single and barely surviving on food stamps in the Black Hills of South Dakota, she had no college degree, no work experience to speak of, and no clear idea of what to do with the rest of her life. She owned a tiny two-bedroom house from her divorce, and she had her two lovely little girls, ages four and six, but that was about it.

You can create your own life

One afternoon, volunteering at her daughters’ school, she heard a teacher tell the kids, “You can create your own life.” That sentence changed everything. As she puts it, “I knew I had to take responsibility for my own life. I had been running it according to others and things hadn’t worked out very well.”

She applied for a student loan and went back to school. The first year, she and her girls lived on welfare, food stamps, and odd jobs, but the second year, an opportunity presented itself and she grabbed it. An artist friend offered her a job assembling jewelry for a mail order catalogue in her spare time. She knew it wouldn’t be easy: she’d be in school all day, taking care of the kids in the evening, and then have to work late into the night at her kitchen table, but she’d be working for herself and be able to get off welfare.

Having a job and being in school built up Trisha’s confidence and she eventually proposed to the owner of the catalogue that she design his entire line of jewelry. She says, “As an entrepreneur you are always going to be confronted by things you don’t know, but you can’t let it stop you.” She went to the library and dove into teaching herself the basics of jewelry design as well as exploring Native American motifs from which she would draw inspiration. She recalls that she didn’t get a lot of sleep in those days.

Growing the business

Her business moved from the kitchen table to the garage where she installed a wood stove to keep it warm against the bitter South Dakota weather. Still, she had to work in gloves and a heavy coat during the winter. After two years, she decided she was ready for an even greater challenge and, in 1985, incorporated her own company.

From the beginning, Trisha was as excited by the cultures that informed her jewelry designs as she was by the final product. She learned the world was a whole lot bigger than Rapid City, South Dakota. She forged relationships with bead and stone vendors from Africa, India, and China.

Looking back, she says those relationships and the ones she developed with her staff made all the difference for the long-term success of her business. She explains, “At first, I had a super aggressive, take-no-prisoners approach. I might have gained something for myself but I wasn’t very nice to those around me. Eventually, I learned that you draw power as a woman in business by being compassionate and inclusive. This way, you can make long and loyal relationships.”

Her first million

After only five years in business, she had made her first million. But, as Trisha remembers, “Getting there was incredibly challenging, I learned by trial and error, I cried a lot. But I lived simply and didn’t need much to survive. I was in a small town and hired my girlfriends to help me. My neighbors pitched in with the kids. My big break came in 1987 when the catalogue of the Smithsonian Institution started featuring my work.”

Helping others help themselves

After winning the Smithsonian as a client, Trisha was able to move out of the garage into a proper jewelry studio. Other catalogues, such as the Museum of Fine Arts in Boston, started picking up the line. When things got busy, she would hire as many as 40 other women, mostly single moms, to fabricate her designs out of their homes – just as she had when she first started.

In 2006, after over 20 years in business, Trisha sold her company to an employee and retired to California with her second husband.

Trisha’s advice for people who want to start their own businesses:

Your responsibility is to be clear about your vision. Then you can ask others to help.

There is a lot of assistance out there for entrepreneurs if you look for it: I learned bookkeeping from a volunteer group of retired accountants.

Surround yourself with people who support you. A lot of people said I was crazy to start my own business as a single mom. But I had a few people who believed in me.

Be okay with the knowledge that you won’t know how to do everything right away and trust that you can learn.

Create a “mastermind group” – 2 or 3 people who are willing to have you bounce ideas off them every few weeks. I kept my group going for 10 years.

Realize it will be hard, and accept that.

by Sarah B. Weir, Yahoo! blogger

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Entrepreneurship: Nothing to Lose and Everything to Gain

Posted by | Posted on 20-11-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

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Entrepreneurship: Nothing to Lose and Everything to Gain

I recently caught up with Ryan Blair, who is a serial entrepreneur and author of the new book “Nothing to Lose, Everything to Gain.” Ryan established his first company, 24-7 Tech when he was only twenty-one years old.

Since then, he has created and actively invested in multiple start-ups and has become a self-made multimillionaire.

