Australian fashion startup and former industry trailblazer Shoes of Prey has collapsed into liquidation, ending months of uncertainty surrounding the startup after it was put on “pause” in August last year.
Employers found to have engaged in serious and deliberate underpayment of migrant workers could face jail under a crackdown signaled by the government to introduce criminal penalties into the Fair Work Act.
Business owners who built e-commerce websites through platform provider Neto claim they’re being “gouged” by a sudden change in its pricing structure that will leave them thousands of dollars a year worse off.
Australian food icon Maggie Beer has sold the final half of her eponymous gourmet products business to ASX-listed food and beverage group Longtable in a deal which marks the end of an era for the much-loved brand.
In a landmark ruling, the Federal Circuit Court has handed down $329,113 in penalties against online fashion retailer Her Fashion Box and sole director Kath Purkis for underpaying an intern and two other workers.
In an ideal world combating cyber crime in business would be a multi-disciplinary in-depth approach, with security built into technology and staff enabled - and empowered - to detect and respond to where technology can’t.
Cyber security can be perceived as being too hard to manage and a drain on people’s time. There can be a general perception cyber incidents only happen to ‘someone else, not me’ or are someone else’s responsibility - which leads to complacency.
With the right approach a business’ people can be its biggest asset in the battle against cyber crime. The problem is many still don’t understand how cyber security is relevant to them or what they need to do to reduce the threat.
Women-only ride-sharing startup Shebah is launching a $3 million equity crowdfunding campaign to boost its tech and fuel overseas expansion, and to share the startup’s success with its community of supportive women.
Back in December 2017, when its price reached close to US$20,000 ($27,700), Bitcoin looked like it had finally disrupted financial markets with the potential to enter the mainstream. A year later and things looked quite different. Bitcoin is now steadily trading below US$4,000 and has beenconstantly on a downward rideover the last year, losing more than half of its market capitalisation.
And yet cryptocurrency enthusiasts seem to ignore the fact that Bitcoin could yet enter an even more extreme death spiral. Bitcoin is not the only cryptocurrency whose market capitalisation has been hammered. Sell-offs have happened across the board, with the price of major alternative coins such as Ripple and Ethereum falling in the past year.
It is not clear what the catalyst was for these price drops and selling. But what is clear is that cryptocurrency prices struggle to find a floor for a number of reasons. These range from the rising cost of mining, regulatory concerns, market manipulation, speculative trading, sky-high power consumption, and the increasing scepticism from both the public and the world’s established financial industry.
1. Rising cost of mining
If its price continues to drop and the mining costs do not fall to the same extent, the incentives to update the public ledger and validate transactions can quickly disappear, threatening the very existence of Bitcoin as a viable payment system.
Bitcoin is dependent on a system of miners that verify transactions and record them on a digital ledger called the blockchain. This prevents copies being made of the digital tokens. As a reward for the energy and time involved, miners are rewarded in Bitcoin.
But the amount of work involved in mining keeps increasing (making it more costly), as the mining process was always designed to get more and more difficult, to limit the number of new Bitcoin that get issued. Seeing as mining requires vast amounts of energy, a number of miners have shut down their operations, as Bitcoin’s declining value has made mining less profitable.
This is worrying for Bitcoin’s viability as there needs to be a minimum number of miners at work to maintain the public blockchain ledger. Without the mining activity, cryptocurrencies are just a set of encrypted numbers with no value. Any rational investor would stand clear of mining if the cost of mining is higher than the future price.
2. Regulatory concerns
Regulators across the world are beginning to act on cryptocurrencies with diverging views. While countries like Switzerland and Malta are trying to become hubs for cryptocurrency businesses, others like China and the US have cracked down on cryptocurrency markets.
A case in point comes from the US markets regulator, the SEC. It announced in November 2018 that operators of two initial coin offerings (ICOs) must pay fines and restitution as they broke the law by selling unlicensed securities. This hardly comes as a surprise. In fact, it is likely only the beginning of a decisive intrusion of regulatory bodies in the opaque ecosystem of ICOs. Such a development might be enough to spook some investors to abandon cryptocurrencies altogether.
Advocates of cryptocurrencies insist that more institutional investors will get involved in the space thanks to new products such as crypto-specific exchange-traded funds (ETFs). They expect these to take off in the same way that ETFs have become massively popular for conventional investors. But the SEC has not approved any crypto ETFs, and it would be overly optimistic to assume that this will happen in the near future.
3. Market manipulation
Market manipulation and speculative activity are also important concerns when it comes to the crypto market, which could have been priced into recent performance. Myrecent research showshow well-informed traders buy cryptocurrencies in bulk, which pushes the price up and gets other buyers to follow suit, until the well-informed traders sell and send the price down, which again everybody follows.
