Startup Entrepreneurs

Linkibuzz Edition 20

Linkilaw Business News

Welcome to this weeks Linkibuzz.

 

Our first featured story for the week explores a lawsuit against a company in New York called Beanfields that is accused of false advertising.

 

Our second story looks at some sage advice by former Netflix Chief Talent Officer Paddy McCord on how to rapidly grow and scale a company. This is one article anyone looking to grow their business should read.

 

Third, we have an interesting story about the startup scene developing in China. Opportunists there are making progress by embracing aspects of capitalism. This story looks at how China’s federal government is encouraging this start-up boom.

 

Lastly, we take a look at how Software as a Service (SaaS) startups that are cash strapped are turning to a tactic used during the 1900s by oil and gas barons to finance their startups. It’s an interesting read about a financing option that is only available to businesses with a specific model of revenue generation.

 

Consumers Accuse Beanfields Snacks Of False Advertising

 

Recently in New York, a lawsuit was launched against a snacks company with consumers claiming the company is guilty of false advertising.

 

The company in question is Beanfields and consumers are claiming that the company has violated New York’s consumer protection law. Specifically, the claim boils down to the company advertising that they use all natural ingredients in their products.

 

However, upon closer inspection, it was revealed that the company actually doesn’t use all natural ingredients. In fact, it was found that ingredients like citric acid, lactic acid, malic acid, and tapioca maltodextrin have been used. These are all considered to be synthetic ingredients.

 

Looking at this it seems like a very clear-cut case of blatant false advertising. The bottom line is that all companies should heed the lesson in this, which is to never make false claims in your advertising.

 

It’s dishonest and it’s only going to hurt your brand. Furthermore, you risk being sued as what is happening to Beanfields Snacks right now.

 

Former Netflix Chief Talent Officer McCord Has Sage Advice For Startups

 

Former Netflix Chief Talent Officer Patty McCord is one of the genuine experts in Silicon Valley on rapid growth and scalability for startups.

 

Communitech will be holding its annual Waterloo Innovation Summit 14 September. The theme of the summit is identifying the top startups in the region and helping them become tech companies that can be sold for at least $1 billion.

 

It’s a big task and one that McCord has a lot of experience in. She’ll be speaking at the summit and imparting her wisdom on everyone there about what it takes to rapidly grow a company.

 

One of the things she notes from her experience is that many startups start experiencing complexity problems when they start scaling and growing rapidly. In turn, many startups turn to new processes and procedures that actually stifle the growth of the company.

 

This is just one of many observations she has seen throughout her 14 years working in this industry. We recommend you read the rest of the article to see her advice for growing a startup rapidly and scaling without experiencing complexity problems in the process.

 

Venture Communism: How China Is Building A Start-Up Boom

 

China has an economy that continues to grow and a large reason why is because of the nation’s willingness to embrace capitalist reforms. However, this is not something seen in every city in China but rather a select few.

 

One of those cities is Hangzhou where more than 710 startups are being nurtured in the hope they’ll grow to be mega-companies. Specifically, the government of the Hangzhou region is actively encouraging a culture of startups and growth by giving certain benefits and incentives.

For example, many startups are given subsidies, cash handouts, and special training to give them the best possible chance of succeeding. There are also incubators and accelerators in the city for the startups deemed most likely to succeed.

 

China is looking to add more to its commerce and it’s doing that via startups. More and more young people are being encouraged to pursue entrepreneurship. The government is also making it clear that it is willing to support people who want to build a successful startup with their many subsidies and cash handouts.

 

There are a lot of problems the government has experienced such as wasteful spending on companies that weren’t ever going to succeed. It’s a work in progress for China, but it’s very clear they’re looking to embrace startups and build a stronger and more thriving economy off the back of them.

 

Cash Strapped Startups Are Turning To A Tactic Used By Oil And Gas Companies In The1900s

 

Most SaaS companies have a solid revenue generation model. They charge for a recurring service in exchange for memberships or subscriptions for their software. It’s one of the best ways to generate revenue because of its predictability.

 

However, SaaS startups are not immune to funding issues like any other company. They do have an advantage that many other startups don’t have and that is the way they can get funding. Specifically, what many do is take out revenue based loans that are financed against future revenue streams.

 

It’s an advantage most other companies don’t have and it’s actually a financing model that was first used in the 1900’s by oil and gas barons. One disadvantage with this type of lending is that interest rates are far higher than typical financing models. However, for many SaaS startups, this is offset by the fact that they’re not dealing issue equity to investors.

 

It’s a matter of taking the good with the bad for many SaaS startups. It’s an interesting way to finance a startup and one that most startups cannot turn to. It’s certainly an advantage that SaaS startups have for gaining funding when they’re cash strapped.

 

Closing

 

We hope you enjoyed our featured stories for this week.

 

Our first story explored a lawsuit against Beanfields Snacks for false advertising. The bottom line here is don’t engage in false advertising or anything dishonest.

 

Secondly, we looked at some great advice by former Netflix Chief Talent Officer Paddy McCord that will help any CEO’s looking to grow rapidly and scale.

 

Third, we looked at what China is doing to encourage and foster a startup boom. Lastly, we saw how SaaS startups that are cash-strapped are in a unique position for securing financing that few other startups can secure.
Thanks for reading and stay tuned for Linkibuzz #63 next week.

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