After he sold his company ViSalus Sciences to Blyth in early 2008, the global recession took the company to the brink of failure resulting in a complete write off of the stock and near bankruptcy. Ryan as CEO went “all in” betting his last million dollars on its potential and turned the company around from the edge of failure to more than $150,000,000 a year in revenue in only 16 months winning the coveted DSN Global Turn Around Award in 2010.

In this interview, Ryan talks about how he re-branded himself after being in a gang, the issues with the education system, and more.

How did you shake your criminal record and re-brand yourself?

I remember when I was working my way up in the first company that employed me, I used to have nightmares that one day they’d find out about that I had been in a gang, call me into the office, and fire me. In the beginning I didn’t talk much about what I’d been through. But eventually when I got to a point where I had established myself as a professional entrepreneur, I embraced my past, used it as part of my branding, and crossed over.

Ryan Blair

In this day and age people want authenticity. Now that the world is social, people know all about you. Assuming you decided to join humanity, that is. It turned out that as I started showing my true identity, so did the rest of the world. One of the reasons my company ViSalus is one of the fastest growing companies in the industry today is because we share our good, bad, and ugly. Like sharing a video of me playing a practical joke on one of my employees, for instance. As a result of embracing authenticity, I turned the company around from near bankruptcy to over $15 million a month today. Unlike our competitors, our distributors and customers know exactly who we are, and I’d say that corporate America has a lot of catching up to do.

What’s your take on the educational system? Will a college degree help or hurt your chances at starting a successful business?

As a product of Los Angeles’s public school system, in a state with the highest dropout rate in the nation (about 20 percent), I can tell you from personal experience that some of our brightest minds are being misidentified because of a one-size-fits-all learning environment. Because I had ADD and dyslexia I never got past the 9th grade.

I recall sitting with a career counselor in continuation high school, being told that I didn’t have the intellect or aptitude to become a doctor or a lawyer. They suggested a trade school, construction, something where I’d be working with my hands.

The irony is that today I employ plenty of doctors and lawyers. Would you rather be a doctor or a lawyer, or a guy who writes a check to doctors and lawyers?

If President Obama phoned me today and told me he was appointing me Educational Czar, I’d turn education into a business, a capitalistic, revenue driven system, creating a competitive environment where each school is trying to attract customers, based on quality of customer experience.

As an entrepreneur, having a college degree or getting classroom training won’t hurt your chances for starting a successful business, but it’s ultimately not necessary. In Malcolm Gladwell’s book “Outliers,” he makes a point that it takes approximately 10,000 hours to master a skill set at a professional level. That means experience, over traditional education.

What three business lessons did you learn from juvenile detention?

I learned a lot about business and life from my time spent incarcerated. I like to call these pieces of wisdom my Philosophies from the Jail Cell to the Boardroom. One of the biggest lessons I learned was that in Juvenile Hall, new guys always get tested. When I went in the first time, I was just a skinny little white kid and I had to learn fast. People will be bumping into you on the basketball court, or asking you for things, testing to see if you’re tough.

And everyone knew that if a guy let someone take their milk during lunchtime, they weren’t as tough as they looked. Soon you’d be taking their milk everyday, and so would everyone else. It’s the same for business, if you give people the impression that you can be taken, you will be.

Also, adaptation is the key to survival. In jail the guy who rises to power isn’t always the strongest or the smartest. As prisoners come and go, he’s the one that adapts to the changing environment, while influencing the right people. You can use this in business, staying abreast of market trends, changing your game plan as technology shifts, and adapting our strategy around your company’s strongest competitive advantages. Darwin was absolutely right – survival is a matter of how you respond to change.

The last lesson I got from jail is that you have to learn how to read people. You don’t know who to trust. It’s the same for business because a lot of people come into my office with a front. I have to figure out quickly who is the real deal and who isn’t. Based on that fact, I developed an HR system that I use when interviewing potential new hires that I call the Connect Four Technique. Yep, you guessed it. I make my future employees – and I have hundreds of them – play me in Connect Four.

Can everyone be an entrepreneur? Can it be learned or do you have to be born with a special gene?

