TIME Silicon Valley

How Google Perfected the Silicon Valley Acquisition

Signage outside the Google Inc. headquarters in Mountain View, California on Oct. 13, 2010.
Tony Avelar—Bloomberg/Getty Images Signage outside the Google Inc. headquarters in Mountain View, California on Oct. 13, 2010.

As tech's largest firms grow in scope and age, acquisitions have become an increasingly important maneuver

In late October John Hanke and several of his co-workers met for a reunion of sorts at Fiesta Del Mar, a Mexican restaurant near Google’s Mountain View headquarters. Hanke, a 10-year Google employee who led initial development of Maps, was once the founder of a small geodata startup called Keyhole that Google acquired in 2004. The fact that the one-time entrepreneur has stayed with the search giant for more than a decade makes him and his colleagues oddities in Silicon Valley. “There are quite a large number of [us] who are still at Google, and I have to say I don’t think anyone expected that when we first came in,” he says.

Google has used acquisitions to expand its workforce and launch new products since before it was a household name. Recently that strategy has become the modus operandi for technology firms in Silicon Valley. Facebook is using its fast-growing cash hoard to take control over sectors both adjacent to its core product (WhatsApp for $22 billion) and far-flung from social networking (Oculus VR for $2 billion). Microsoft, Yahoo and Amazon are doing the same, making big-ticket bets by buying Minecraft developer Mojang ($2.5 billion), Tumblr ($1.1 billion) and video game streaming site Twitch ($970 million), respectively. Even Apple, which long eschewed splashy acquisitions in favor of much smaller, less public buys, says it bought at least 30 companies during the last fiscal year, including the $3 billion purchase of Beats.

Overall spending on tech acquisitions topped $170 billion in 2014, up 54% from the previous year and more than double the amount spent in 2010, according to PrivCo, a research firm that tracks investments in private businesses. As the core of dominant technology companies get larger, they have come to depend on acquisitions not only to broaden their businesses but also to sustain the pace of innovation. “Companies are buying innovation,” explains Peter Levine, a general partner at venture capital firm Andreessen Horowitz. “As large companies need to be competitive and want to increase their footprints in a variety of different areas, one of the best ways to do that is through acquisition.”

The deals are a boon for startups as well. Venture capital is abundant, and companies can rely on investment rather than revenue to keep growing. If it’s not clear how a startup will eventually convert users into revenue, a buyout from a large firm can render that problem irrelevant—or at least less urgent. While investors and founders insist that launching a thriving self-supporting company is still the end-goal in Silicon Valley, “exiting” via a sale rather than an initial public offering can still net a lucrative payout. “It’s almost a goal for some of these companies as they start, to have that exit event,” says George Geis, a law professor at UCLA whose upcoming book, Semi-Organic Growth, analyzes Google’s acquisition strategy over the years.

But while snapping up a startup is now easy, holding onto its key employees is more difficult. Startup founders, who often think of themselves as entrepreneurs before engineers, are notoriously difficult to keep at large firms long. Partly, this is cultural: striking out on one’s own, idea in hand, is a fundamental part of the Silicon Valley ethos. The widespread availability of funding doesn’t hurt, either. That has left firms struggling to keep the expertise they may have spent millions acquiring. “When a firm is making a tech acquisition, they’re buying the talent as much as they’re buying the technology,” says Brian JM Quinn, a law professor specializing in mergers and acquisitions at Boston College.

A TIME analysis of startup founders’ LinkedIn profiles found that about two-thirds of the startup founders that accepted jobs at Google between 2006 and 2014 are still with the company. Amazon has retained about 55% of its founders over that time period, while Microsoft’s rate is below 45%. Facebook, with a 75% retention rate for founders, is beating its older competitors, but the company only began acquiring companies in significant numbers around 2010 or so. Yahoo and Apple, which have both gone on acquisition sprees under new CEOs Marissa Mayer and Tim Cook in the last two years, now have a similar retention rate to Google.

