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For this sports drink startup, Gatorade is the No. 1 target

2015-06-04T15:32:23Z

If you had asked Vitaminwater co-founder Mike Repole a few years ago if he’d ever return to the beverage industry, he would’ve responded with a vehement “no.”

Well, that clearly didn’t stick. Fast forward to 2015, and Repole’s latest venture, BodyArmor, a sports drink claiming it uses a healthier recipe than its competitors, is poised to earn $100 million in retail revenues for the year. It also has star athlete backers, including NBA stalwart Kobe Bryant as its No. 3 investor, and NFL quarterback Andrew Luck, who asked to get involved with the company because he liked the drink so much.

BodyArmor isn’t daunted by PepsiCo-owned Gatorade, which controls an overwhelming majority of the $8 billion sports drink market. “I think Gatorade is an iconic brand,” says Repole. At the same time, Repole suggests that the drink is past its prime. “To me, it sounds weird that a brand I grew up with 35 years ago is the same brand that my kids grow up with. It doesn't make sense.”

That thinking partly inspired a video marketing campaign BodyArmor released on Tuesday. The gist: Gatorade and other sports drinks aren’t with the times, nutritionally speaking. But BodyArmor, naturally, is.

BodyArmor, which Repole founded with Fuze Beverage creator Lance Collins, has notched a record of its own since its 2011 launch. Repole tells Fortune that it’s currently the only sports drink startup to still be kicking after four years since its founding, as Gatorade has historically crushed the competition within two. He estimates that his budding company, which is headquartered in Queens, New York and employs over 100 full-time workers, holds about 1% of the sports beverage market. Repole is confident that BodyArmor will gain more recognition among shoppers as soda sales continue to decline and healthier options gain ground.

“After 50 years, no one has been able to get to this stage,” says Repole. “Our best thing going for us is the brand and how it's connecting with athletes and how it’s connecting with moms.”

BodyArmor is made of 10% coconut water and what it touts as all-natural ingredients, including 15mg of sodium, 300mp of potassium, and a slew of vitamins. Compare that to a standard serving of Gatorade, which contains 250mg of sodium, 65mg of potassium, and no “significant source” of vitamins, according to its nutrition label.

While BodyArmor claims that other sports drinks out there aren’t healthy, others beg to differ. A few years ago, Gatorade removed high fructose corn syrup from its recipe, substituting the sugar with a more natural variant, says John Sicher of Beverage Digest. Sicher also explains that there are also numerous varieties of Gatorade for different occasions.

Repole, 46, was born in Queens, New York and studied sports business in college. At 29 years old, he started a bottled water company with Darius Bikoff called Glac?au. That venture’s main product, Vitaminwater, took off and was eventually sold to Coca-Cola in 2007 for $4.1 billion.

Glac?au's employees profited handsomely from the deal, as The New York Times reported in 2011:

Repole, the coach, took care of his players. Glac?au's 600 employees all had stock options: 50 of them cashed out with more than $1 million, another 150 with $500,000, and 200 with more than $100,000.

Repole is fond of speaking in sports metaphors. “I want to win at the highest level in business and surround myself with people who have the same passion, focus, and intensity as myself,” he says.

Part of Repole’s role as “chief coach” at BodyArmor, it seems, is recruiting an all-star cast of athletes who aren’t paid to endorse the product but are instead invited to take an equity stake in the company. Andrew Luck, quarterback of the Indianapolis Colts, needed no coaxing to get involved. In fact, he tells Fortune that during his stint on Stanford University’s football team, he would drink the product regularly since it was stocked in the fridge during his junior year. “It sounds a little to be good true,” Luck admits. He wanted to learn how he could sign on to the business. “It was one of those things when I turned professional, [I asked] how does it work when you're a pro?” He reached out to his agent: “He made the calls,” says Luck.

Other BodyArmor investor athletes include Rob Gronkowski of the New England Patriots, Mike Trout of the L.A. Angels, Buster Posey of the San Francisco Giants, Richard Sherman of the Seattle Seahawks, and Skylar Diggins of the Tulsa Shock.

Luck says he appreciates that BodyArmor includes the athletes in their business decisions. “They've been very open about their strategic sales and marketing,” explains Luck. “They wanted a lot of input from us…. The folks at BodyArmor appreciate the opinions of the athletes, and I think it's neat for us to be involved.”

Repole is unafraid to attack Gatorade for sticking with what he claims is the same recipe, although that isn’t the case. In addition to changing the sugar in its recipe, Gatorade also removed a controversial ingredient called brominated vegetable oil from its products in 2013, thanks to a petition launched by a teenager. At the time, Gatorade said that it was removing the vegetable oil due to consumer demand and not for health concerns. The company didn’t respond to a request for comment for this story.