No. Not everyone can be an entrepreneur. There are two types of people in the world, domesticated and undomesticated. Some people are so domesticated through their social programming and belief system, so employee minded, that they could never be entrepreneurs. And they shouldn’t even bother trying. The irony is that this is coming from a guy who teaches millions of people how to become entrepreneurs. I’m literally selling a book about becoming an entrepreneur, telling you that not everyone should read it.
To be an entrepreneur, you have to have fighting instincts. Are instincts genetic? I don’t think so, but you ‘inherit’ them from your upbringing. Now, if you’re smart you can reprogram your beliefs. But there are still some people that would rather watch other people be entrepreneurs, like the people in the Forbes “richest celebrity list” than take the time to reprogram themselves, and live their lives like rock stars, too.

Is there a need for business plans these days?

When you’ve really got the entrepreneurial bug, the last thing you want to do is sit down and write a business plan. It’s the equivalent of writing a book about playing the guitar before actually knowing how to play the guitar. You don’t know what your new business is going to be like. And just like a guitar, a business will have to be tweaked and tuned multiple times, and you’ll need long practice sessions and repetition, before you can get even one successful song out of it.

In my book “Nothing to Lose, Everything to Gain,” I actually included a chapter called “I Hate Business Plans” where I talk about this. Most business plans that get sent to me, I close within seconds of opening them up because they are full of fluff and hype. A business plan should be simple, something you could scribble on a scratch pad. No more than three pages of your business objectives, expected results, and the strategy to get there. But the best business plan is one built from a business that is already up and running and that matches the business’s actual results.

The point is that you should be so obsessed with your business that you can’t sleep at night because that’s all you can think about. And that’s your ultimate “business plan.”
Dan Schawbel is the Managing Partner of Millennial Branding, LLC, a full-service personal branding agency, and author of “Me 2.0: 4 Steps to Building Your Future.”

by Dan Schawbel, contributor, Power Your Future

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Jeremy Renner’s Secret Side Gig: Flipping Houses

Posted by | Posted on 18-11-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

=> Business Plan Australia

Jeremy Renner’s Secret Side Gig: Flipping Houses

Jeremy Renner might be best known for playing brooding tough guys and charming anti-heroes, but there’s one part he plays that few know about: house flipper.

Before he was nominated for Oscars for “The Hurt Locker” and “The Town,” Renner and his business partner, actor Kristoffer Winters (who had a small role in “Locker,” plus last year’s “Fair Game”) were fixing up and flipping old houses in Hollywood and Studio City, according to the new issue of The Hollywood Reporter (on newsstands now).

In 2002, the two bought a nondescript three-bedroom 1962 home in Nichols Canyon for $659,000 and sold it less than a year later for $900,000. According to Keller Williams’ Bobbe Mitchell, the sales agent on many of their projects, Renner and Winters had a shoestring budget but transformed the house into a cozy, private abode, adding a patio and new landscaping. During those lean days, the two staged it with flat-screen TVs that had a 30-day return policy, hoping they’d sell the house before the expiration date.

Fresh off their first flip, they re-invested in a $915,000 Spanish-style 1940 house off Laurel Canyon that required more work. They gutted it, and Renner lived in the guesthouse during renovations. “He lived in squalor,” Mitchell says. “He was in there with a gun and would shoot the rats” that would invade during a winter of heavy rainfall. The house sold for nearly $2.4 million.

Michael Mccreary Music supervisor Mark Wike (“NCIS: Los Angeles”) bought their next project, a four-bedroom 1938 Cape Cod near Fryman Canyon. “My wife is an avid cook, and the kitchen made it really appealing,” Wike says. “They opened it up, and we could have 25 people in there at a party.” The flip? Bought for $1.36 million, sold for $2.09 million.

The pair have recently gotten more ambitious, and it has paid off. In 2008, they bought the Hemingway House, a 1924 Greek Revival estate in Hollywood, for $1.55 million. A year later, they grossed $2.45 million, selling it for more than $4 million. “Renner does beautiful work and does what he needs to without breaking the bank on construction costs,” says John Bersci, a luxury flipper ($15 million-$20 million range) familiar with the properties.

