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Westlake Legal Group > Entrepreneurship

A Hard Lesson in Silicon Valley: Profits Matter

Westlake Legal Group 08valley-facebookJumbo A Hard Lesson in Silicon Valley: Profits Matter Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck, titled “R.I.P. Good Times,” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups were focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he had already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality, and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he had been able to raise that money only because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy, and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth-at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing

Westlake Legal Group 08valley-facebookJumbo Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck titled “R.I.P. Good Times” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations, and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups are focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he has already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he was only able to raise that money because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing

Westlake Legal Group 08valley-facebookJumbo Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck titled “R.I.P. Good Times” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations, and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups are focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he has already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he was only able to raise that money because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

DC-born Bluemercury celebrates 20 years in the beauty industry this fall

Westlake Legal Group Marla_Beck DC-born Bluemercury celebrates 20 years in the beauty industry this fall style skin care shopping Profiles makeup locally owned Entrepreneurship cosmetics cosmetic company Business Bluemercury beauty products beauty industry Beauty
Photo courtesy of Bluemercury

Barry and Marla Beck first started Bluemercury as a neighborhood cosmetic company in historic Georgetown and now, exactly 20 years, more than 150 stores and several awards later, the husband-and-wife duo is stepping down. 

The recent announcement by brand owner Macy’s, Inc. came just after the company celebrated its 20-year anniversary this month. From the annual anniversary beauty bag to in-store events with well-known brands, CEO Marla Beck wanted this year’s celebration to stand out. 

Bluemercury, which is widely recognized as one of the nation’s largest and fastest-growing luxury beauty chains, also debuted several exclusive products in honor of the milestone, ranging from a dry shampoo bottle to limited-edition highlighter. Another addition this year includes the Blue Rewards program, which offers clients experiences like exclusive access to in-store events and new brand launches. 

“We wanted to launch a program that not only rewarded our clients for shopping with us through beauty reward cards, but through one-of-a-kind experiences,” says Beck. “We are the first retailer to go beyond treating our client to a birthday gift, but offering a birthday experience with a complimentary spa treatment and makeup service.”

While COO Barry Beck officially left the company on Sept. 20, to pursue new ventures, according to a press release, Marla Beck will continue as CEO until Macy’s, Inc. finds a replacement. 

Here, Beck shares her experience with the ever-changing beauty industry and what she hopes women across the globe will take away from her 20 years leading Bluemercury. 

For more beauty and style, subscribe to our weekly Shopping newsletter.

Westlake Legal Group new-and-featured-products-from-Blue-Mercury DC-born Bluemercury celebrates 20 years in the beauty industry this fall style skin care shopping Profiles makeup locally owned Entrepreneurship cosmetics cosmetic company Business Bluemercury beauty products beauty industry Beauty
These four products either received a new label or are brand-new to the shelves of Bluemercury, in celebration of the 20th anniversary. The R+Co Anniversary Death Valley Dry Shampoo, $32 (left); Lune+Aster Limited Edition Real Glow Highlighter, $34 (middle); LAFCO Bluemercury Spa Diffuser, $48 (top); Dr. Barbara Sturm Glow Duo, $375 (right). (Product images courtesy of Blue Mercury)

How has your strategy changed to match the current beauty trends over the years?
Our mission has always been to be the best at giving beauty advice and creating a friendly, open and energetic atmosphere around helping people find the best beauty products. We are always listening to what our clients and beauty experts are loving—and what they think is missing from our shelves. In 2012, clients were coming into the store looking for skincare with powerful ingredients but without parabens. This led us to create M-61 Skincare, which is the top selling line at Bluemercury today. We followed by launching Lune+Aster Cosmetics in 2015, a line of vegan cosmetics. As our client’s lifestyles shift, we make sure our merchandising shifts along with them.

What is it about your job that keeps you coming back to work every single day?
Our beauty experts and clients continue to inspire me and keep me motivated to bring them the best in beauty! My favorite part of my job is when I go into the stores and hear what they are thinking about and what they are interested in. One of the first questions I ask is, “What are you loving right now?” It tells you so much. So many of the ideas for new products come from our customers.

