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Acquisitions of tech start-ups have fallen dramatically this year

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(This post originally appeared on The Washington Post)

It used to be that you could start a tech company, grow its value, then sell it for millions, even billions. Not so much nowadays.

According to this report on TechCrunch just 17 “well-funded” private technology companies were acquired for more than $100 million so far this year. Last year the same number were sold with valuations of $500 million or more. Through the end of July, there’s been on only one big “unicorn” ($1 billion valuation) deal — Cisco’s $3.7 billion purchase of AppDynamics. In 2016 there were six such deals.

So why the slowdown in tech acquisitions? “It could be happenstance,” David Blumberg, managing partner at early-stage firm Blumberg Capital told TechCrunch. “Or some sectors may be running into resistance due to high multiples.”

It’s not as if the money isn’t there. TechCrunch reports that more than 450 companies in many sectors each raised more than $20 million or more this year with 94 companies able to raise more than $100 million. That’s up more than a third over last year.

Big companies aren’t acquiring tech start-ups this year for a few reasons — and these apply to any business owner looking to sell this year.

Some are waiting to see where tax reform goes in Washington, where there’s talk of a potential dramatic reduction in tax rates on cash repatriated back to the United States (Apple, for example is sitting on more than $250 billion in cash overseas). Many venture-backed companies are choosing to stay private for as long as possible and avoid “sub-optimal” offers and return more to their original backers who hold shares. A few, like the real estate brokerage platform Redfin have opted for initial public offerings – although some – like Snap and Blue Apron — have been beaten up in the markets so far.

[For IPO-chasing upstarts, Snap and Blue Apron offer cautionary tales.]

But another, perhaps bigger factor is today’s tight labor market. With the unemployment rate at pre-recession lows, tech firms who hold out longer from being acquired can see the growing valuation of their company as a big carrot to keep employees motivated and reduce turnover. That’s a good strategy too.

Why owning a laundromat is not what it used to be

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(This post originally appeared on The Washington Post)

Once upon a time laundromats ruled the world. Or at least many large cities. Since the first automated laundry shop opened in Fort Worth, Texas in 1934 laundromats grew (with the help of technology) to a multi-billion dollar industry, made up mostly of mom-and-pop operators, around the country. Going to the local laundromat “became a fixture of the urban experience,” wrote Marc Vartabedian in The Atlantic. Things were booming for operators through the 1990’s and up until a few years ago.

Unfortunately, things aren’t what they used to be. Read More…

This start-up has promising marketing technology … but it’s only for Democrats

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(This post originally appeared on The Washington Post)

Hustle is a San Francisco-based start-up that wants to change the way companies and organizations market to their communities … through mass text messages.

“People don’t pick up the phone as much any more,” says the company’s co-founder Roddy Lindsay in this TechCrunch article. “Having a one-on-one conversation on text is the best way to get people to participate.”

The company, which just raised $8 million from a group of venture capitalists, offers a platform that lets users send personalized text messages to self-created lists of targeted customers and prospects. The software then enables a continuing one-on-one text conversation, via customized scripts, to nurture the relationship, gather data (including payment if desired) and connect further.

But there is one small catch. If you want to sign up for the service it’ll help if you’re a Democrat. Read More…

Locals pan new Brooklyn restaurant’s ‘bullet-ridden’ wall

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(This post originally appeared on The Washington Post)

If you’re thinking of starting a new business one day that pays homage to the area’s history, you may want to be a little careful about the history.

That’s what newbie restaurateur (and former tax attorney) Becca Brennan found out after opening Summerhill, a cocktail bar and “boozy” sandwich shop in Brooklyn’s Crown Heights section. Brennan, a transplant from Canada, thought it would be fun to promote her business by emphasizing the location’s dubious past as an illegal gun outlet. Her marketing plan didn’t exactly go over well with the community, according to this report from the New York Daily News. Read More…

Beer sales are down…especially among the millennials

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(This post originally appeared on The Washington Post)

Thinking of opening a craft brewery or a bar? You might want avoid targeting millennials in your marketing–and definitely cut back on the beer.

Goldman Sachs recently downgraded the stocks of two major brewers–Boston Beer Company (the makers of Sam Adams and Angry Orchard cider) and Constellation Brands (the third-largest beer company in the United States, and one known for importing Corona and Modelo)–due to “sluggish sales,” according to this CNBC report.  The culprit? Yeah, it’s the millennials. Read More…

The Senate prepares to vote on health care, and I’m starting to panic

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(This post originally appeared on The Washington Post)

As the Senate prepares to vote on whether it should bring its most recent — and likely doomed — health care bill to the floor for debate, I watch. With a growing sense of panic.

Like many other business people, I’m watching because our elected politicians are not only voting on a bill that affects almost 20 percent of the country’s economy, but also a big chunk of our financial statements. According to the Kaiser Foundation, approximately 46 percent of private firms in the United States offered health insurance in 2015. For those firms, the cost of health insurance is among the most significant of their business expenses. What about the other 54 percent that don’t offer health insurance? Not providing health care because of its high costs could put these firms at a serious disadvantage. Most workers want health care and tend to gravitate toward those firms that provide it. Read More…

A Wisconsin company offers to implant remote-control microchips in its employees

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(This post originally appeared on The Washington Post)

Would you ask an employee to get a microchip implanted in her hand? Sounds invasive and intrusive. But come Aug. 1, one company in Wisconsin will be giving it a try.

Three Square Market — a developer of software used in vending machines — is offering all of its employees the option to get a microchip implanted between the thumb and forefinger. It’s quick, painless and the company will even pick up the $300 fee. And don’t worry — there’s no GPS tracking capability … yet.

The company is expecting 50 of its employees to voluntarily sign up for the implants. Read More…