With Renner slated to appear in the tentpoles “Mission: Impossible – Ghost Protocol” and “The Avengers,” will he continue his home-buying habit? Neither he nor Winters would comment.

FIVE FLIPS BY RENNER

1. Laurel Terrace Drive

Renner and Winters bought a two-bedroom in Studio City for $915,000 in 2004. It sold for $2.39 million in 2005. Gross profit: $1.48 million.

2. Fryman Place

In 2006, they flipped a Cape Cod in Studio City, bought at $1.36 million and sold at $2.09 million. Gross profit: $725,000.

3. La Cuesta Drive
Renner and Winters took on their first project in 2002: a $659,000 house in Nichols Canyon; it sold for $900,000 a year later. Gross profit: $241,000.

4. Selma Avenue

After renovating a 1924 Greek Revival estate in Hollywood (purchased for $1.55 million in 2008), they sold it two years ago for $4 million. Gross profit: $2.45 million.

5. Franklin Avenue

The business partners are currently rehabbing a nearly 6,000-square-foot house in Hollywood acquired in 2009 for $1.35 million.

Renner isn’t the only star to turn a tidy profit from a side interest in real estate. Courteney Cox, Diane Keaton, Vincent Gallo and ex-TV bandleader Max Weinberg are among the most famous for flipping. Cox’s most famous flip was a 1979 John Lautner-designed modern residence on Carbon Beach, bought in 2001 for about $10 million and sold in 2007 to now-divorcing Dodgers owner Frank and Jamie McCourt for a clean $27.5 million. Meanwhile, Keaton bought a Ralph Flewelling-designed hacienda in Beverly Hills for $8.1 million in 2007 and sold it to “Glee”’s Ryan Murphy last year for $10 million.

By Marissa Gluck, The Hollywood Reporter | Movie Talk

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Jobs at Apple: Master inventor, master marketer

Posted by | Posted on 07-10-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

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Jobs at Apple: Master inventor, master marketer

SAN FRANCISCO (AP) – Steve Jobs started Apple Computer with a high school friend in a Silicon Valley garage in 1976, was forced out a decade later, then returned to rescue the company. During his second stint, Apple grew into the most valuable technology company in the world.

Jobs invented and masterfully marketed ever-sleeker gadgets that transformed everyday technology, from the personal computer to the iPod and iPhone. Cultivating Apple’s countercultural sensibility and a minimalist design ethic, he rolled out one sensational product after another, even in the face of the late-2000s recession and his own failing health.

Jobs helped change computers from a geeky hobbyist’s obsession to a necessity of modern life at work and home, and in the process he upended not just personal technology but the cellphone and music industries.

Perhaps most influentially, he launched the iPod in 2001, which offered “1,000 songs in your pocket.” Over the next 10 years, its white earphones and thumb-dial control seemed to become as ubiquitous as the wristwatch.

In 2007 came the touch-screen iPhone, and later its miniature “apps,” which made the phone a device not just for making calls but for managing money, storing photos, playing games and browsing the Web.

And in 2010, Jobs introduced the iPad, a tablet-sized, all-touch computer that took off even though market analysts said no one really needed one.

Earlier this month, Apple briefly surpassed Exxon Mobil as the most valuable company in America, with Apple stock on the open market worth more than other company’s.

Under Jobs, the company cloaked itself in secrecy to build frenzied anticipation for each of its new products. Jobs himself had a wizardly sense of what his customers wanted, and where demand didn’t exist, he leveraged a cult-like following to create it.

When he spoke at Apple presentations, almost always in faded blue jeans, sneakers and a black mock turtleneck, legions of Apple acolytes listened to every word. He often boasted about Apple successes, then coyly added a coda – “One more thing” – before introducing its latest ambitious idea.

By JORDAN ROBERTSON – AP Technology Writer

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Buffett pulls trigger to buy Lubrizol for $9 billion

Posted by | Posted on 14-03-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

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NEW YORK/BANGALORE (Reuters) – Billionaire Warren Buffett’s Berkshire Hathaway Inc struck a deal to buy lubricants maker Lubrizol Corp for $9 billion in cash to tap rising demand for chemicals used to operate engines and machinery.