You’re a successful CEO at a booming company. How do you see that impacting young women right here in NoVA and across the country?
For young women, I believe it is important to see role models that look like you. When I was growing up, there were very few female leadersmuch less any female CEOs. However, it’s also important that young women know that Bluemercury was not an overnight success.  If you asked me 20 years ago if we would be here today, with almost 200 stores, I would have never believed it! I’ve had many failures in my life that brought me to this place today. I’ve also had countless people tell me no and that my idea for Bluemercury would never work, yet I kept pushing. I hope young women can see meand Bluemercuryand know that if they have an idea or dream to keep pushing, keep finding ways to move the needle day by day, to make it a reality.

What are you loving right now?

Westlake Legal Group primer_blue-mercury DC-born Bluemercury celebrates 20 years in the beauty industry this fall style skin care shopping Profiles makeup locally owned Entrepreneurship cosmetics cosmetic company Business Bluemercury beauty products beauty industry Beauty
Lune+Aster PorePerfect Primer. (Photo courtesy of Bluemercury)

Lune+Aster PorePerfect Primer
The new, vegan primer blurs and diffuses the appearance of pores, fine lines and wrinkles, while providing a gentle mattifying, ‘filtered’ effect. 

Hourglass Scattered Light Glitter Eyeshadow collection.
This limited-edition trio of weightless, micro-glitter eyeshadows—which includes two exclusive shades for Bluemercury—are infused with light-reflecting pearls to create high impact, sparking eyes.  

Heretic Parfum
A new addition to our conscious beauty program, Heretic Parfums are made entirely of naturally derived materials, blended in organic sugarcane alcohol. The ‘dirty collection’ is available in eight gorgeous scents.

Westlake Legal Group power-glow-peel-from-blue-mercury DC-born Bluemercury celebrates 20 years in the beauty industry this fall style skin care shopping Profiles makeup locally owned Entrepreneurship cosmetics cosmetic company Business Bluemercury beauty products beauty industry Beauty
The m-61 Limited Edition PowerGlow Peel is the company’s bestselling product. In honor of the 20th anniversary, the product is sold in special silver packaging. (Photo courtesy of Bluemercury)

M-61 PowerGlow Peel
This one-minute, one-step exfoliating peel resurfaces, clarifies and helps to firm the skin for a radiant, renewed glow. The No. 1 bestselling product in the entire Bluemercury store, with one box sold every eight seconds.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Blocked in Business, South Korean Women Start Their Own

HWASEONG, South Korea — At first glance, Energy Nomad appears to be a typical South Korean company: Just about everybody who works there is male.

Crusty engineers, mostly in their 40s and dressed in matching dark jackets and black pants, hover over its production lines in a factory outside Seoul, or work at nearby desks. The sole exception is one young women, who deferentially bows her head as a senior manager directs her into a meeting room.

But at this start-up, looks can be deceiving. The lone woman, Park Hye-rin, is the boss. She founded Energy Nomad in 2014.

“I may be able to encourage the next generation of women” said Ms. Park, 33. “More young women might join me in this community of the future.”

Ms. Park is one of a new wave of Korean women who are starting their own companies. Frustrated in their climb up the corporate ladder in a male-dominated business culture, they choose to find another way up.

“In education we are equal to men, but after we enter into the traditional companies, they underestimate and undervalue women,” said Park Hee-eun, principal at the venture-capital firm Altos Ventures in Seoul. “Women are disappointed with the working culture, so they want to make their own companies.”

In 2018, more than 12 percent of working-age women in South Korea were involved in starting or managing new companies — those less than three and a half years old — a sharp increase from 5 percent just two years earlier, according to Global Entrepreneurship Monitor. In Japan, where women face similar biases, only 4 percent are starting companies.

Similarly, a Mastercard report on 57 global economies last year said that South Korea showed the most progress in advancing female entrepreneurs, and that more women than men had become engaged in start-ups. Government statistics also show that a rising percentage of new companies, about a quarter, were started by women last year.

The trend could reshape a corporate world where discrimination against women is deeply entrenched. South Korea has been a marvel of economic progress over the past 50 years, transforming from one of the world’s poorest countries into an industrial powerhouse famous for its microchips and smartphones. But notions of women’s role in society have changed slowly, often trapping them in poorly paid jobs with little chance of advancement.

Only about 10 percent of managerial positions in South Korea are held by women, the lowest among the countries studied by the Organization for Economic Cooperation and Development, while the gap in pay between men and women is the widest.