But Repole does give Gatorade credit for sticking around for over five decades and counting. BodyArmor, he says, wants to “hydrate athletes for the next 50 years” so they’ll have covered athletes “for 100 years together,” he says, with humor.

Sicher of Beverage Digest says that BodyArmor has its work cut out for itself if it really plans to take on Gatorade. “Competing against Gatorade would require deep pockets, brilliant branding, and lots of patience, and the likelihood of success even then is questionable,” he says. “Gatorade is one of the most powerful brands in not just the beverage industry but in the U.S.” Sicher explained that while No. 2 sports drink Powerade “ramped up a few years ago,” it’s currently underperforming, giving Gatorade even more power.

Repole seems to understand that need for patience. While the company has enjoyed a 210% boost in sales so far in 2015 over last year, he says he is playing the long game. “I think we're on to something big,” he says. “It’s a marathon not a sprint.”

Burning Man is getting taxed for the first time ever

2015-06-03T20:03:35Z

Heads up, Burning Man fans: Your tickets to the annual out-of-this-world desert shindig might be about to get more expensive.

Lawmakers eliminated loopholes in Nevada’s live entertainment tax, which previously allowed festivals like Burning Man escape any government-mandated fees, Bloomberg reports. The tax was originally targeted at cabaret performances and burlesque dancing.

A 9% charge will now be added on tickets for festivals like Burning Man and the Electric Daisy Carnival, which both cost about $400 a pop. The tax will also apply to “pickup fees” for escort services, though prostitutes at Nevada’s 24 legal brothels don’t fall under this new levy group.

"There's no better venue in the world than Southern Nevada to conduct an event like Electric Daisy Carnival and there's no better place than the desert of Northern Nevada for an event like Burning Man," State Senator Mark Lipparelli, a Las Vegas Republican who sponsored the bill, told Bloomberg. "We like them as businesses and we want them to keep coming here. We also want to improve education in Nevada."

The live entertainment tax was expected to generate about 4.3% of the state’s $6.3 billion two-year budget covering 2015 to 2017 before this change. Analysts haven’t run numbers on the yield expected from the updated version, but expect it will be similar.

Festival promoters for Burning Man -- which attracts many of the tech elite every year -- and Electric Daisy Carnival weren’t happy about the new fees. Spokespeople for the two events called it “short-sighted” and “detrimental to our industry,” pointing out that the fetes generate huge sums for Nevada’s economy every year.

Big chain movie theaters are under investigation by the feds

2015-06-02T16:46:07Z

There’s good news if you love movies--and having choices about them.

New Securities and Exchange Commission filings by cinema giants AMC and Regal confirm earlier reports that the government is investigating potential anti-competitive activity on the part of America’s biggest movie theater chains. The filings disclose the Department of Justice is looking into whether those companies used joint ventures and exclusivity agreements with movie studios in violation of antitrust laws.

Operators of small independent cinemas say exclusivity agreements, called “clearances,” are a problem because they allow big chains to prevent competitors from playing popular new movies. That’s bad for consumers who want more theater options close to home--or prefer indie theaters, which sometimes offer special ticket discounts or features like food and drink service.

Tom Stephenson, CEO of a local Dallas multiplex, told the Dallas Morning News he has been cooperating with federal investigators. He claims AMC threatened not to play certain films unless movie studios granted the chain exclusive screening rights in his cinema’s area.

“The Justice Department is highly skeptical that limiting consumers' choices is a good idea," Stephenson told the newspaper.

Together the biggest three movie chains--AMC, Regal Entertainment Group and Cinemark Holdings--control about 42% of U.S. screens. In its filing, AMC acknowledges that it “has been an active participant in our industry's consolidation,” having acquired several theater chains, including Loews and General Cinema, in the last two decades.

AMC also points out it’s easier to beat smaller competitors in big urban areas: “Where real estate is readily available, it is easier to open a theatre near one of our theatres, which may adversely affect operations at our theatre. However . . . the complexity inherent in operating in . . . major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.”

Both AMC and Regal’s filing state that the companies’ managers do not believe they have violated federal or state antitrust laws.

“One has to remember that film clearances, they’ve existed for many years and we believe they have because they are beneficial to the studios, they are beneficial to exhibition and they are beneficial to consumers,” Regal Entertainment Chief Executive Amy Miles said in a recent conference call.

Ironically, clearances were originally created to protect small, independent theaters after a 1948 Supreme Court decision required movie studios to divest ownership in cinemas.

How a chance encounter with JetBlue’s CEO changed my business

2015-06-02T14:24:15Z

For entrepreneurs, success is a mixture of business savvy and the sense to recognize and act upon great opportunities when they come your way.