Just two weeks ago, Buffett wrote to Berkshire shareholders vowing to use its huge cash pile on acquisitions. “Our elephant gun has been reloaded, and my trigger finger is itchy,” the 80-year-old investor wrote in his annual letter.

Lubrizol, will continue to be led by its current management team under James Hambrick, the companies said.

“Lubrizol is exactly the sort of company with which we love to partner,” Buffett said in a statement on Monday.

Berkshire, which had amassed about $38 billion of cash by the end of last year, will acquire Lubrizol for $135 per share, about a 28 percent premium to its closing price on Friday. Berkshire will also assume about $700 million of Lubrizol’s debt.

The deal is Berkshire’s biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late 2009. It extends the trend of Berkshire expanding in basic industries, which includes Buffett’s recent deals for Marmon Holdings and Israel’s Iscar Metalworking.

Thomas Russo, who helps invest more than $3 billion at Gardner Russo & Gardner, said he believes the investment is positioned to take advantage of increasing demand for Lubrizol’s products as countries around the world industrialize further. Around 11 percent of Gardner Russo & Gardner holdings are invested in Berkshire shares.

“It’s certainly a full price – especially if you think back what the opportunity could have been had they bought at the bottom of 2008 or 2009’s market selloff,” Russo said. “But it’s all about the forward looking returns and I suspect that the rest of the world’s demand for the products will grow.”

Lubrizol makes lubricants for engines, especially large trucks, buses and boats. Demand for the company’s products should continue to rise as shipping of goods increases around the world.

In February, Lubrizol posted strong quarterly profit and issued a bullish forecast for 2011, signaling demand for lubricants continues to recover with the economy.

Wickliffe, Ohio-headquartered Lubrizol, founded in 1928 but which traces its roots back as far as the 1870s when it began as BFGoodrich Performance Materials, employs 6,900 staff worldwide, producing specialty polymers and additives used in everything from engine oil and personal care products to pharmaceuticals and coatings.

Earlier this year, Lubrizol agreed to buy rival Nalco’s personal care business, which makes ingredients for hair, skin and home care products, for $166 million.

Citi and Evercore Partners are acting as financial advisers to Lubrizol, which owns and operates plants in 17 countries.

Shares of Lubrizol rose 27 percent before the bell on Monday. They closed at $105.44 on Friday on the New York Stock Exchange.

(Reporting by Thyagaraju Adinarayan and Michael Erman, Additional reporting by Jonathan Stempel in New York and Ernest Scheyder in Chicago; editing by Gopakumar Warrier, Dave Zimmerman)

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LinkedIn Share Sale Likely to Be First In Wave of Social-Networking IPOs

Posted by | Posted on 23-02-2011

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Can a small business really create a plan on a postcard?

“Yes! An effective small business plan that covers no more than a postcard is more than possible, it’s practical and effective”

=> Business Plan Australia

LinkedIn Share Sale Likely to Be First In Wave of Social-Networking IPOs

LinkedIn Corp.’s plan to raise as much as $175 million in an initial public offering may be the first in a wave of share sales for U.S. social-networking companies.

The largest professional-networking site plans an IPO after turning a profit in the first nine months of last year and more than tripling revenue between 2007 and 2009, it said in a filing yesterday with the U.S. Securities and Exchange Commission.

Other companies that foster online interaction may follow suit. LinkedIn is at the forefront of social-Web startups that aim to replicate the successes of Internet pioneers, such as Google Inc. and Amazon.com Inc., and avoid the fate of sites like Pets.com Inc., which shut less than a year after its IPO.

“LinkedIn is bringing the very hot concept of social networking to the practical business world,” said Dixon Doll, co-founder of venture-capital firm DCM, based in Menlo Park, California. “The whole social-networking phenomenon may be in the fourth or fifth inning and none of these have gotten public yet.”

Social deals site Groupon Inc., which rebuffed a $6 billion takeover approach from Google, is in talks with banks about a public offering this year, while Facebook Inc. may pursue an IPO in 2012, three people familiar with the matter said last year.