These biases infect the start-up sector, too. Building a new enterprise is a risky endeavor in any circumstances, but South Korean women often are not taken seriously by male bankers, executives or even employees.

“You have to put extra effort into being a female entrepreneur,” said Kim Min-kyung, founder of a personalized lingerie company, Luxbelle.

ImageWestlake Legal Group merlin_152232144_39bcd9a1-5cd8-4caa-967c-0e0fa6d74b2b-articleLarge Blocked in Business, South Korean Women Start Their Own Work-Life Balance Women and Girls Venture Capital Start-ups South Korea Entrepreneurship Economic Conditions and Trends discrimination

“You have to put extra effort into being a female entrepreneur,” said Kim Min-kyung, who started a lingerie company, Luxbelle.CreditJean Chung for The New York Times

Ms. Kim, 35, was undeterred. By the usual standards of success in South Korea, she had already made it big, landing jobs at affiliates of the Samsung business group, among the most coveted positions in the country.

But she felt unappreciated within Samsung’s bureaucracy. Though Ms. Kim never faced overt discrimination there, she said, she also knew she would eventually smack into a very low glass ceiling.

“I thought I would not have a future as a woman at a more traditional company,” Ms. Kim said. “I thought I would not get a top position, so I had to go out and start my own business, sooner rather than later.”

A start-up, she added, “is my company, and I can do whatever I want.”

Ms. Kim quit Samsung in 2014 and started Luxbelle with a partner a year later. Its website guides women in choosing and fitting lingerie, under the brand name Sara’s Fit, which they can then buy online. From a bare-bones two-room office in a hip neighborhood in Seoul’s Gangnam district, Ms. Kim has tackled almost all aspects of the business — designing the lingerie, managing the website, raising capital and personally measuring customers who stop in for some offline attention.

This type of entrepreneurship was once a rarity in South Korea, for either sex. Still-conservative families tend to press sons and daughters to seek more predictable employment within the government or at the nation’s big enterprises. Venture capital was scarce in a financial system built to funnel funds to the large conglomerates, called chaebol, that dominate the economy.

The situation began to loosen up during the dot-com boom of the late 1990s. Entrepreneurship became more socially acceptable, even cool, and money became more widely available.

Social attitudes toward women are changing, too, though slowly. It remains common for parents and spouses to expect wives to carry the burden of child care and household responsibilities.

However, Lee Ji-hyang, an entrepreneur, said she believed South Korean society was becoming more understanding of women’s professional goals.

“There’s this notion of a superwoman who can perfectly juggle family and work life. She was the role model,” she said. “But now there’s also a notion that women handle too much.”

Ms. Lee, 28, started her company, Mark Whale, last year to market fragrances that she develops and mixes herself. From a desk at an all-female incubator in Seoul, she sold her initial product, a leather car freshener, mostly online.

Lee Ji-hyang, who started a fragrance company, Mark Whale, said she believed South Koreans were becoming more understanding of women’s professional goals.CreditJean Chung for The New York Times

“My husband and I are planning our future together,” Ms. Lee said. “When I was at a crossroads between getting a job and starting a business, I was encouraged by my husband.”

“I definitely think I’m part of the trend,” she added.

The government has stepped in to help. It wants more women to enter the work force as South Korea’s population ages and it looks for ways to keep its economy growing. According to the ministry for start-ups, the government earmarked $470 million to support companies run by women in 2019, 18 times the 2015 total.

Public institutions also budgeted $7.6 billion to buy goods and services from women’s firms this year. Since 2014, the state-linked Korea Venture Investment Corporation has allocated $35 million of government funds to venture capital firms to invest in start-ups founded by women.

But female entrepreneurs still face hurdles in a business world where hardly any women are senior bankers or executives.

Kim Min-kyung found herself in the uncomfortable position of discussing Luxbelle’s lingerie with venture capitalists who were almost exclusively male. “They don’t even understand that fitting a bra can be a business,” she said.

She was rejected so often, she said, “my confidence hit rock bottom.”

The networking and schmoozing that entrepreneurship often requires can be no less awkward. One of Ms. Kim’s investors, an arm of the Lotte business group, offered her office space at a business incubator. The male manager joined the other entrepreneurs there in after-hours beer-drinking outings, a common practice for office colleagues in South Korea. But Ms. Kim wasn’t invited, and was too shy to ask to go.

