Small Business Labs

Google Wallet Roundup and Summaries

The already hot mobile payments space got hotter last week.  Google announced Google Wallet, an NFC-based mobile payments solution (click here for quick description of NFC technology). 

If you're into mobile payments, there were lots of interesting articles on the topic published last week.  If you're not, take a look at one or two of the summary articles listed below:

The Guardian's Mobile phones bring the cashless society closer provides an overview of the ideas, concepts and issues associated with mobile payments.  Europe is farther along in the adoption of mobile payment technologies than the U.S., so it's useful to see what's happening there.

Singularity Hub's New Google Wallet Will Face Stiff Competition nicely reviews the Google Wallet and postions it against various competitors big and small.  The article also has 5 embedded, short videos illustrating different products. 

Waiting for the New Mobile Payments Frontier from the NY Times Bits blog has links to other stories.  It also points out that:

"The mobile phone will eventually take over your wallet, replacing your credit cards, cash and coupons. But it could be some time before this new type of transaction becomes an everyday reality."

Forrester weighed in on Google's announcement.  Google Is Right When It Says That Mobile Payments Are Just Starting describes why it will take a couple of years for NFC to become common and what Google is really after - data. 

Overseas Startups Moving to Silicon Valley

The Wall Street Journal's Overseas Start-Ups Move In covers the trend of international technology startups moving to Silicon Valley. 

The reason?  According to the article, they move "to get access to venture capital, top talent and other resources."  Interesting quote from the CEO of Trulioo on why he moved his company from Canada to Silicon Valley:

"The speed at which things move is quite key," said Chief Executive Stephen Uford, adding that he was able to accomplish in three months what would have taken years back home."

We've posted in the past about tech firms moving from Boston to Silicon Valley, and Silicon Valley firms moving so they can be in the same neighborhood or building as leading firms like Twitter and Facebook.

Even in the Internet age, location matters. 

Politics and Small Business Advocacy

Portfolio has an excellent article on the wide differences between what two of the leading small business advocacy groups - the National Federation of Independent Businesses (NFIB) and the Main Street Alliance - believe to be of importance to small business. 

For those not familiar with these groups, NFIB tends to lean Republican on most issues.  The Mainstreet Alliance tends to lean Democratic.  And yes, I know I'm way understating each organization's political orientation. 

As the Portfolio article points out, the small business sector is diverse.  So it comes as no surprise that different small business advocacy groups represent different political points of view. 

Because of this, we suggest you shop around before joining a small business association or advocacy group.  Since almost all DC advocacy groups are partisan, a good starting point is finding a organization that fits your political views. 

Top 10 Emerging Technologies 2011

Each year MIT's Technology Review chooses 10 emerging technologies they think will have the greatest impact on the world.  This year's top 10 are:

1. Social Indexing
2. Smart Transformers
3. Gestural Interfaces
4. Cancer Genomics
5. Solid State Batteries
6. Homomorphic Encryption
7. Cloud Streaming
8. Crash Proof Code
9. Separating Chromosomes
10. Synthetic Cells

IT and biology dominate the list, which is no surprise.  But it's interesting that 2 power related technologies are included. 

See the article for more details and videos on each of the 10 technologies. 

Global Middle Class Booming; Poverty Declining

The Christian Science Monitor's Surging BRIC middle classes are eclipsing global poverty does a great job describing the surging number of people entering the middle class around the world.  Key quote:

"By 2030, the global middle class is widely projected to at least double in size to as many as 5 billion – a surge unseen since the Industrial Revolution. This boom, however, is more global, more rapid, and is likely to have a far different – and perhaps far greater – impact in terms of global power, economics, and environment, say economists and sociologists."

This boom in middle class consumers is being driven by the impressive economic growth of the developing world, and in particular the BRIC countries (Brazil, Russia, India and China). 

The increase in the size of the global middle class is also resulting in declines in the global poverty.  According to the article:

"The world will, for the first time in history, move from being mostly poor to mostly middle-class by 2022, the Organization for Economic Cooperation and Development projects."

The rise of the developing world is one of the most important trends we follow.  Last year in the Intuit 2020 report we forecast that 1 billion middle class consumers would join the global economy by 2020.  The forecasts presented in this article are even more aggressive. 

Coworking Labs Blog is Back

After a 5 month break, our coworking project blog - Coworking Labs - is back.  We started actively posting on the site again last week. 

Our research focus for the next year is on the future of work, with an emphasis on the growing role independent workers and micro-businesses are playing in the economy.  We consider the coworking movement to be a leading indicator of this shift, which is why  Coworking Labs is back. 

In the coming months we'll be conducting another coworking census and releasing several research memos on coworking and related topics. 

We will, of course, continue to track and analyze the future of small business here on Small Business Labs.

If you're not sure what coworking is or want to learn more, this is a great time to visit Coworking Labs.

The Worst Predictions in History

The Guardian has a fun article reviewing the book History's Worst Predictions.  Key quote:

"As a new book, History's Worst Predictions, by Eric Chaline, shows, everyone from ancient prophets to modern futurologists have, more often than not, got the future spectacularly wrong."

