FTC cracks down on scammers, but only those not running Government agencies

The FTC conducted a sweep, (dubbed "Operation Short Change") going after scams involving job placement, government grant money (but not TARP, or PPIP, or any other four-letter acronymed government scam of US taxpayers), debt-reduction services, unauthorized credit and debit card charges. Hat tip to Felix Salmon for this, though he claims that the FTC is saying all business opportunities should be avoided, and then excerpts a selection that does not support his hyperventilation:

It doesn’t hedge, it doesn’t say that some are better than others — instead it says in a simple and forthright manner that if someone is advertising a “business opportunity”, even if it’s a celebrity like Adam West, you should run fast in the other direction:

 

Want to “be your own boss,” “work from home,” or just “make extra money“? Then you may be tempted by an ad for a business opportunity. Before you open your checkbook, check out the offer. Fraudulent business opportunity promoters use the classifieds and the Internet to tout all kinds of offers, from pay phone and vending machine routes to work-at-home businesses like medical billing and envelope stuffing. Too often, these ads make promises - about earnings, locations, merchandise, or marketability - that sound great, but aren’t truthful. The result: consumers are getting ripped off, losing money instead of making it.

Umm, it says: "Before you open your checkbook check out the offer. Fraudulent business opportunity promoters...." That sounds like one giant "hedge" to me. But perhaps Salmon is referring to some other text not quoted.

If you think any of the business opportunities we list are scams, please say so in the comments or send us an email. We applaud any effort to bust criminals and ripoff artists of any stripe. They just seem such small potatos ($ millions) compared to the much larger government operated scams and ponzi schemes ($ trillions) — the current stock market Government-manipulated crap rally, their attempts to reinflate the housing market, social security, US treasuries, the bank bailouts, detroit, and on and on.

But I digress. Go FTC!

Update: And here is another writer taking issue with Salmon on the same post.

It's where [Salmon] calls for heavy regulation (why don't we just go out say ban) for "business opportunity scams". You know, get-rich-quick type offers. That I think most people with two bits of common sense simply laugh at. It sounds righteous to say these are bad, so let's heavily regulate them, but with such action you will end up creating a nightmare for a lot of more reasonable business opportunities, adding legal fees (to cover your butt ahead of time) to, say, a fledgling franchise business.


Give me Kate Winslet or Give Me Death

With job losses in the US hitting men disproportionately (9.8% for adult men versus 7.5% for adult women) it is not surprising that the topic of stay-at-home fathers is a good topic for churning out some copy.

Interviews with those who have actually decided to stay home or spend more time with their kids like to bring up the fear of being judged in the playground (versus the more exciting prospect of hooking up with Kate Winslet). Focusing on the role of men as "caregivers" — a passive and unappealing description of a job category — does not help sell the proposition. 

 

Still, according to this CNN CareerBuilder poll, the number of men who would leave their jobs if their spouse made enough money to support the family has declined from 49% in 2005 to only 37% in 2009. But 30% of those surveyed would take a pay cut to spend more time with their kids -- of course, once faced with the 100th repeat of Barney, actual behavior may vary. And I suppose the other 7% plan to spend no more time with their kids but a lot more with their TV. 

 



Test Posting

We are doing some updates to our blog. This is just a test.

More testing.

More testing. Like really .


ZeroHedge, our new favorite economics & trading blog

ZeroHedge. The blog seems to have been started only in January of this year but appeared fully-formed and became an instant must-read. It's fairly, though not-unreadably, technical, and rather pessimistic, which matches my mood, so perhaps I'm a fan from confirmation bias.

The background of the author, Tyler Durden -- a pseudononymous Fight Club reference -- is unknown, although the timing of his appearance would suggest perhaps a laid off Bear Stearns or Lehman trader or similar? Or maybe A crypto-Goldman Sachs plant seeking to first impress, persuade and then ultimately betray his growing legions of readers?

Either way. I'm hooked.


Twitter launches job search

From TechCrunch Twitter has launched jobsearch tool. Although there is tons of competition in this space (dont' we know it!), given Twitter's scale they should be able to get some instant traction. And jobs are usually a nice earner so they could use it!

Another site Jobaphiles is targeting students.


The last time the Dow Jones Industrial Average Was this low was...