I founded Gensler--an organization that today includes 5,000 employees in 46 locations--50 years ago. When we began, we had three employees and $200 in the bank. How did we manage to grow our company from a mom-and-pop shop into a leading global design firm?

The foundation for our success lies in observing key principles, which I share in Art's Principles, my new book. One of these principles centers on leveraging unanticipated opportunities, and that's something any entrepreneur starting a professional services firm must be able to do. Here's an example:

When I was running late in a meeting in New York, I called my assistant to rearrange my flight schedule. She called back to say she refused to make the flight arrangements because the airline would charge $1,000 to change my ticket back to San Francisco. I appreciated her frugal nature but needed to get home. We needed another way.

Being cheap (and cautious with our firm's money) I told her about a new airline, JetBlue, that had flights to San Francisco for only $115. She argued that they had only coach seats and that I didn't fit very well in a coach seat. (I'm tall.) But for the difference in cost, I finally convinced her to get me a seat on JetBlue's later flight.

Later, as I was settling into my plane seat, a man's voice came on the PA system. He introduced himself as David Neeleman, founder and CEO of JetBlue JBLU . He said that he would be joining the flight attendants to serve drinks, and he hoped to talk to every passenger. I thought this was fantastic and was suddenly glad to be sitting farther back in the plane because it gave me a few moments to think about how I would introduce myself.

When David Neeleman reached my seat, he asked what I did. "I'm an architect," I said, adding, "We do airports."

Those three little words changed everything.

He replied, "I'm trying to build a new terminal at JFK and am not happy with the architect the Port Authority suggested." We exchanged business cards.

Two weeks later, I received a request for proposal for the terminal project at John F. Kennedy International Airport. Three weeks later, JetBlue selected Gensler as its architect. In the years since, we've worked on more than a dozen projects with JetBlue, ranging from full airport terminal design, to exterior signage, and even a lodge where JetBlue employees go for executive training.

Today, Gensler continues to work with JetBlue, and it all goes back to that first introduction and three simple words shared between David Neeleman and me. When he offered me the opportunity to introduce myself, I seized it--by letting him know that I design airports. Now we have designed airports for him.

Luck is not a strategy; the key is to recognize it when it comes your way. You must both welcome the serendipitous and also act on it.

If I hadn't shared my background and experience with architecture and airports during that brief conversation with David Neelemen, I might not be telling you this success story. As a study conducted by the Harvard Business Review shows, surprisingly often, people mistakenly assume that others recognize and appreciate their experience, when this is not the case.

Getting to know people before getting down to business is one way to discover unanticipated opportunities. Let your mind expand with the possibilities, embrace them, and leverage them to increase visibility. Fear can't be the obstacle that prevents you from jumping in and trying something new.

Curiosity is the building block upon which luck expands. The stronger your curiosity, the more unforeseen opportunities you will discover. Asking yourself how you can take advantage of the events or people you encounter will open up unanticipated avenues and reveal untapped resources.

Exploration in turn follows curiosity. This may mean venturing into uncharted territory, taking a fresh look at the familiar (such as your defined talents or areas of expertise), looking at the potential from a different perspective, and asking yourself what you can honestly bring to the table.

To be the best entrepreneur, you must trust your gut, take risks, and embrace opportunity. I have always tried to put myself out there, interact with chance encounters, and keep a constant eye on what could be. And I've always been astonished by not only how often unanticipated opportunities happen, but also by the amazing places they've taken me, and my firm.

Arthur Gensler, FAIA, is an architect and founder of Gensler, a leading global design firm. When he started his company, he knew a lot about architecture but very little about running a business. In 2015, he wrote Art's Principles to offer today's entrepreneurs the business insights he wishes someone had given him when he was first starting out.

FIFA probe and May auto sales–5 things to know today

2015-06-02T13:12:16Z

Hello friends and Fortune readers.

Wall Street futures and the dollar are a touch lower this morning, while crude oil futures are holding above $60 a barrel as OPEC ministers prepare to meet in Vienna.

Today’s must-read story is by Fortune contributor Amy Langfield who looks at how top tier museums are scrambling to adapt their business models to today’s art consumers–to mixed results.

Here’s what else you need to know today.

1. The U.S. probe into corruption at FIFA got closer to President Sepp Blatter

The U.S. investigation into bribery and corruption at the governing body of world soccer took another twist Tuesday, as FIFA denied claims that its number two official, Secretary-General J?r?me Valcke, was involved in a suspect payment linked to the award of the 2010 World Cup to South Africa. A letter leaked via Twitter suggests otherwise.