I really like the article's (and the book's) comparison of modern futures techniques to those used during the Roman Empire:

"Futurologists now use complex computer models to make predictions but, as Chaline puts it, computers are often no better at discerning the future than "a sheep with a peculiarly shaped liver".

Computer models may not be more accurate, but they're a lot less messy. 

Acqui- Hires, LinkedIn Show It's 1999 Again in Silicon Valley

During the Internet bubble in the late 1990s, the demand for engineers was so strong that the valuation of early stage startups was based on the number of engineers they had on staff.

In an example of history repeating itself, the New York Times article For Buyers of Web Start-Ups, Quest to Corral Young Talent covers the growing trend of larger tech companies "buying start-ups to get their founders and engineers — and then jettisoning their products."

Both Business Insider and USA Today weigh in on this type of acquisition, which has the really bad name of acqui-hires. 

The going rate, BTW, is $500k to $1,000,000 per engineer. 

***Update:  I wrote this post yesterday and this morning LinkedIn's stock price doubled from yesterday's already impressive IPO debut.  Another sign it's 1999 again.***

To be fair, the current boom in Silicon Valley is much more grounded in economic reality than during the first Internet bubble.  But this can't be a good sign.

Provide Training Without Losing Productivity

Wouldn't it be great if everyone you hired could just sit down in front of a computer and start working immediately, with no training at all?  Sure, if you hire someone with experience, they can do that to a certain extent. But even people who've done the same job somewhere else before need to learn how your business runs.  Maybe you use different tools, or you have different procedures.  In order to fit in and be productive, a new employee will have to learn those things.

You may hire employees with little to no experience, but who exhibit good skills that can benefit your company. They'll need to be trained from the ground up. And longtime employees will also have a need for training eventually. It would be great if you could just send everyone to a business networking site and let them educate themselves, but that won't be enough. Your industry may change, new tools may become available, or you may just decide to change the way you do things in order to be more efficient or cost-effective.  How do you carve training time out of the workday and not lose productivity?

Group Training

If your business is the kind that won't suffer from having all your employees away from their workstations for a set period of time, schedule training during the day when business is slowest, and get it all done at once. Everyone receives the same training, everyone benefits from the questions and answers exchanged during the session, and everyone goes back to work more knowledgeable and ready to implement what they've learned together.

Individual Training

Maybe your business can't tolerate any downtime at all. At least one person must be available to answer phones, or to respond to customers. Try dividing the employees into smaller groups, and hold more than one training session. Depending on the size of your business, you may have to opt for individual training. It may take more time out of your own schedule to do it this way, but you'll know your employees are getting the training they need, and the business isn't suffering for it.

Off-Duty Training

This may seem like the least attractive option at first. Who wants to attend training during their off time? The key is to turn it into a team-building opportunity. You can hold training during the lunch hour, after work, or even on a weekend—just make sure you provide a meal and refreshments, and include some fun team-oriented exercises to keep it interesting. You may have to pay your employees overtime to conduct training this way, but the tradeoffs are there's no downtime time for your business, and your employees have a chance to build better relationships with each other and with you outside of work, leading to better working relationships.

No matter how you decide to go about it, providing training for your employees rather than seeking outside talent when you need it is making a smart investment in your business. It will also boost morale and foster loyalty in employees who appreciate being valued rather than being pushed aside in favor of others who have different skills. And that's the most important investment you can make in your business.

This post was contributed by Shawn Hessinger, community manager of BizSugar, an online community of small business owners.

The U.S. Manufacturing Renaissance

The strategy consulting firm The Boston Consulting Group released a study predicting that over the next 5 years the U.S. will see manufacturing boom.  The reasons?  Higher costs in China, more expensive supply chains and growing U.S. productivity. 

Key quote from their study press release:

"Products that require less labor and are churned out in modest volumes, such as household appliances and construction equipment, are most likely to shift to U.S. production. Goods that are labor-intensive and produced in high volumes, such as textiles, apparel, and TVs, will likely continue to be made overseas."

The big driver leading to higher overseas manufacturing costs are higher wages.  This is particularly true in China.  As a recent Wall Street Journal article points out, "Wages are rising in China, heralding the possible end of an era of cheap goods." 

The same article quotes William Fung, head of the giant manufacturing-outsourcing company Li & Fung, who is predicting "China's wages will increase 80% over the next five years."  Anyone out there think U.S. manufacturing wages will increase anywhere near 80% over the next 5 years? 

We first reported on the trend towards manufacturing returning to the U.S. in 2007.  At that time, the products coming back to the U.S. to be made had high transportation costs relative to the value of product, and/or small production runs.

The Great Recession slowed the shift back to the U.S., but it picked up with the economic recovery.  As we pointed out last year in The Trend Towards U.S. Manufacturing, this trend is accelerating and we expect many more companies will choose to manufacture in the U.S. in the coming decade.

Small manufacturers will benefit from this shift, and we expect this sector to show strong growth over the next decade.