Google stands out among this cohort in large part because of the massive number of acquisitions it’s conducted. Overall at least 221 startup founders joined Google’s ranks between 2006 and 2014. Yahoo, the next closest competitor, added at least 110 founders to its employee roster in that time. Google’s internal calculation of its overall retention rate for startup founders through its history is similar to TIME’s, according to data provided by the company. Apple, Facebook, Yahoo and Microsoft declined to share any information on the retention of founders; Amazon did not respond to a request for data.

An examination of the ways Google tries to retain employees provides a window into the increasingly ferocious battle among the tech sector’s giants to expand through conquest. “Google,” says Geis, “has done a pretty good job—among the best in Silicon Valley.”

‘The toothbrush test’

Even when Google was small, it wasn’t shy about spending. The company’s first startup acquisition, the 2003 purchase of Pyra Labs, forms the backbone of what is today Blogger, an online publishing platform. Since then, many of Google’s most well-known products, including Android, YouTube, Maps, Docs and Analytics, have originated from acquisitions. “M&A has obviously been a huge part of Google—and, I think, Google’s success—for a long time,” says Don Harrison, Google’s vice president for corporate development, who oversees the company’s acquisitions.

Before any deal is finalized, it has to pass what CEO Larry Page calls “the toothbrush test”: is the product something you use daily and would make your life better? “If anything matches the toothbrush test and relates to technology, then Larry has an interest in it,” explains Harrison.

Typically, Google buys occur in sectors where the company has already been experimenting itself. Harrison points to YouTube as a prime example. Google already had a video sharing service called Google Video in the mid-2000’s, but YouTube’s fast-growing user base convinced the firm to offer a then-eye-popping $1.65 billion for the startup, even though it was barely a year old and earned no revenue. Today, YouTube brings in billions of dollars of revenue per year and is the third most-visited website in the world, according to Web analytics firm Alexa.

But the return on investment on an acquisition isn’t only measured monetarily. It’s important to Google and other tech giants that the founders behind ideas worth paying for stick around as well. Harrison says founder retention is one of the significant factors Google measures as part of the “scorecarding” it does to evaluate its purchases. “We hold ourselves accountable to make sure that the founders are able to be successful within Google,” Harrison says. “It’s something that we’re not only working on at the time we buy the company but we work on for years after as well.”

Cash alone can’t convince the top startup founders to join Google. 2014 was the most active year for IPOs in the U.S. since the year 2000, according to IPO tracker Renaissance Capital, and Chinese online retailer Alibaba had the biggest public debut in world history, raising $25 billion in September. “As aggressive as we’re willing to be, we probably can’t match public company premiums right now,” Harrison admits.

So Google tries to find other ways to lure key talent.

‘A True CEO’

For Tony Fadell, the CEO of smart home company Nest, the decision of whether or not be acquired by Google was really a question of how he wanted to spend his time.

Google had begun courting Nest almost from the company’s inception, ever since Fadell showed Google founder Sergey Brin a prototype of the Nest Thermostat at a TED conference in 2011. At the time, Fadell wasn’t interested in a buyout. “I wanted to keep it as a startup as long as possible,” he says.

But as Nest grew, so did Fadell’s logistical headaches. By 2013, he says he was spending 90% of his time on what he calls “back-of-house stuff”: managing finances, talking to investors, wrestling with taxes and fending off patent lawsuits. “There was a lot of selling to multiple entities that we were doing the right thing,” he says.

When Google came knocking again, offering a big payday and the chance to keep Nest’s name brand intact—a key requirement for Fadell—an acquisition seemed more appealing. Now Fadell says he spends 95% of his time focused on product development and key relationships. Nest, meanwhile, has gotten access to resources that would have taken much longer to accrue independently. The company launched in five new countries in 2014, but Fadell thinks they would have only reached two without Google’s help.

In many ways, the Nest acquisition is the ideal scenario startup founders envision when they agree to be swallowed by a larger company. Harrison, Google’s M&A head, calls Fadell a “true CEO” and says Google execs serve more as a board of directors for Nest instead of supervisors. Fadell says he hasn’t had to get formal approval for anything from Google, though he reports directly to Larry Page and meets with the Google CEO a few times per month. “He’s like, ‘Call me when you need me, but this is for you to run,’” Fadell says of his relationship with Page. “He gives us the freedom, so I run with that. Only when it’s really major decisions do I really touch base with him.”