“If female entrepreneurs want to network with different people, they have to be assertive enough to put themselves right in the middle of the boys’ club,” she said. “It takes a lot of courage among female entrepreneurs to do that, and they find it difficult to start that process.”

Managing male employees can also be tricky, as Jihae Jenna Lee discovered. After more than a decade on Wall Street, Ms. Lee returned to South Korea and in 2015 started AIM, which offers computer-driven financial advice. Now managing $40 million from 4,200 investors, Ms. Lee and her six-member team operate the service — which she markets as a “hedge fund brain packaged as a mobile app” — out of a WeWork office in a popular shopping district of northern Seoul.

In 2016, she hired a senior manager from a Seoul brokerage firm to augment her start-up’s local expertise. But, Ms. Lee said, he had trouble accepting the fact that his boss was a woman. On one occasion, Ms. Lee felt he undermined her authority in front of the entire staff. When she raised the issue with him privately, she said, he apologized but then made his discomfort clear.

“He said, ‘I think I’m not seeing a woman boss,’” Ms. Lee, 39, recounted. The employee left after only three months.

Many men in South Korea “are not used to seeing a women in power, women who are making decisions, or women as a partner,” Ms. Lee said. “They’ve only seen probably one female executive in their whole lifetime.”

Many South Korean men “are not used to seeing a women in power,” said Jihae Jenna Lee, the head of AIM, a financial adviser.CreditJean Chung for The New York Times

There can hardly be a more extreme situation than Park Hye-rin’s at Energy Nomad. She is in manufacturing, a sector where women are especially scarce.

Her company engineered and produces a device that generates electric power when dropped into any moving water, sort of a portable Hoover Dam. Ms. Park got the idea while working for a private company cooperating with the South Korean government to build small-scale hydroelectric stations. Encouraged by the election of the country’s first female president in 2012 and increased government support for working women, she decided to start Energy Nomad.

Originally, Ms. Park envisioned the product as a clean, renewable source of energy for rural villagers in poor countries who lack access to regular electricity. But her customers are mainly American campers and others who are working or traveling in remote areas.

In 2018, Energy Nomad posted $2.8 million in sales, triple the amount from the year before. Ms. Park recently received a $165,000 investment from employees of SK Innovation, a South Korean energy company, which will also help Energy Nomad expand into Southeast Asia.

After designing the product with two partners, Ms. Park awoke to a serious problem: They had no clue how to manufacture it. That forced a significant change in the company. Ms. Park started to hire engineers with experience in operating a factory. In South Korea, those workers tend to be middle-aged men.

The ensuing clash of cultures — the young, bright-eyed entrepreneurs and the older, risk-averse production engineers — fractured the firm, Ms. Park said. Her original partners departed.

With that, Ms. Park found herself in a highly unusual position for a young woman in South Korea — managing a staff of 13 men, all considerably older than her. That situation has made Ms. Park feel isolated and insecure.

“I feel I have to grow as quickly as possible to be on par with my colleagues. Every morning I wake up feeling this way,” she said. “The most difficult part of the whole picture is that I don’t have any role models or female leaders I could look up to.”

Ms. Park is continually confronted by discrimination, she said. During meetings with businessmen and even her own colleagues, she is a constant victim of sexual innuendo and jokes, she said, but feels helpless to do anything about them.

“This sort of sexual harassment happens on an everyday basis,” she said, “and the men don’t think it is a big problem.”

The problems are all too obvious at the Energy Nomad factory. As Ms. Park’s meeting with her senior operations manager progressed, he dropped the honorifics in the Korean language appropriate for a chief executive and instead addressed Ms. Park as if she were a younger subordinate.

“Men don’t think of me as an equal even though I am the C.E.O.,” she said. Yet Ms. Park has believed she can succeed, to the point of selling her home and car to raise funds for her start-up.

“It’s very lonely doing this business,” she said. “The good thing is I could be a pioneer and show the others that we can expand our horizons.”

Su-Hyun Lee contributed reporting.

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Bad Times in Tech? Not if You’re a Start-Up Serving Other Start-Ups

SAN FRANCISCO — Things should be dismal in Silicon Valley right now, with technology’s biggest companies under attack from regulators, lawmakers and even President Trump.