Earnings, Facebook

For the nine months that ended in September, net income attributable to common shareholders was $1.85 million, LinkedIn said. Revenue was $161.4 million, almost double the $80.8 million a year earlier. Total revenue in 2009 was $120.1 million, and the company had $89.6 million in cash and equivalents as of Sept. 30.

LinkedIn is dwarfed by Palo Alto, California-based Facebook, the most popular social network, which has more than 500 million users. It had revenue of $1.2 billion in the first three quarters of last year, up from $777 million, according to a person who has viewed documents pertaining to its results and asked to remain anonymous because the company is private.

Even with that growth, Facebook isn’t worth the $50 billion valuation it derived from a recent round of financing led by Goldman Sachs Group Inc., according a poll of 1,000 Bloomberg customers who are investors, traders or analysts.

Of investors polled, 69 percent say Facebook is overvalued, the poll showed. Only four percent said it’s worth more.

‘Lot to Like’

LinkedIn could draw strong demand in the public markets because it has steadily boosted sales from advertising, subscriptions and hiring services, said Tom Taulli, an independent technology analyst.

“There’s a lot to like if you’re an investor,” said Taulli, who is based in Los Angeles. LinkedIn is “growing quickly, it has multiple revenue streams and there’s global potential here,” he said.

LinkedIn’s biggest shareholders include co-founder Reid Hoffman and his family and trust, with 21 percent; Sequoia Capital, with 19 percent; Greylock Partners, which holds 16 percent; and Bessemer Venture Partners, with 5.1 percent. LinkedIn Chief Executive Officer Jeff Weiner owns 4.1 percent.

Some of the shares sold to the public will be from existing shareholders and some stock will be issued and sold by Mountain View, California-based LinkedIn, according to a post on the company’s blog. The company didn’t say how many shares would be sold in either case, or at what price.

‘Always Danger’

LinkedIn hired Morgan Stanley, Bank of America Corp. and JPMorgan Chase & Co. to lead the offering, according to the SEC filing. Allen & Co. and the investment banking division of UBS AG are also working on the sale.

Jim Breyer, a managing partner at venture capital firm Accel Partners, said if it was up to him he wouldn’t take LinkedIn public now. There’s “always danger” of a social- networking bubble, he said today in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland. Accel was an early investor in Facebook and Groupon.

LinkedIn has more than 1,000 employees and 90 million users in more than 200 countries. Members use the site to search for jobs, recruit employees and find industry experts. While users can create personal profiles for free, LinkedIn introduced paid subscriptions in 2005, giving recruiters more access to job candidates and providing business professionals ways to communicate with one another. The company also makes money by selling ads on the site.

As LinkedIn’s membership has grown, investment firms have been clamoring for a piece of the company.

$3 Billion Valuation

Tiger Global Management LLC, a hedge fund founded by Chase Coleman, paid $20 million for a stake in the company in July, at a valuation of about $2 billion, according to two people familiar with the matter. SharesPost, a private exchange, is now trying to auction LinkedIn shares at a valuation of almost $3 billion, three people familiar with the matter said last week.

Pricing of LinkedIn’s stock in its IPO won’t be affected by trading on speculative markets for private company shares, the company said in its SEC filing.

LinkedIn was founded in 2003 by former PayPal Inc. executive Hoffman, 43, and received its first round of funding that year from Sequoia, the venture firm behind Google Inc. and Yahoo! Inc. Sequoia’s Mike Moritz is on LinkedIn’s board. The company has raised more than $100 million from firms including Greylock, Bessemer and Bain Capital Ventures.

On Jan. 25, in the first venture capital-led U.S. IPO of 2011, Web content company Demand Media Inc. sold 8.9 million shares at $17 each after originally offering 7.5 million shares for $14 to $16 apiece. New York-based Goldman Sachs Group Inc. and Morgan Stanley arranged the IPO.

LinkedIn “is just one of what we view as dozens of high- quality private companies that represent strong venture capital- backed, technology IPO candidates,” said Paul Bard, director of research at Greenwich, Connecticut-based IPO researcher Renaissance Capital LLC. “You’re going to see momentum continue, and we could end up with some pretty big numbers in terms of IPOs in 2011.”