Some founders who don’t quite have Fadell’s free rein are still granted a certain level of autonomy. Skybox Imaging, a satellite manufacturer that Google acquired for $500 million last summer, reports to the company’s vice president of engineering for geo products but maintains separate offices from Google in Mountain View. “We kind of get a little bit of the best of both worlds,” says Ching-Yu Hu, one of the four Skybox founders that now works at Google. “We’re all Googlers now so we have access to all the infrastructure there, but at the same time we’re semi-autonomous.”

The company has experimented with more direct incentives to maintain an entrepreneurial spirit. For a few years in the mid-2000’s Google handed out Founders Awards valued at as much as $12 million in stock to teams that developed successful new products like Gmail and Google Maps. Today awards are a little less explicit, in the form of more traditional of raises or promotions. Google works closely with founders in their first 90 days on the job to insure they’re getting acclimated well, but check-ins on founders’ progress can continue for years, depending on the acquisition.

At the core of Google’s pitch to founders is the opportunity for bountiful resources. Sure, those can be scratched and clawed for independently, but going it alone requires a lot more time, money and luck than hitching your wagon to one of the richest companies on Earth. “It was a pretty compelling pitch,” Hanke recalls of his own deliberations about whether to sell Keyhole to Google. “We could achieve a lot more standing on the shoulders of all that was going on at Google versus trying to do it on our own as startup.”

When Founders Leave

Still, even Harrison admits that not every acquisition goes smoothly. Because California is an at-will employment state, workers can generally be fired or choose to leave at any time. Tech companies try to ensure founders stick around for a while by offering a stay bonus or using “golden handcuffs,” which often meter out the payday for a big acquisition in company shares that vest over several years. Facebook’s acquisition of WhatsApp, for instance, includes $3 billion in restricted stock for WhatsApp employees, but they can’t fully tap into those funds unless they stay at the company for four years.

In some cases, golden handcuffs aren’t enough to keep founders on board. Kosta Eleftheriou joined Google in October 2010 through the acquisition of his keyboard app BlindType, but life at the massive company wasn’t what he envisioned. Eleftheriou says he was relegated to maintaining Google’s stock Android keyboard rather than envisioning ways to improve the product. He left after one month, leaving half of his compensation package for the acquisition on the table (he says the total acquisition price was in the seven figures). Now he’s a founder again, with a new keyboard app called Fleksy that has been downloaded 4 million times.

“It was a mismatch between what I was expecting and what happened,” Eleftheriou says. “I think that was partly due to maybe some unrealistic expectations on my side on how much creative freedom I would have. I was hoping to be part of a bigger picture than just some engineer working on something by themselves.”

As the founder of a small company that didn’t make huge headlines when it was acquired, Eleftheriou’s experience isn’t uncommon in the Valley. “Unless they’re sufficiently large, very few acquisitions continue to run independently,” says Justin Kan, a partner at the venture capital firm Y Combinator and cofounder of Twitch. “Oftentimes founders are rolled up inside another group inside of the company. They can’t make decisions as freely as when they were entrepreneurs. That affects people’s willingness to stick around.”

Sometimes founders simply crave the excitement of starting something new. Uri Levine was the only one of Waze’s three founders who chose not to join Google when the traffic app was acquired for $1 billion in June 2013. Instead he launched a new startup—his sixth—called FeeX, which aims to help people reduce investment fees in their retirement accounts. “Entrepreneurs, they are driven by a passion for change,” Levine says. “As soon as you become part of a large organization, you cannot change anymore.”

Google’s also had some more high-profile misfires. When it made its largest acquisition ever, the $12.5 billion purchase of handset maker Motorola Mobility, Page hailed it as an opportunity to “supercharge the Android ecosystem.” But Motorola’s phones failed to gain traction, the subsidiary racked up $1.4 billion in losses for Google, and the company offloaded the handset division to Lenovo for $2.9 billion in 2014. Harrison defends the deal as a smart acquisition because of the patent portfolio that Google acquired, helping the company defend itself from lawsuits by Apple and Microsoft (Geis, who has studied the transaction closely, called it “a wash” for Google).