2. May auto sales.

Auto makers reveal their May sales numbers today, and analysts aren’t expecting much. Demand is anticipated to be flat or down slightly from the same period a year ago. That’s partially due to one less selling day in the month and lower demand from fleet customers, like rental car companies. Analysts expect sales of 1.59 million vehicles in May. That may be down about 1% year-over-year, but it still keeps the industry on track to hit an annual rate of 17.3 million vehicles based on the first five months of the year. The 17 million level hasn’t been seen since 2001.

3. Dollar General reports.

Dollar General DG will likely have some good news for investors when it reports its first-quarter earnings today. It will be a welcome update after the discount retailer’s bid for Family Dollar was turned down in favor of rival Dollar Tree DLTR . First-quarter sales are expected to be up year-over-year to $4.94 billion, which is a credit to lower-margin products like tobacco. Dollar General plans to speed up its expansion of storefronts across the U.S. as it looks to gird itself from its newly beefed-up competitor. For a more in-depth look into the dollar store wars, Fortune’s Shawn Tully has the inside story.

4. JPMorgan exec gives insight into its consumer credit unit.

JPMorgan Chase JPM consumer banking chief Gordon Smith goes on the record today at an investor conference in New York. The talk, which will be webcast, will review the company’s home mortgage and credit card businesses. Smith runs the single biggest division of JPMorgan, the largest U.S. bank. He’s often cited as one of the top contenders to replace CEO Jamie Dimon after former front-runner Michael Cavanagh left the bank.

5. The state of U.S. manufacturing.

The Commerce Department releases factory order data for April this morning at 10 a.m. ET. Demand for U.S.-produced goods is likely flat year-over-year after an impressive March. Factory orders were up 2.1% in March, largely due to high demand for transportation equipment. That was the biggest boost in eight consecutive months, even as the U.S. manufacturing sector has struggled due to a stronger dollar and weakened demand from abroad. April factory orders are expected to be up 0.3%.

Additional reporting contributed by Reuters.

This is the city with the largest percentage of women-led startups

2015-06-01T10:30:47Z

It may be best known for charming brownstones and bearded hipsters, but Brooklyn has a surprising new distinction: It's the No. 1 city for female entrepreneurs.

About 28% of the Brooklyn-based startups that received initial funding between 2009 and 2014 had at least one woman founder, according to a CrunchBase analysis of companies in its database. That's the highest percentage in the country, well above the national average of 15%, and outpacing other tech hotspots such as Boulder (18%), San Francisco (16%) and Palo Alto (12%). New York City as a whole is also pretty impressive, with 21%.

Brooklyn's start-up scene has been booming in the past few years. Yes, plenty of entrepreneurs are making vintage furniture, artisanal pickles and the like, but big players like Etsy, Kickstarter and MakerBot also call the borough home. In 2013, the Downtown Brooklyn Partnership identified 500 innovative start-ups that together had created 23,000 jobs, occupied 1.7 million square feet of office space, and boosted Brooklyn's GDP by $3 billion, says Tucker Reed, president of the DBP.

Some of Brooklyn's appeal is economic. Two years ago, says Reed, commercial real estate vacancy rates were higher and prices lower than in Silicon Alley and much of the rest of Manhattan. Transportation is plentiful. The Brooklyn Tech Triangle, an area that includes DUMBO, Downtown, and the Brooklyn Navy Yard, can be reached by about a dozen subway lines. And Brooklyn's cool quotient has had an impact, says Reed. "Brooklyn has attracted a creative class that is fueling the growth of these companies because this is where people want to live," he says.

"It started with the lower rent, then became a lifestyle choice, and now it is a vibrant community," says Charles Torres, a partner at Lowenstein Sandler who works with entrepreneurs at the firm’s Jay Street office. “When you can tap into the collective knowledge, the community is the attractor, not the price."

All those factors appeal to both male and female founders, of course. So why are more women starting companies in Brooklyn than in, say, Austin? There’s no single reason, but some female entrepreneurs say it is less about what Brooklyn is than what it is not.

Gauri Nanda is co-founder of Toymail, a Carroll Gardens company that makes toys with a built-in messaging system so parents can communicate with kids without a computer or phone. She previously lived in Boston, where she launched her first company, Clocky. The Boston start-up community is closely tied to that city's universities, but in Brooklyn "there aren't institutions or giant corporations that dominate," says Nanda. "The culture is really in its nascent stages, so there is an opportunity to be a part of that, and the tech community is small and very supportive, and doesn't feel competitive."

Lexy Funk agrees. The artist-turned-entrepreneur founded Brooklyn Industries long before the current start-up rage, in 1996, and now has 17 retail stores and offices in DUMBO. "There is no sense here of an old boys network that you feel excluded from," says Funk. "It doesn't feel clubby, but artistic and creative, and there is a lot of support and openness." (Brooklyn Industries is not in CrunchBase’s database as it has not taken venture funding.)