Not for Henrique Dubugras and Pedro Franceschi. The two Stanford dropouts, both 23, are the founders of Brex, one of the hottest young companies today. Their start-up’s mission? To provide charge cards to other start-ups.

“We knew that if we could build what we wanted to build, people would want it,” Mr. Dubugras said. “We never had questions about that.”

Mr. Dubugras, sporting a black hoodie and tortoiseshell glasses, was speaking from Brex’s new San Francisco headquarters, where an orange “511572” mural displayed the bank identification numbers that appear on all its charge cards.

The two-year-old start-up moved into the sun-filled space this year as investors poured in tens of millions of dollars, valuing Brex at $2.6 billion — and making Mr. Dubugras and Mr. Franceschi worth roughly $430 million each on paper, according to EquityZen, a marketplace for private stocks.

Brex is an example of Silicon Valley’s unflagging start-up exuberance, even amid the Big Tech backlash. Start-ups raised $55 billion in venture capital in the first half of this year, the most since 2000, according to CB Insights and PwC. And a burgeoning class of these companies is thriving by catering to a fast-growing market: other start-ups.

Apart from Brex, there is Carta, which helps start-up employees manage their equity and is valued at $1.7 billion. There is Guideline, which provides retirement services to start-ups. There are Brex copycats. And there is InterPrime, which helps start-ups manage their “idle cash” and has more than 50 customers.

“Start-ups are great because they’re underserved and provide a lot of feedback to companies like ours,” said Kanishka Maheshwari, a founder of InterPrime, based in Menlo Park, Calif.

ImageWestlake Legal Group merlin_158397918_7f42787a-bc73-42a0-9c26-b720b62e7cd7-articleLarge Bad Times in Tech? Not if You’re a Start-Up Serving Other Start-Ups Venture Capital Start-ups San Francisco (Calif) Pedro Francheschi Outdoor Advertising Henrique Dubugras Entrepreneurship credit cards Computers and the Internet Brex

Brex’s founders, Pedro Franceschi, left, and Henrique Dubugras, in the private lounge they set up for their clients.CreditArsenii Vaselenko for The New York Times

Brex’s journey began in Brazil, where Mr. Dubugras and Mr. Franceschi were raised. At age 12, Mr. Franceschi gained notoriety for “jailbreaking” iPhones to remove their software restrictions. At 14, Mr. Dubugras created a gaming company that was later shut down over patent violations, causing what he joked was a “14-year-old life crisis.”

The two met on Twitter as teenagers and together built a payments start-up, Pagar.me, based in São Paulo. By the time they turned 20, they had sold it to Stone, a Brazilian charge card processor.

In 2015, they moved to Silicon Valley to attend Stanford University. Going to Stanford was a dream, they said, because of the TV show “Chuck,” whose protagonist was a hacker who studied there.

But after eight months, the pair dropped out. They were participating in Y Combinator, a start-up accelerator, with an idea for a virtual-reality company, Veyond. There, they noticed how difficult it was for entrepreneurs to get bank credit from traditional sources, which required a credit history and a personal guarantee. So they turned Veyond into a credit card company, which they later renamed Brex.

The idea was to appeal to start-ups by offering nearly instant approvals and requiring no personal guarantees. Brex struck a partnership with Sutton Bank, in Ohio, to issue the cards. To mitigate risk, the company constantly monitors customers’ bank accounts and adjusts credit limits. It also requires that the start-ups pay off their balances each month.

The cards cost $5 a year per user after the first five users, who are free. Brex would take transaction fees from merchants.

Mr. Dubugras and Mr. Franceschi became co-chief executives. Mr. Dubugras now handles partnerships, fund-raising and communications, with Mr. Franceschi focused on technology and operations.

Immediately, Brex had more demand than it could handle.

Brex’s advertising has helped raise its profile, drawing employees and more venture capitalists.CreditArsenii Vaselenko for The New York Times

“We call that ‘things are on fire,’” said Anu Hariharan, a partner at Y Combinator’s Continuity Fund, which invested in Brex. “Everyone wants it, and you’re like, ‘Oh, my god, I don’t know how to deal with this.’”