The Spree Continues

At Google, at least, there are opportunities for change for some founders who join the company. Hanke, the former Keyhole CEO, spent several years heading up Google’s geo services, but now he’s in charge of Niantic Labs, a separately branded unit that Google bills as an “internal startup.” Hanke’s team develops apps that increase the opportunity for digital interaction in real-world environments, like InGress, a mobile game that requires players to visit physical locations to gain power ups. Android founder Andy Rubin also took on a role far removed from smartphones when he became the head of Google’s robotics division in 2013. (Rubin eventually left Google in October after nine years at the company).

Google is constantly making these kinds of bets on the future, and it needs new blood with fresh ideas to sustain them. The company is currently wrestling with multiple threats to its core business, search, including a declining share of desktop searches and a mobile market where Amazon is stealing product search queries and Facebook is taking ad dollars. If Google is to maintain its steady growth, it will eventually have to tap into a new revenue source somewhere, and that may well stem from an acquisition. The company may view Nest as the key purchase that ensures its future dominance, given Fadell’s perch. “Founders and everyone else at these startups, they want to be businesspeople,” he explains.

And the big businesses themselves? They want to ensure they don’t miss out on the next big thing. “The ability to move quickly in rapidly changing markets is one of the major drivers,” says Geis of the acquisition spree. “If you want to effectively compete and innovate continually, it can’t all be from within.”

MONEY Financial Planning

4 Things You Need to Change Your Career

Want to change your career or launch a new business? A financial planner explains the four things you need.

A few years ago a client, Peter, came to me and said, “I’m doing all the work, but my boss is making all the money. I could do this on my own, my way, and make a whole lot more.”

Peter was an instructor at an acting studio. He was working long hours for someone else, knew the business inside and out, and felt stuck. He wanted a change.

We talked through his dilemma. Peter wanted to know what he needed to do to venture out on his own and start his own acting academy.

Many of us find ourselves daydreaming about making such a bold life change, but few of us do it. So what is stopping us from taking the leap? Why don’t we have the courage to invest in ourselves?

Peter and his wife, Jeannie, sat down with me to chart out a plan. We determined that they needed four major boxes to be checked for Peter’s dream business to have a real shot at success:

  1. Support from the spouse
  2. Cash reserves
  3. A business plan
  4. Courage to take the leap

Let me break these down:

1. Support from the spouse: Peter and Jeannie had to be in full agreement that they were both ready to take on this new adventure together. In the beginning, they would have significant upfront investments in staffing, infrastructure, and signing a lease for the business. Money would be tight.

2. Cash reserves: Peter was concerned. “How much money can we free up for the startup costs?” he asked. We discussed the couple’s financial concerns, reviewed financial goals for their family, and acknowledged the trade-offs and sacrifices they would need to make. We determined a figure they were comfortable investing in their new business. Then we built a business plan around that number.

3. Business plan: It has been said that a goal without a plan is just a wish. Peter and Jeannie needed a written plan in place so that their wish could become a reality. Their business plan would serve as a step-by-step guide to building and growing the acting academy. It included projections for revenues, expenses, marketing strategies, and one-time costs.

Once we wrote the business plan, we had one final step remaining: the step that so many of us don’t have the courage to take. Peter and Jeannie had to trust in themselves, believe in their plan, and…

4. Take the Leap: Regardless of how confident we are, how prepared we feel, and how much support we have, this is a scary step. We have to walk away from our reliable paycheck, go down an unfamiliar road, and head out into the unknown.

I’m happy to share that Peter and Jeannie’s story is one of great success. They faced obstacles and bumps along the way, but Peter persevered and succeeded in accomplishing his goal. He is now running a thriving acting academy with multiple instructors and a growing staff. If you decide to invest in yourself, you will need to take the four steps too.

———-

Joe O’Boyle is a financial adviser with Voya Financial Advisors. Based in Beverly Hills, Calif., O’Boyle provides personalized, full service financial and retirement planning to individual and corporate clients. O’Boyle focuses on the entertainment, legal and medical industries, with a particular interest in educating Gen Xers and Millennials about the benefits of early retirement planning.