Funk heads the local chapter of the Entrepreneurs' Organization, a global network for founders, and says the Brooklyn group has the largest share of female members--30%-- in the country. Emily Doubilet, co-founder of Susty Party in Greenpoint, belongs to a small group of female founders who meet every month to share "war stories and successes." Beyond the emotional support, she gets a lot of practical tips. "A lot of us are figuring it out as we go, so it is really important to have a close group that you can ask for advice about things like how to fire someone or whether to work with a consultant or improving your social media strategy," says Doubilet, whose company makes colorful, sustainable party ware that can be composted.

Still, startup labs, meetups and networking groups exist in every start-up hub. But Brooklyn is just crowded enough, and close enough to Manhattan, that informal networking is easy. "What is interesting about Brooklyn is that you can access everything immediately, and with its density, you run into people all the time," says Funk. Nanda says she's met much of her network serendipitously. Doubilet met her co-founder, Jessica Holsey, at a party, and says she’s met several other women founders in the building where Susty Party has its offices. "When you are surrounded by other artists and creatives, it's inspiring. I like the vibe.” she says. "If I didn't have other women entrepreneurs in the building and neighborhood, I wouldn't like it as much, and it is great seeing other women doing the same hustle I am."

Funk suggests that the prominence of working women of all kinds in Brooklyn is important in showing women they can follow their own path. "There is a huge acceptance of women working, and it is okay to put kids in day care or in public school without any stigma," says Funk. "This is a place where you see as many men as women at the playground, or picking up kids at school. There are a lot of couples in which one or both people is an artist, and is not unusual to be a woman who is working, or running something, or making more money than her husband, and that is very liberating."

Torres speculates the abundance of female entrepreneurs is because both the market and the population is young. "I'm not sure if it is anything different for women in Brooklyn, but it is a nascent market that is very open, and women are increasingly seeing becoming a founder as a great career path. That might be level off over time."

Brooklyn's surging popularity does have a downside. Real estate deals, never plentiful, are getting even harder to find. The commercial real estate vacancy rate is now about 3%, says DBP’s Reed. Time will

These are the most extreme jobs

2015-05-29T17:11:49Z

Adrenaline addicts looking for a new job may want to consider a few of the following: Crocodile physiologist, venom milker and skydiving instructor. They all made a list of the world’s most extreme jobs, at least according to YourTradeBase, a company that helps other businesses with the entirely sedate job of completing their paperwork.

Take safari guide, for example, which was identified as the extreme career with the highest average salary. They are exposed to potentially dangerous animals like lions, work in an area lacking in medical facilities and drive on muddy and bumpy dirt tracks. But let’s face it: Despite the danger, it’s a great job.

Here are he most extreme jobs ranked by average salary per year (or season) are:

Safari Guide: $73,000
Professional Stuntman: $70,000
Crocodile Physiologist: $62,500
Storm Chaser: $60,968
Cave Diver: $58,640
Smoke Jumpers: $33,000
Venom Milker: $30,000
Skydiving Instructor: $24,000
Whitewater Rafting Guide: $6,675 per season
Everest Guides: $5,000 per season

In case you were wondering what a venom milker does, YourTradeBase writes that it’s a position to “massage the venom glands of many snakes, whilst pressing their fangs on a plastic plate/tube, to collect their venom.” It notes that “snakes don’t enjoy being milked.” Well, imagine that.

These jobs are most likely to be taken by a computer

2015-05-29T15:28:01Z

Telemarketers’ jobs have the highest chance of being automated, according to recent report. Other positions with huge potential for being overtaken by robots? Cashiers, tellers and drivers, among others, according to this new NPR interactive.

While telemarketers have a 99% chance of one day being totally replaced by technology (it’s already happening), cashiers, tellers and drivers all have over a 97% chance at being automated. Many positions within the “production” category put together by NPR, including packaging and assembly jobs, tend to rank highly as well.

The job with the lowest shot at being overtaken by technology in the future? Mental health and substance abuse social workers. They have a 0.3% chance, according to the data. Occupational therapists also rank at 0.3%, while dentists, surgeons and nutritionists appear pretty safe at just 0.4%.

Per NPR:

The researchers admit that these estimates are rough and likely to be wrong. But consider this a snapshot of what some smart people think the future might look like. If it says your job will likely be replaced by a machine, you’ve been warned.

To play around with the complete data, check here. But beware, it’s pretty addicting.

Unions say it’s OK for businesses to sidestep the L.A. minimum wage

2015-05-27T20:41:17Z

Earlier this month, the Los Angeles City Council voted in favor a new law that would increase the city’s minimum wage from $9 to $15 an hour by the year 2020. Yet the Los Angeles Times reports that labor officials, who until now have been strong supporters of the wage hike, are asking for a last-minute change that would allow unions the freedom to collectively bargain for wages that are lower than the minimum.