I got tired of looking a Yahoo finance and eyeballing stock market prices to see how far back we have to go to get to today's prices. So, at the suggestion of a friend we whipped up a mini-site to answer that question.

 Tells you when the DJIA last (well first really) hit the current price and how many years of investment gains (dividends excluded) have been obliterated.

 


Turker Nation

No, not the Mustafa Kemal Atatürk nation. They have their own communities. But Mechanical "Turkers"?... better than Mechanical Turkeys, I suppose, have a community: Turker Nation. Everything for requesting and providing services using the Turk.

We look forward to the day that Mechanical Turk has their own eBay Live-like convention. Even more, we look forward to the day when they stop holding the convention because it has grown too large and unfocused. Then the Turk will have truly arrived.


How Much To Show Your Face On Mechanical Turk?

The author topped out at $0.50 for users to hold up picture of them with a sign. But that only got him 20 submissions in two days. One can imagine all sorts of interesting experiments along these lines. File this one away for future use.

The Problem With Virtual Sweatshops

Our position is that the only problem with virtual sweatshops is that there aren't enough of them. Still, Katharine Mieszkowski's article for Salon on Mechanical Turk is a light, but interesting read; rightly pointing out how tight the economics are for anyone hoping to make a living from it in a Western country. But, this being Salon after all, it adds the "contractually required" shout-out to their anti-sweatshop readership.

To a labor activist like Marcus Courtney of WashTech, a tech workers union, the whole arrangement represents a dystopian vision of a virtual sweatshop. "What Amazon is trying to do is create the virtual day laborer hiring hall on the global scale to bid down wage rates to the advantage of the employer," he says. "Here you have a major global corporation, based in the United States, that's showing the dark side of globalization. If this is Jeff Bezos' vision of the future of work, I think that's a pretty scary vision, and we should be paying attention to that."

And

Rebecca Smith, a lawyer for the National Employment Law Project, seconds that. "The creativity of business in avoiding its responsibility to workers never ceases to astound," she says dryly. "It's day labor in the virtual world." Smith sees Mechanical Turk as just another scheme by companies to classify workers as independent contractors to avoid paying them minimum wage and overtime, complying with non-discrimination laws, and being forced to carry unemployment insurance and workers compensation. "It's an example of cyberspace overtaking a country's labor laws," she says.

Take as given a recitation of the endless, economics debates here. If you aren't convinced already, you will have to wait until you come back to life as a developing-world peasant farmer to achieve enlightenment.


Silicon Valley Start-Up Cost Cutting & Restructuring Action Plan

Last week’s doom & gloom CEO summits, venture capitalist advice and angel investor emails have shown how broad the sentiment is that Silicon Valley is going to go through a major business downturn. Taking the downturn as a given let's look at what you need to create an action plan on how to survive and prosper; it isn't enough to just cut costs and increase revenue.

In my 12 years in Silicon Valley, I’ve experienced the tough choices that have to be made for companies to survive. From restructuring my own venture backed company to being a senior executive as a public internet company during bubble 1.0, I’ve seen everything from multiple rounds of lay offs (the proverbial death by a thousand cuts) to default notices from venture debt providers to renegotiations with VCs and service providers. It can be a long tough road but it pays off for the survivors.

Below is a 7 step action plan for cost cutting and restructuring. No matter how my business was doing, I would take this opportunity to go through each of the seven steps and rethink people, expenses, processes and economics.

  1. Discontinue All Unprofitable Sales & Marketing Activities There is a very simple formula to determine what sales & marketing to keep or turn off. For marketing programs, if they are not ROI positive today, cease them immediately. For sales programs led by sales people, it’s a similar formula: Take the revenues brought in by the salesperson then subtract her salary, commissions, taxes, benefits, etc. As long as that person’s total compensation is substantially less than the sales he brings in, keep him. Otherwise, you’d be better off losing the sales in the short to medium term and conserving the cash.

  2. Stop Focusing on Product I know this is going to be antithetical to many start up CEOs. However, your VCs are focused on revenue and profitability right now. Hence, this is probably not a great time to heavily invest in the product unless you think those investments will pay off in near-term revenue.