MONEY Entrepreneurs

Here’s a New Theory About Why People Become Entrepreneurs

mother and daughter shopkeepers
Ariel Skelley—Getty Images

Nurture beats nature when it comes to small business ambitions, according to a new study.

It’s long been known that children with entrepreneurial parents are more likely to become entrepreneurs themselves. But new research quantifies that effect—and goes a step further by suggesting why exactly that might be.

The study, published in the latest Journal of Labor Economics, found that upbringing, rather than genetics, seems to have the biggest effect on the offspring of self-started business owners. The researchers did something prior studies (which mainly focused on twins) hadn’t: They examined the career choices of thousands of Swedish children raised by either adoptive or biological parents to compare the relative effects of nature and nurture on the entrepreneurial impulse.

Adopted children, they found, were 20% more likely to become entrepreneurs if their biological parents were also entrepreneurs. But if it was their adoptive parents who were entrepreneurs, it was 45% more likely children would follow suit.

“The importance of adoptive parents is twice as large as the influence of biological parents,” wrote authors Joeri Sol and Mirjam Van Praag of the University of Amsterdam, and Matthew Lindquist of Stockholm University.

The authors controlled for the possibility that kids might just be inheriting the family business (or money to start a new business) and continued to find the same effect—which suggests that kids were simply seeing their parents as role models. That would also explain why gender had a big impact on children: Daughters in the study were most likely to become entrepreneurs if their mothers were—and sons if their fathers were.

These findings may also have implications for educators and policymakers who care about growing small businesses. The greater the effect of nurture on career choices, the authors wrote, “the larger the potential benefit of programs aimed at fostering entrepreneurship.”

The biggest takeaway for parents? If you want your kids to become start-up success stories, you should first try to become one yourself.

TIME leadership

3 Books Every Leader Should Read to Be Successful

Frank Gehry has selected personal favorites for his 'Curated Bookshelf' at Louis Vuitton's London flagship. The shelf is located in the first-floor librarie.
Jessica Klingelfuss

Teachings from the best in the business world

As an employee, you function mostly as a solitary unit. You do your part, produce your “output,” and the work is done. But as a manager (or more precisely, a leader—managers manage tasks, leaders lead people), everything changes. Your success is no longer about your own output, it’s about other people’s — the most important work you do is often what enables other people to do their jobs. But finding your way can be difficult. So in honor of National Book Month, here are three books that every leader should read to succeed.

High Output Management by Andy Grove

Key points: Grove’s book, reflecting on his time as Intel CEO in the 1970s, remains relevant today because of the basic principles it outlines: As a leader, you are an enabler of others. Your team’s performance, not your own output, is what you are judged on. Grove also shares five key things that should inform and govern your time: decision making, information gathering, information sharing, nudging and role modeling. If you are spending significant time doing things outside of those five key areas, it might be worth rethinking your schedule.

Best quote: “The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.”

Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround by Lou Gerstner

Key points: Compared to High Output Management, which can read a little like a textbook, Who Says Elephants Can’t Dance? is practically a thriller. Gerstner’s well-known memoir about the turnaround of IBM is a vibrant book on leadership during a challenging time. It’s about transformation. Gerstner touches on the importance of speed and a clearly communicated set of principles—especially across a company as large as IBM was at the time. Gerstner also talks about the issues big companies run into with mid-level talent: “People do what you inspect, not what you expect.”

Best quote: “I came to see, in my time at IBM, that culture isn’t just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.”

The Amazon Way: 14 Leadership Principles Behind the World’s Most Disruptive Company by John Rossman

Key points: This is by far the easiest read of the three in this post, but it’s also the most effective at providing prescriptive and actionable leadership advice. Rossman, a former Amazon executive, decodes a lot of the behind the scenes at Amazon and points to what is most important at a company that complex: decision making and ownership. The owner of a project or product doesn’t have to be the most senior person at the organization. In fact, it can be a very junior person. But this person is the sole person responsible for the project’s outcome.

Best quote: “Amazon.com employees quickly learn that the phrase ‘That’s not my job’ is an express ticket to an exit interview.”

Have your own favorite leadership books? I’d love to hear them—tweet at me @cschweitz.