“With a collective bargaining agreement, a business owner and the employees negotiate an agreement that works for them both,” Rusty Hicks, head of the Los Angeles County Federation of Labor, said in a statement. “This provision gives the parties the option, the freedom, to negotiate that agreement. And that is a good thing.”

Some business leaders suspect the sudden about face by the organization, which represents over 300 unions in the L.A. area, might be a tactic to increase membership and enhance the power of organized labor. Ruben Gonzalez, a senior vice president with the Los Angeles Area Chamber of Commerce, which opposed the wage legislation, told the Times he believes labor leaders are hoping to use this exception to pressure companies into unionizing, thereby allowing them to avoid minimum wage rules.

The city council’s Economic Development Committee is scheduled this Friday to review an ordinance enacting the new minimum wage law.

Terror on the XBOX! 4 new streaming services for horror movie fans

2015-05-26T20:50:01Z

If you were a horror movie fan during the 1970s or 1980s, you are indebted to Charles Band. He not only made them for decades, but as a distributor, he got them to fans who wanted to see them, but couldn't find them at movie theaters.

"I was an early pioneer in home video," he told Fortune. "I licensed well-known Italian horror films, like 'Zombie' by Lucio Fulci, and it was a seller's market. In the 80s I had a company called Empire, and we made 'Ghoulies,' 'Parasite' and 'Metalstorm.' Then I started Full Moon Video, and VHS morphed into DVD."

These movies were typically only available to cable subscribers who happened to be up at 3 a.m., or to people who rented them at Blockbuster. Then the digital age came along, and rampant piracy dealt a blow to the genre that could have been fatal. "We'd release a movie and ship DVDs, only to find it on the torrent sites for free," Band said. "It was concurrent with the demise of rental stores, which was our main source of revenue. We lost our connection with the fans."

Luckily, streaming technology has come along and re-shuffled the deck. Such platforms as Roku, PlayStation, XBOX and Apple TV have made it possible for distributors to deliver this content again, and made it possible for fans to be reunited with the movies they love, all via streaming services that specialize in these films.

Almost all of these services are brand new - indeed, the oldest is just a year and a half old. But no movie fan is more devoted than the horror movie fan. If anyone can take a streaming service from beta version to IPO, it's the person in zombie makeup who lines up outside of the horror movie convention to get George Romero's autograph.

Screambox

Ray "Rayzilla" Canella is a lifelong horror fan who worked for the Syfy network for 20 years and worked on such timeless classics as "Sharknado" and "Mansquito." Today, he's Curator and Head of Programming for Screambox, which shows uncut, uninterrupted horror movies for $3.99 a month.

"I'm thrilled to be in a platform like Screambox, because in the digital ecosystem, the shackles are off," he told Fortune. "The limitations that exist in cable and broadcast television are gone. At Screambox you see the films the way they were meant to be seen."

The service offers movies in five categories - Killers, Supernatural, Monsters, Psychological and Extreme. Each category is broken down into subcategories, including "Redneck," "Splatter" and "Brutal and Disturbing." This way, people who just want to watch "Angry Nazi Zombies" in peace won't waste their precious time on such frivolities as "Deadly Renovations."

CEO David Wolfe told Fortune that Screambox currently has 7,500 paid subscribers, 14,000 users in the midst of trial offers and 30,000 that have created new accounts. That doesn't add up to profits just yet, but he said that he expects the service to be very popular with the underserved population of horror fans once it catches on.

"We've been around for six months, funded with money from angel investors," Wolfe said. "Our vision is to start with horror, but also seek out niche areas and groups of passionate fans and enthusiasts and build content around them."

Frightpix

Frightpix is a subsidiary of Popcornflix, itself a veteran streaming service with four whole years under its belt. Unlike many other horror streaming services, Frightpix isn't subscription-based, but is entirely ad-supported instead. Executive Vice President David Fannon told Fortune that the service was founded in part because the demand for horror was impossible to ignore.

"Horror films always perform very well," he said. "It’s a great genre with a loyal following."

The movies are categorized by genre, including "Sexy Horror," "Cult" and an entire page devoted to the schlock movie studio Troma, of "The Toxic Avenger" fame. But a quick perusal of the available titles shows little in the way of familiar, mainstream horror films, and ugh! Those ads! What about all the people who don't want to sit through them?

Fannon didn't seem too worried about either consideration. He estimated that there were "more than a couple million unique visitors" through such platforms as mobile IOS, the web, Roku and XBOX 360, and he had a simple explanation for the success.

"In the ad-supported space, we're head and shoulders above the competition," he said. "We have better content and the quality's better."