Again, this hardly comes as a surprise. Cryptocurrency markets are incredibly opaque. Anyone paying attention to cryptocurrency trading knows that this kind of pump-and-dump activity and fictitious orders are designed to artificially move prices, exacerbating price swings at the expenses of, perhaps unsophisticated, retail investors.
4. Power consumption
A third concern behind the constant price drop is the increasing costs of equipment and electricity. Bitcoin mining is incredibly power hungry. And this power demand is becoming so high in regions where mining is concentrated, such as Canada, that authorities are starting to deny supply to mining facilities.
Again, this could threat the very survival of any cryptocurrency which is based on mining. This represents the vast majority.
5. Industry scepticism
Large drops in prices are accompanied by a persistent scepticism around cryptocurrencies. To some extent this is due to the fact that the promise to bypass the mainstream, centralised economic system and enable peer-to-peer payments has been disappointing so far.
Major players in the world of finance, such as Berkshire Hathaway’s Warren Buffett and JP Morgan Chief Executive Jamie Dimon, constantly express their deep scepticism of cryptocurrencies, suggesting Bitcoin and the likes still face an uphill battle for acceptance.
The one upside to all this is that, although cryptocurrencies may have entered a death spiral, the blockchain economy is here to stay. As well as allowing safe peer-to-peer lending and transactions, it is being used to build more efficient supply chains and in the evolution of the internet of things—to name just a few of its applications. This will only grow as it is applied to everything from education to the media.
Global sportswear company Nike has found itself courting controversy for the second time in six months, with an online petition calling for the recall of one of its products due to it resembling the Arabic word for Allah.
In 2015, Kirsten Kore was looking down the barrel of her future at two potential career options: take a big promotion at the real estate agency she worked at, or quit, take a big pay cut, and dive into the world of startups for the first time.
Naturally, she took the second option.
Kore is the co-founder of peer-to-peer dress-sharing marketplace Designerex, which allows women to rent out their unused dresses to other women for a fee, providing an alternative to buying a new dress every time another event comes around.
Like many founders, Kore’s idea for Designerex was sparked from her own experience after she was faced with the prospect of shelling out $1,000 for an awards night dress.
“I was questioning if this was really a good purchase because I was only going to wear this dress once, so I was chatting with the girls in the office and I found out you could rent dresses through people on Facebook,” she tellsSmartCompany.
“So I rented a dress from a girl, and found it wasn’t very secure, I had to email her my credit card details. And that’s when I had the idea for Designerex.”
The rise in dress-sharing has been fuelled twofold by social media, says Kore, as not only has Facebook provided a rudimentary platform for women to swap clothes, but it’s also driven the constant need to be seen in a different dress at each event.
The Designerex platform removes the social media aspect completely, and makes the process much more secure, as Kore and her co-founder Costa Koulis built the online marketplace from the ground up, choosing to use the same programming language as other famous sharing-economy startups such as Airbnb.
“We’re both non-technical founders,” Koulis says. “We knew tech was going to solve this problem, but we didn’t know exactly how.”
The ‘chicken and the egg’ issue
Both founders believe it was only a matter of time until the sharing economy infiltrated industries such as fashion. Kore says fashion has a number of “underutilised assets”, but believes the onset of the sharing economy was slowed due to the difficulty of building a two-sided marketplace.
However it’s a hot area for millennials, who Kore and Koulis believe are more focused than ever on improving their spending habits, leading the rise in platforms such as Afterpay.
“In 2015 I tried to justify that initial $1,000 purchase, and I came up with a better solution, which is a key part of adopting the sharing economy,” she says.
The Designerex platform. Source: Supplied.
The two are currently in New York overseeing the launch of their startup in the US, which they claim makes them the only company in the dress hire industry to head global. Currently, Designerex is growing 100% year-on-year and has over 11,000 dress listings live on the site.
Koulis says the company’s involvement inAustrade’s Landing Pads programwent a long way to kickstarting its growth in the States, providing them with the resources and connections to help get them off the ground.
Acquiring new users in the US marketplace is a focus for Designerex, with the inherent dual-market “chicken or egg” issue being something the startup has planned to combat.
“The problem with needing both renters and dress owners is that you can be left with one side of the marketplace without the other if you launch all at once. We didn’t want to launch with zero users,” Koulis says.
“To overcome this we’ve launched the platform in early-access mode so people can list dresses but not rent them. This technique is applicable to a lot of different two-sided marketplaces.”
$1.2 million raised
So far Designerex has raised $700,000 in seed capital and is currently $500,000 deep into a second seed round. Both the founders work full-time on the business, saying it’s non-stop work to keep developing features and building out the site’s backend with the help of some developers based in Nepal.
“We’re even thinking about implementing AI into the platform through optimising dress selection and pricing,” Kore says.
As a young founder, 29-year-old Kore says the best thing founders can do is “just get going” and start developing their business as quickly as possible. She also advises founders to network wherever possible, as you never know when a meeting will open up a door.