Read next: 4 Biggest Myths About Being a Great Leader

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MONEY Odd Spending

Brilliant Guy in Massachusetts Is Selling Snow for ‘Only $89′

snowball wrapped in brown paper
Phil Ashley—Getty Images

Originally marked down from $99! The price includes overnight shipping anywhere in the U.S., and each package includes enough snow to make about a dozen snowballs.

New England—and Boston specifically—has way more snow than it knows what to do with. Boston has received roughly 100 inches of snow this winter. And it’s not even March yet. And guess what the forecast calls for on Tuesday? Yep, a few more inches of snow.

Boston has had so much snow that in early February the city started considering special approval by the EPA to dump it in the ocean because snow removal teams have been running out of places to put it.

It’s amid this scene that a Massachusetts man got the idea that he could do his part to get rid of some of the snow—and make some profits while he’s at it. The service, ShipSnowYo.com, started as something of a joke, but by mid-February it had reportedly sold around 100 16.9-oz. plastic bottles filled with snow, which were frozen in dry ice and shipped around the country, at a cost of $19.99.

By the time the bottles arrived at their destinations, they were most filled with pure New England water, not snow. But Waring insists that the recipients didn’t mind much. “They understand that we want to clean up Boston, so even if it does arrive as water, they get a kick out of it,” Waring explained to Boston Magazine.

Nonetheless, ShipSnowYo has since begun offering a new product that’s “Guaranteed Snow on Arrival!” This package includes 6 lbs. of snow collected courtesy of Winter Storm Neptune, which dumped 20+ inches in parts of Massachusetts. The “Limited Supply” snow comes in a thick Styrofoam container and is shipped overnight, at a cost of “$99 Now Only $89!”

Waring told Boston.com that the $89 package yields enough snow to make 10 to 15 snowballs. “It seems to be corporations paying for the $90 product as a funny gesture, where the $20 one is regular consumers,” he said of his customers.

What’s next for Waring? Look for a bigger, 10-lb. snow package to hit the market at a price of $119. Presumably, such a product would be more appropriate for larger snowball fights in Florida, Arizona, or wherever else they’re shipped. And the entrepreneur says that he might try a slightly different moneymaking idea next autumn. “Maybe I’ll ship some fall foliage,” he said.

TIME Marijuana

This Event Will Teach Businesspeople How to Buy Pot

Marijuana Pot Weed
Getty Images

Certified cannabis financial analysts are standing by

There are many bits of stock-trading wisdom that, simply because they are both wise and obvious-sounding, have become clichés: “Buy low, sell high.” “Don’t catch a falling knife.” “Nobody ever went broke by taking profits.” The list goes on.

Now we might have a new one, thanks to the folks putting on an event for would-be investors in the newly emerging legal-pot business: “Be wary of marijuana companies that don’t exist.” So advises a press release touting the Marijuana Investment and Private Retreat.

“The average consumer hears all day long how the increasingly legalized cannabis industry is booming and a Mecca for aspiring marijuana business owners,” according to the release. “What they don’t hear, however, are ways ordinary citizens (e.g., non-millionaires) can also capitalize on this new industry by investing in marijuana stocks.”

Any seminar that had only the interests of “the average consumer” in mind would stop there and say, “Don’t invest in marijuana stocks at all unless you have a little cash that you’re totally OK with losing.” But that wouldn’t make for much of a retreat—it would be over before the mid-morning munchies set in.

To their credit, the event sponsors say they’ll “teach investors how to invest without falling for the many fraudulent stocks and scams that come with investing in a new industry,” and note that many pot stocks trade over the counter, and in some cases aren’t even backed by assets, much less revenue streams (that’s what they mean by companies that “don’t exist.”) Such stocks represent nothing more than ideas, if that. That includes nearly all pot stocks at the moment.

Keynote speaker Alan Brochstein, identified in the press release as a “certified cannabis financial analyst” and founder of 420 Investor, said: “Even those companies that file with the SEC have red flags that include complex capital structures, non-viable business plans, a lack of industry experience and leadership, and many other potential pitfalls.”

Other scheduled speakers are: Tripp Keber, founder of Dixie Elixirs; Wanda James, president of Cannabis Global Initiative; and Christie Lunsford, a consultant and a veteran in the marijuana business.