By Douglas MacMillan and Ari Levy, Bloomberg.net

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Zappos CEO Tony Hsieh Happy Making $36,000 A Year Working For Amazon

Posted by | Posted on 14-02-2011

Category : Entrepreneur Success Stories

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Zappos CEO Tony Hsieh Happy Making $36,000 A Year Working For Amazon

One of the most striking Internet success stories in recent years is Zappos, the $1+ billion e-commerce business which was bought last year by Amazon.

But, as is often the case, the Zappos empire was not created overnight. Ten years ago, the online retailer known for selling shoes was actually desperate for sales. It wasn’t until a young Tony Hsieh came aboard in 1999 — as a business consultant and investor — did that all begin to change.

Hsieh’s unorthodox approach to company culture turned Zappos not only into a very lucrative business, but one beloved by customers and employees alike. He was named CEO in 2000 and attributes Zappos’ success to sticking by the company’s core values, which were designed to make employees happy.

“Our number one priority at Zappos is company culture. Our belief is that if we get the culture right most of the other stuff like delivering great customer service or building a long-term enduring brand for the company will happen naturally on its own,” says Hsieh who is also the author of a new book “Delivering Happiness: A Path to Profits, Passion and Purpose.”

Hsieh, 36, has stayed CEO of Zappos, despite making a salary that one would normally associate with an entry-level customer-service rep–$36,000 a year. Hsieh has been so successful as an entrepreneur that money no longer motivates him. What does, he says, is continuing to develop the company and culture that the Zappos team built over the past decade. And, so far, Amazon has allowed him to do that.

He must be on to something: Fortune magazine named Zappos #15 on its annual ranking of “Best Companies to Work For” at the beginning of the year.

Born for business

Hsieh, a first-generation Taiwanese-American, was only in his mid-20s when he joined the Zappos team. He may have been fresh out of college, but he certainly was no stranger to creating and cultivating multi-million dollar businesses.

From a very young age, he had the entrepreneurial instinct. At just nine years old, he had started his very first business – a worm farm. A few years later came his mail-order make-your-own button company. Then while studying computer science at Harvard he started making his peers what every college student demanded more than anything: pizza.

His first “real” company

Shortly after college in 1996 at the age of 24, Hsieh co-founded LinkExchange a website development business from the comfort of his own basement. Two years later Microsoft paid him $265 million – yes, nine figures – for his creation.

Of course Hsieh needed another challenge and to feed his insatiable entrepreneurial appetite. That challenge would be Zappos. His goal was to make the company – at the time fighting for financial stability – the largest online shoe retailer.

Zappos named him CEO and he did what he set out to do. Hsieh grew the company that had nearly non-existent sales when he started, to over $1 billion in sales today.

His guiding principle: Happiness. When you enjoy what you do and where you work, great things will happen.

“We have 10 core values at Zappos. We try to do is hire people whose personal values match their corporate values,” says Hsieh while also stressing the importance not hiding or holding back who you are outside of the office. “It is about being yourself in the office because we found that when true friendships are formed, that is when creativity really blossoms (in our employees) and great ideas come out, which is what has driven our growth.”

The company will not hire anyone who does fit within their corporate culture.

“One our values is to be humble, and that is the one that trips us up most during the hiring process. There are a lot of smart people out there that are also egotistical and for us it is not a question, we just won’t hire them,” says Hsieh.

In the same vein, the company will fire employees who do not live up to those standards.

Often, when growing companies are acquired by much-larger ones, such cultures are destroyed, as the acquirer seeks to wring out the “synergies” used by financial folks to justify the acquisition.

But that’s not so in this case, Hsieh says.

Before Amazon and Zappos agreed to their deal, Amazon signed a document saying it would let Zappos continue to do its own thing. And Hsieh says Amazon has honored that commitment.

Basically, the only thing that has changed, Hsieh says, is that Zappos has swapped its old board of directors for a new one–at Amazon. Zappos still runs its own show, and that has enabled it to maintain the culture that it so carefully cultivated in its years as an independent company.

by Henry Blodget

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