Among the start-ups that flocked to Brex’s charge cards were Hims, an online medicine provider; SoFi, a personal finance start-up; and ClassPass, a fitness company.

Another was Boxed, an e-commerce start-up in New York, which began using a Brex card a year ago to pay for items like inventory and digital ads. The card let Boxed sell some merchandise before paying for the goods, which freed up capital to fund more growth, said Chieh Huang, the chief executive.

Boxed, which has nearly $250 million in funding and more than $100 million in annual revenue, had an extremely high limit, Mr. Huang said.

“It’s so much that we don’t want anyone physically holding the card,” he said. “It’s, like, melting your hand.”

While growth took off, Brex initially struggled to recruit engineers because of the competitive talent market, said Larissa Maranhao Rocha, the company’s first employee and chief community officer. “You’d Google us and nothing came up,” she said.

Brex’s chief community officer, Larissa Maranhao Rocha, with Mr. Dubugras and Mr. Franceschi.CreditArsenii Vaselenko for The New York Times

That changed after Brex raised funding in February and October last year. Within six months of being in business, the company hit a $1 billion valuation. Its investors include Peter Thiel and Max Levchin, co-founders of PayPal.

Brex then went on an advertising blitz, covering San Francisco’s bus stops, billboards and airport terminals with its logo and tag lines like “The corporate card that actually lives up to the hype” and “Don’t charge it. Brex it.”

In November, Mr. Dubugras showed off the billboards at a conference, saying they were a cheaper way to reach potential clients and employees than digital ads. Afterward, San Francisco’s billboard prices rose, he said. Now he has a new rule: “Don’t talk about advertising that works.”

Today, Brex has 220 employees. The company estimates it will have just under 400 by the end of this year.

Brex’s rising profile soon drew more venture capitalists. Mr. Dubugras and Mr. Franceschi turned down many of them, but used the meetings to pitch their charge cards for the other companies that the venture capitalists had invested in.

One meeting was held at a cafe in San Francisco’s South Park, near the offices of more than 10 venture capital firms. It was crawling with entrepreneurs and investors, all potentially eavesdropping. So in March, Brex opened a private lounge, the Oval Room, directly above the coffee shop.

Named after the White House’s Oval Office and South Park’s shape, it is one of the perks that Brex offers its customers. Others include credits for cloud storage, discounts on WeWork office space and points for spending on scooter rentals.

Mr. Dubugras and Mr. Franceschi are enjoying some fruits of leading a hot start-up. Mr. Dubugras said he now bought subscription home-cooked meals for his Bernese mountain dog, Ruby, who is named after the coding language Ruby on Rails.

How long Brex’s success can continue is unclear. Since most start-ups fail, hundreds of Brex’s customers have gone out of business.

Brex tries to be understanding when that happens, Mr. Franceschi said. Unlike credit card providers that tell customers, “You’re running out of business, you didn’t pay us, I’m going to cut you off now,” he said, Brex sees failed entrepreneurs as future customers who may try again with a new idea.

Mr. Dubugras said he did not expect venture capital to disappear if things turned, and added that as long as Brex served the fastest-growing start-ups, it would be all right. Brex can usually tell when customers will run out of money, he added, because it constantly monitors their financial health and adjusts credit limits.

Brex moved into its new San Francisco headquarters this year.CreditArsenii Vaselenko for The New York Times

But just in case, Brex, which is unprofitable, has stockpiled money. In June, the company said it had raised another $100 million from investors, including DST Global and Kleiner Perkins. That brought its total funding to $315 million, including debt.

Neil Mehta, an investor at Greenoaks Capital, which led Brex’s funding round in October, said he was taken by the start-up because it offered a “J.D.C.E.” — jaw-dropping customer experience — comparable to the first time he used Uber or drove a Tesla.

“It’s just the beginning” for Brex, Mr. Mehta said.

This year, Brex also started working with life sciences and e-commerce companies; the latter now make up 30 percent of its business. Some publicly traded companies have asked Brex about its card, but the company has turned them away.

As Brex gets bigger, it’s crucial to stay disciplined, Mr. Franceschi said. In Silicon Valley, “it’s easy for you to kind of get your feet off the ground and forget what matters,” he said.