TIME Innovation

Five Best Ideas of the Day: February 13

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. After the shootings in Chapel Hill, a Muslim-American school teacher asks what they must do to be ‘part and parcel’ of America.

By Deanna Othman in the Chicago Tribune

2. Imagine insulin that can read a diabetic’s blood sugar level from inside the body and start working on-demand.

By Anne Trafton in MIT News

3. City governments are using Yelp to warn the public about restaurant health code violations.

By Michael Luca and Luther Lowe in Harvard Business Review

4. The FDA is cutting the red tape so doctors can get experimental drugs to patients more quickly.

By Peter Lurie in FDA Voice

5. How can we support entrepreneurial inventors in developing countries? Create innovation ecosystems.

By Alexander Pan in the Aspen Journal of Ideas

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Second Career

How to Build a Second-Act Business with Your Millennial Kid

Combining complementary skills of two generations can be a recipe for success

It’s awesome working with my dad,” says Case Bloom, 30. The feeling is mutual, says his father, David, 58: “We are good complements to one another.”

Among the more striking developments I’ve learned researching my new book, Unretirement, is the rise in boomer parents going into business with their adult children, like the Blooms—co-owners of Tucker & Bloom, a Nashville, Tenn. luggage business.

In the past few years, setting up a multigenerational enterprise has been a mutually savvy way for boomers and their kids to deal with tough economic times. The parents typically have capital and plenty of experience, while their adult children burst with energy and tech skills.

From ‘You’ to ‘We’

The Blooms, and their business manufacturing highly-crafted messenger bags targeted at the DJ market, are a prime example. Before opening shop, David had spent his career in bag design and was director of travel products for Coach in New York City before he lost that job. When Case was in college in Nashville, studying business, he’d offer pointers to help his dad’s venture. “His logo was so bad. Horrible,” laughs Case. “I’d tell him, ‘You’re doing it wrong. Do it like this.’”

Eventually, Case says, it became “We should do it this way. The business happened organically.” Today, father and son each own half of the company, which has seven employees. David handles design and product development; Case is in charge of anything to do with the brand image and online sales. He’s also the one making frequent runs to Home Depot for the business’s factory and to the Post Office for shipments. “I have a different set of skills than my father,” says Case, who is also a part-time DJ.

When Kinship Is Friendship

One reason for the growing second-act-plus-child trend: surveys repeatedly show that today’s young adults generally get along well with their parents—and vice versa. “The key is an attitudinal shift in the relations between generations,” says Steve King, founder of Emergent Research, a consulting firm focused on the small business economy. “Boomers are close to their kids and the kids are close to their parents.”

Take Amanda Bates, a Gen X’er, and her mother Kit Seay, co-owners of Tiny Pies in Austin, Texas. “We’ve always had a close relationship, feeding off one another, finishing each other’s sentences,” says Kit, 73. They’d long wanted to do something together.

Several years ago, Amanda got the idea for making handheld pies from her son’s desire to take pie to school. So she and her mother began selling small pies, based on family recipes, in local farmers markets. They now sell them throughout the state, mostly through specialty stores, and opened a retail storefront at their wholesale facility in March 2014. Kit focuses on the creative and catering side of the business; Amanda’s in charge of the basics of running an enterprise. “The trust is there,” says Kit. Amanda agrees. “Yes, the trust is there. If she says something will get done, it will.”

Teaching Your Child Trust

Trust and complementary skills are also themes for Lee Lipton, 59, and his son Max, 25, and their Benny’s On the Beach restaurant in Lake Worth, Fla.

Lee, the restaurant’s principal owner, came out of the clothing manufacturing business, moving to Florida after the Calvin Klein outerwear line he ran with a few partners was sold. He bought Benny’s a year ago. Max, who’d wanted to get into the food business, is one partner; the other is chef Jeremy Hanlon. Lee’s the deal maker, Max manages the restaurant and executive chef Hanlon handles the kitchen. “The three of us trust each other incredibly and when one person feels strongly about something we tend to do it that way,” Lee says. “Very rarely after talking do we disagree, and that format was identical to my past partners. I want to teach Max and Jeremy that closeness.”