Full Moon Streaming

Charles Band isn't just a former horror filmmaker and video distributor. He's also the owner of Full Moon Streaming, the company he founded a year and a half ago to keep pace with the viewing habits of today's horror movie consumer.

"I followed the lead of Netflix and got into the streaming business," he said. "But our movies are ones Netflix isn't carrying. We acquire the licensing rights to horror movies, sci-fi, grindhouse... movies you won't find on Netflix. We call ourselves 'Netflix for lunatics.'"

Full Moon Streaming is a little pricier than the competition at $6.99 per month or $65 per year in the U.S. However, subscribers get a lot more than just horror movies. The service offers exploitation films, science fiction movies, swords and sorcery fare and even deleted scenes from its horror selections. It also sells merchandise, a revenue stream that other services don't have.

"For every subscriber dollar we get three four back from merchandise," Band said.

He described the company as "marginally profitable," and said that the service has a zero attrition rate. He added that due to its unique business model, the company is well positioned to handle the perils of success.

"We own the content and license at the right price," he said. "So even if we triple the subscriber base, operating wouldn't cost any more."

The Crypt

Vini Bancalari is co-founder of The Crypt, a horror movie streaming service that launched in January. In the 1990s, he founded Elite Entertainment, a home video label that restored and re-released such classics as "The Texas Chainsaw Massacre" on Laserdisc and DVD, and he founded The Crypt after observing that the home video market was in a state of terminal decline.

The Crypt is currently only available on XBOX 360 and costs $3.99 a month, or $39.99 per year. But he told Fortune that this is about to change, and the service will soon be available to anyone with an IOS device.

"In the next month, we'll start streaming on the website," he said. "Any device with a screen, you'll be able to access The Crypt eventually."

Once that point has been reached, subscribers will find a wealth of material to choose from, including everything from such classics as "Night of the Living Dead" to more topical fare, such as "Bath Salt Zombies." Bancalari said that the library is always expanding, and he has big plans for the developing service.

"Technology has reached a point where we can do incredible things, and streaming is just the first phase," he said. "We're trying to have a lot of stuff that’s hard to find. We plan on licensing libraries from all around the world. You'll be able to search Mexican horror and Italian horror and so on. Our ultimate goal for The Crypt is to be a virtual horror convention that never closes."

Daniel Bukszpan is a New York-based freelance writer.

Cashing in on celebrities’ names: How relatives of famous people do it

2015-05-21T09:25:47Z

There's a deep-rooted tradition of the relations of successful people following in the family footsteps, whether in business, politics, or entertainment: you have your Heinz family, your Kennedys, your Barrymores.

But the following are examples of several relatives who benefit from the recognition of their famous family name when launching products or businesses in other fields. It's a fine line between appearing tacky (cashing in) and savvy (aligning one's own product with an established brand–and ideally borrowing some of the name's associated goodwill). Read on to find a rock star’s dad peddling a family recipe in the grocery aisle, showbiz daughters venturing into the fashion world, and more.

Bon Jovi

Photograph by Lorenzo Bevilaqua -- ABC Television/Getty IMages

Jon Bon Jovi's dad, John Bongiovi, Sr. is marketing his great grandmother's tomato sauce recipe under the family name (as originally spelled, but in the same typeface as his son's band logo): Bongiovi Brand Pasta Sauces.

Bongiovi, Sr. told the Asbury Park Press, "We're not just putting our name out there. I refuse to do that. It's good." And it's not only about money--part of the profits go to support the Jon Bon Jovi Soul Foundation, which helps combat hunger and homelessness in impoverished communities.

Middleton

Photograph by Max Mumby -- Indigo/Getty Images

The Duchess of Cambridge's parents Carole and James Middleton have run their party supply site Party Pieces since the mid-1980s, before their daughter married into royalty. However, since then, they've been criticized on several occasions when some items featured on their party supply website appear to cash in on their connection to the royal family. At the time of the royal wedding, they sold corgi cake toppers and plastic hats with Union Flags. In 2012 they drew attention for selling Royal Jubilee party items such as paper crowns, and later the same year when shortly after the princess' first pregnancy was announced, for selling plates that said "a new little prince."

Kate's sister Pippa Middleton, meanwhile, brought in around $366,000 last year. She is a columnist for Vanity Fair, a newspaper, and a magazine, and the director of PXM Enterprises Limited, which conducts "publishing activities. " She also wrote the critically-panned party planning book Celebrate: A Year of British Festivities for Families and Friends, which came with an advance of over $585,000.

McCartney

Photograph by Atsushi Tomura -- Getty Images

Fashion designer Stella McCartney is the daughter of Paul and Linda McCartney (the latter whom launched an eponymous vegetarian range of foods, along with her Beatle husband who she introduced to vegetarianism).