    What you probably need at this point is a product person and a small team of engineers to maintain the product. Yes, I know how hard you worked to build a great engineering team. I did it too and when I had to let my engineering team go, I was in shock. It took me so much time and so much recruiting money to find a decent engineering team, it was difficult to even think about downsizing. Unfortunately, I couldn’t ignore the hard facts necessitating cash preservation. And frankly my users were more concerned that I could keep the product that I had running, rather than trying to improve it with an end result of not having it at all.

  3. Reduce Headcount Cutting staff is the hardest thing to do but it’s the most vital as well. Be bold. If you think you need to cut 20% of your work force, then cut 35%-40%. I’ve never seen a situation where I thought I cut too many people. Instead, I’ve had experiences where my superiors weren’t bold enough and we ended up doing layoffs four times within a few months. This was bad for morale, the bottom line and for the business.

    If there are a few folks that you think you could use short term but don’t really need in the long term, give them notice now but let them have a transition period. You don’t want to be faced with another round of cuts in a month or two.

    Outsource whatever tasks you can. Hire contractors - although some may seem more expensive than employees, you don’t pay them benefits, taxes, vacation, etc and you can let them go at anytime without the guilt of not paying them severance.

    You can also use this opportunity to upgrade your team. Take a few months, see how you do with a smaller team and if you have the luxury to hire again, you will probably find some great people.

  4. Keep the “Do-er” Employees What employees would I keep? I would keep the do-ers. The people who actually are on the front lines running the business day-to-day. People who are working with the customers, partners, vendors, etc. The ones that make stuff happen in the company.

    In today’s market, you don’t need a lot of senior people to ‘strategize’. You need people who are heads down executing. Specifically, in addition to the small engineering team and profitable sales people, I would keep some customer service reps, and a finance person who can aggressively renegotiate contracts and hawkishly watch the bills and cash burn.

  5. Renegotiate Contracts / Cancel Services Review every contract. Don’t assume that you’re stuck with long term contracts. Any deal can be renegotiated. Determine what your leverage is and how you can use it. From my experience, partners and service providers that agree to renegotiate sooner rather than later usually get the best returns.

    For services and partners that you no longer need, cancel them immediately. Do you really need that phone system? Are you using Omniture or can you just switch to Google Analytics? Do you need those additional seats in the CRM system? Is the SEO consulting firm making a real impact on your rankings? Do you have too much space for staff? Should you consider subletting? Ask the questions.

    For early contract cancellations, negotiate early exits even if you have to pay a bit upfront to get out. My general strategy has always been to explain to the partner that that they are lot better off getting something today then nothing tomorrow (and yes, that is a real possibility).

  6. Stay Ahead of VC Debt Issues If you don’t have any VC debt, you can skip this section. But I know many start ups today have VC debt, as I did. And you will have to deal with the consequences of having debt obligations as I did. When I told my debtors that I was no longer looking to raise another round of financing for my start up, but rather wanted to restructure the business to make it more viable, my top tier VC debt firm that was recommended by my VCs, sent me a letter of default and froze the company’s cash. I worked it out with them but it was a tough road and forced me to make decisions for the company that I wouldn’t have made alternatively.

    So many startups today have VC debt and with an environment where the VCs are publicly telling everyone that it’s going to be tough for startups to raise funds, the companies with only a few months of cash could be in some trouble from their debtors. Technically, if you or your investors think you can’t raise more money to keep the company in business, the debtors could determine that your business has had a material negative change and could ask for their money back.

    If you accept that theory, many VC debtors could start getting really nervous about their investments and start taking a much closer look at their portfolio and asking some pretty tough questions. Some of them may have the right to pull their funds. If you fit this category, engage your investors in talks with your debtors. Create a plan that will make your investors and VC debtors feel comfortable with your ongoing strategy but whatever you do, don’t sign away rights to your IP.

  7. Know Your Cash Position & Stretch Out Your Payments to Vendors Since cash is king so track your cash balance daily down to the last dollar. That means track uncleared checks, upcoming obligations, cost cutting expenses, etc. Extend payments to your lawyers, accountants, and other service providers who can afford to wait a month or two to get paid. Turn your payments into a net 90 payment cycle rather than a net 30. They can afford to wait and you can increase the flexibility of your cash flow.

Going through this action plan and doing everything on it is not easy. It emotionally heart wrenching but it has to be done if you want to come out on the other side and in one piece. You have to believe and make your team believe that this new thinking will make your company stronger and more efficient with the best chance for future success.