For second-act family businesses, creating boundaries between work and home is advisable, but easier to say than do. Speaking about her current relationship with her mom, Amanda Bates says: “We used to go out together and have fun, go to garage sales, that kind of thing. Now, when we get together, the business always come up. Even at family dinners, we end up talking business.”

The Win-Win of Multigenerational Businesses

But in the end, it’s family that makes these businesses succeed.

Bianca Alicea, 26, and her mom Alana, 46, started tchotchke-maker Chubby Chico Charms. in North Providence, R.I. with $500 and less than 100 charm designs at their dining room table in 2005. They now have roughly 25 full-time employees and sell several thousand handmade charms. Alana is the designer; Bianca deals more with payroll and other aspects of the business. “It’s important to remember you are family,” says Bianca. “Things don’t always go according to plan, but at the end of the day you have to see one another as family.”

Intergenerational entrepreneurship, it turns out, can be a win-win for boomers and their kids. For the parents, it’s the answer to the question: What will I do in my Unretirement? For their adult children, working with mom and dad provides them with greater meaning than just picking up a paycheck.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He writes twice a month about the personal finance and entrepreneurial start-up implications of Unretirement, and the lessons people learn as they search for meaning and income. Send your queries to him at cfarrell@mpr.org or @cfarrellecon on Twitter.

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Meet the 12-Year-Old CEO Who Runs a $150,000 Business

ABC's "Shark Tank" - Season Five
Michael Ansell—ABC/Getty Images

We could all learn a lot about business and life from Moziah Bridges

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This post is in partnership with Inc., which offers useful advice, resources and insights to entrepreneurs and business owners. The article below was originally published at Inc.com.

In the past three years, while his classmates were doing homework and playing sports, Moziah Bridges built himself a $150,000 business.

That’s right–he started his business when he was 9 years old. Not yet a teenager, Bridges now has five staff members and has received a ton of media attention, from an appearance on the TV show Shark Tank to features in O magazine and Vogue.

“I like to wear bow ties, because they make me look good and feel good,” Bridges writes on his website. “Designing a colorful bow tie is just part of my vision to make the world a fun and happier place.”

Ever the fashionista, he’s reveled in style from a young age. At four years old, Bridges wore a suit and tie whenever possible and insisted on dressing himself.

His business, Mo’s Bows, was born of his love for bow ties and his dissatisfaction with the selection available for kids his age. Even worse than the poor color selection, they were all clip-ons–Bridges believed real men should tie their own ties. His grandmother taught him to sew by hand and to use a sewing machine, using scraps to create his favorite neckwear.

Within a few months, he had created his own collection of more than two dozen bow ties. Friends and family fell in love with his creations. Bridges upped his production, fashioning tidy bow ties from his grandmother’s vintage fabrics in an array of floral and African prints, and even scraps of old taffeta dresses.

Word of mouth worked its magic, and soon Bridges was taking orders through Facebook and selling on his own Etsy store. As demand increased, his mother, grandmother, and other family members came on board to help with production.

Today, each bow tie is still sewn from scratch, though Bridges has expanded from vintage materials to tweeds and ginghams, with a formal line of satins and silk. His bow ties are available in his own webstore, on Etsy, and in boutiques throughout Texas, South Carolina, and Tennessee.

When asked who his role models are, he said he looks up to Daymond John, who became his mentor as a result of the Shark Tank appearance.

As if his early success in business weren’t enough, Bridges has also become something of a young philanthropist. This summer, he donated $1,600 to send 10 children from his hometown of Memphis to Glenview Summer Camp.

In a post on his blog, Bridges wrote, “Memphis is ranked the highest of child hunger; most kids only get a meal when school is in session. At the community center, the kids get a meal and play time. Giving back to my community really helped me feel humble. It also makes me smile because I see other kids smiling and enjoying the camp.”

What’s next for this inspirational kidpreneur? In a recent interview, Bridges said he wants to go college and start a full clothing line by the time he’s 20.

He’s got it all figured out, folks; Moziah Bridges has a happy, colorful life filled with business successes, social good, work-school-life balance, and solid goals for the future. And he still gets to bed at 8:30 every night!

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