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Kamala Harris fails spectacularly in Pell Grant reform roll-out

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Senator Kamala Harris released her plan for a student loan debt forgiveness program for Pell grant recipients. She posted a tweet announcing her oddly specific plan and its requirements. The reaction to her plan didn’t go well. The responses came fast and furious.

While potential voters are hungry for specifics from candidates in their plans, as a general rule, Kamala’s specifications for those qualifying for loan forgiveness are so specific that not many people will qualify at all. The major stumbling block for people interested in the program rests with one requirement – recipients must successfully open businesses in underserved communities and operate those businesses for three years. Her plan is meant to close the opportunity gap for black Americans. Wait. Isn’t that racist? Isn’t she running to be president of all Americans? As it is now, the majority of Pell grants go to black students.

Her supporters say the Pell grant plan is but a part of a much bigger plan.

Harris’ plan may have the potential to help more people than the dozen or so her critics contend it will. Pell grants (a type of federal student aid for undergraduates that are given out solely on financial need and do not need to be paid back) are the largest source of federally funded grants: Seven million Pell grants were distributed during the 2017 to 2018 school year. The maximum Pell grant award for the 2018 to 2019 school year was $6,095; recipients of Pell grants can also receive federal student loans that need to be repaid. According to data from the 2015 to 2016 school year, 72 percent of black students received Pell grants, compared to only 34 percent of white students.

In addition, according to data from the Small Business Administration, about half of small businesses survive five years or longer. Even if just a small fraction of Pell grant recipients go on to pursue entrepreneurship, these statistics indicate that Harris’ plan could have the potential to help thousands of economically vulnerable entrepreneurs get student loan debt forgiveness.

The bigger plan aims to focus on entrepreneurialism. Her intention is to allow participants in the debt forgiveness program to defer their student loan payments interest-free for up to three years. This gives them time to build their business. The program also allows up to $20,000 in federal student loans forgiveness, as Pell grant receipients can also take out other student loans. Pell grants, by the way, do not have to be paid back. The survival rate of new small businesses is about 50%.

Pell grants are the largest source of federally-funded grants. What I am taking away from her plan is that this is an incentive for those burdened with student debt to strike out and make their own opportunities. I’m not quite sure why she drags Pell grants into the equation, as they don’t have to be paid back and I assume most aren’t. Pell grants are given solely on financial need. Only those who fail to complete the academic period for which the Pell Grant was awarded have to pay the grant back. Kamala’s plan allows those new business owners who survive the first years to get student loan forgiveness.

The catch for most new entrepreneurs is the difficulty of securing funding if the person has outstanding debts. A greater percentage of black students have student loan debt than white or Hispanic students – 40 percent of black Americans between 25 and 55 years old have student debt, as opposed to 30 percent of whites and Latinos. Frankly, I’m surprised those numbers are not higher – to hear the Democrat candidates talk, you would think that every graduating student is drowning in student debt. The grand total reported is 45 million Americans owe a total of $1.56 trillion in student loans.

There are other provisions in the senator’s plan – she wants to bring back the State Small Business Credit Initiative, reform Opportunity Zones programs, and expand the entrepreneurship centers at HBCUs. She wants to allow students to re-finance financial debt at lower rates. She supports “free” community college and helping students receive a four year college education while graduating debt-free. She veers from some of the other Democrat candidates in that she doesn’t support forgiving any existing student debt. So, this plan doesn’t address the overall problem of the $1.56 trillon outstanding debt that already exists.

In contrast, for example, Elizabeth Warren wants to cancel 95% of student loan debt and increase the Pell grant program with $100 billion. She wants to make all public colleges tuition-free. And, she is in favor of forming a $50 billion fund for HBCUs. Thanks, new wealth tax proposal for the ultra-rich.

All said, these new entitlement programs proposed by Democrat candidates to pander to various segments of the voting population do nothing for those students who took out loans to go to school and then followed the rules and paid them back. Why is the next generation entitled to breaks that the rest of us didn’t have when it comes to establishing personal responsibility and future debt obligations? Socialism is great as long as we don’t run out of other people’s money, to paraphrase the late Margaret Thatcher. The money always runs out.

Maybe someone will ask Harris to drill down a bit on her plan during this week’s round of debates. This lame roll-out produced more questions than answers.

The post Kamala Harris fails spectacularly in Pell Grant reform roll-out appeared first on Hot Air.

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