“It’s about persistence, learning from your mistakes, and learning from adversity,” she says.
The consumer watchdog has issued a stern warning to franchisors failing to act in good faith with franchisees following a whopping $2.6 million fine against car-repair business Ultra Tune.
Last Friday the Federal Court ruled that Ultra Tune had breached both the Franchising Code of Conduct by failing to act in good faith with franchisees and Australian Consumer Law by making false or misleading representations.
The ACCC alleged Ultra Tune made false or misleading representations about the nature of a franchise business to a prospective partner in 2015, including the price of the franchise itself.
The case was the first time the ACCC has brought proceedings against a franchisor over franchise code obligations for franchisors to act in good faith in their dealings with franchisees.
Experts say the ruling is likely to encourage the regulator to pursue other franchisors over possible code breaches, particularly in relation to disclosure obligations, which have emerged as a key concern in evidence provided to an ongoing Senate inquiry into the sector.
Jenny Buchan, a UNSW Business School professor and franchise law expert, tells SmartCompany the ruling is a “long time coming”.
Buchan says the ruling helps to clear up some legal uncertainty over good faith provisions in the franchising code which have previously provided franchisors with legal wiggle room.
“If the judge writes up the full judgement explaining the reasons it will be hugely beneficial to the franchising community,” she says.
Well-documented cases of other franchisors failing to act in good faith in franchisee dealings could also be followed-up on by the ACCC, Buchan says.
“The [ACCC] will be looking very carefully at complaints received about the same conduct.”
Commercial lawyer Richard Pragnell of Viridian Lawyers says the action makes it clear the ACCC is taking a tougher approach to franchisors.
“The obligation of good faith in contracting is something that has been picking up legal gravitas lately,” he tells SmartCompany.
“I’d encourage franchisors to have a close look at their sales processes, there is often a disconnect between the salespeople on the ground and the lawyers who prepare the contracts.”
In a statement about the case, ACCC deputy chair Mick Keogh said franchisors are often in a stronger position during negotiations with potential partners.
“Franchisors often have the stronger bargaining position in their dealings with franchisees, which is why compliance with the franchising code and the Australian Consumer Law is so important,” he said.
“This outcome should be a strong reminder for franchisors to meet their disclosure obligations or face serious consequences.”
Ultra Tune, which has more than 200 franchises across the country, was also found to have attempted to mislead the Court in its defence by arguing it sent disclosure documents to the prospective franchisee.
“The cover-up that Ultra Tune attempted reflects a significantly heightened need for deterrence, in relation to conduct that was already a most serious and fundamental breach of the franchising code in taking the deposit in the first place, reflecting as it does Ultra Tune’s attitude in relation to its contravening conduct,” Justice Bromwich said.
In a statement an Ultra Tune spokesperson said it has recieved preliminary legal advice and is considering an appeal.
“In light of adverse findings made by the Court about evidence on behalf of the company, executive chairman Sean Buckley has decided to engage an independent outside lawyer (who has had no previous association with the company) to investigate and review all aspects of the case, including evidence given on behalf of the company and the carriage of the case by the company’s former lawyers. The independent lawyer will report findings directly to Mr Buckley,” the spokesperson said.
“The case touched on a number of issues including, inter alia, the level of detail provided in Ultra Tune’s marketing fund accounts where the ACCC decided to run a test case. At all times Ultra Tune had engaged and relied on its external advisors to ensure compliance with the Code’s marketing fund accounting requirements.
“The Franchising Code of Conduct did not prescribe the level of detail which the ACCC submitted to the Court should be provided in marketing fund accounts.
“Nor had the ACCC published any guidelines consistent with the ACCC’s submissions to the Court. The company believes it is regrettable that the ACCC decided to regulate by running a test case, rather than publishing appropriately detailed regulatory guidelines for franchisors and their advisors to follow.”
It’s a familiar story. A glamorous 20-something entrepreneur has a great idea, moves to Silicon Valley, makes millions working four-hour weeks and retires at 30. It sounds so easy — just about anyone can do it. But there’s a lot more to starting a business than these ‘success stories’ would have you believe.
What's the secret ingredient to a killer presentation?
Confidence. Every great presentation has a foundation of confidence.
But, if the thought of presenting has your knees knocking, never fear, there are some tricks of the trade you can learn. By harnessing your passion and tapping into some simple communication skills, you can manage fear and pull off a winning presentation with confidence.
There will be an election in 2019, and at some stage, we will be conducting a mail out to selected marginal seats highlighting the policies of COSBOA and comparing these to the policies offered by the major parties.
Over the last 12 months, SmartCompany and StartupSmart have published thousands of articles aimed at providing Australia’s smallest and fastest-growing businesses with the all the essential information and advice they need to make their ventures succeed.