In 1997, when Karl Lagerfeld heard 25-year-old Stella, then just two years out of fashion school, would follow him as Creative Director of Chlo?, he remarked, "I think they should have taken a big name. They did, but in music, not fashion."

But then, Stella's graduation runway show had been front page news, accompanied by a song composed by her father for the occasion and with supermodel friends Naomi Campbell and Kate Moss on the runway. A London boutique bought that collection and designs were licensed to Neiman Marcus and Bergdorf Goodman, among others.

Madonna

Photograph by Kevin Mazur -- WireImage/Getty Images

In a collaboration similar to her other alliances with the youngs (Nicki Minaj, Britney, Justin, et.al), Madonna is also working with her daughter. Their fashion collection Material Girl is based on Madonna's punky 1980s style and billed as "created by the original material girl, Madonna, and her daughter Lola."

The juniors clothing line, sold at Macy's, debuted in 2010, when Lola (full name: Lourdes Ciccone Leon) was 13. At the time, Madonna told People Lola was, "much more fashion-forward and savvy than I am at this point." Lola, meanwhile, was promoting the line on her blog in typical teen fashion, writing statements such as, "I am totally obsessivo about 80's shorts."

Ellison

Photograph by Lester Cohen -- WireImage/Getty Images

Both the son and daughter of Oracle CEO Larry Ellison have become film producers. Megan Ellison produced Zero Dark Thirty and American Hustle, earning Oscar Nominations for both. David Ellison produced True Grit and Star Trek Into Darkness, as well as World War Z (the last title, by the way, was based on the novel by Max Brooks, son of Mel Brooks.)

David Ellison is also the founder and visionary behind the luxury clothing brand called The LANAI Collection, which is not obviously tied to the Ellison name, but is inspired by the Hawaiian island owned by David's father

Why small firms mean big business for cybersecurity

2015-05-20T16:57:40Z

With the disturbing revelation that a hacker may have infiltrated the computer systems of a United Airlines flight and possibly interfered with its navigation, the issue of cybersecurity should take on a new sense of urgency.

This comes on the heels of many other recent high profile breaches. Hackers stole the credit card information of 70 million customers from retail giant Target in 2013 and 56 million from Home Depot in 2014; this year, health insurer Anthem announced that cyber thieves swiped 80 million social security numbers from its computers; and last year, online auction site eBay suffered an intrusion that left 145 million user records compromised.

The damage to companies in terms of consumer confidence, public image, and legal trouble from such incidents can be considerable, but nowhere are the effects of cybercrime more dangerous than in finance, where highly sensitive information, large sums of money, and people's livelihoods can be jeopardized. The attack on JPMorgan Chase last summer, for example, that resulted in the theft of 76 million account holders' data was a huge black eye for the bank.

Despite this, only 43% of Fortune 1000 companies have adequate technical safeguards against cyber risk, according to risk advisor Willis Group Holdings. Studies conducted by the SEC and FINRA on the financial industry also show a mixed picture. While most big institutions have reasonably robust controls in place, including strong governance, risk assessment, technical safeguards, written policies and procedures, training, and vetting of vendors and business partners, not all firms are performing these tasks as diligently as they could.

The situation is worse for small firms.

For one thing, as cyber threats evolve rapidly and become more sophisticated, financial institutions can be hard pressed to keep up with latest developments, according to a 2014 report by the New York Department of Financial Services. Also, while large banks can afford expensive in-house systems for protection, smaller companies may lack the resources, or even awareness, to secure themselves. That leaves them even more vulnerable to attack. Ironically, these companies also have the most to lose since cybercrime could have a debilitating effect on their business.

This presents a promising opportunity for vendors who can educate and help smaller firms implement cybersecurity defensive measures, such as setting up firewalls, intrusion prevention and management tools, user roles and policies, and communication and data encryption--at an affordable price.

Ranjeet Sodhi, CEO of Pevnost Inc., a New York-based firm that helps organizations plan, build, and execute cybersecurity programs, says that the cost of implementing an information security perimeter should be evaluated against the potential damage that a cyber breach could cause. A hack for a small firm can be devastating since the costs aren't just limited to the immediate theft of financial or personal data (and lawsuits resulting from it), but also include private intercompany communications, vendor contract details, confidential business information, proprietary systems etc. Hackers could use such data to blackmail a company.

All of this illustrates the critical importance of cybersecurity for all organizations, but particularly smaller companies in the financial sector, and a sweet spot for cybersecurity vendors to focus on.

Kumar has worked in technology, media, and telecom investment banking. He has evaluated mergers and acquisitions in these sectors and provided strategic consulting to media companies and hedge funds. He does not own shares of any of the companies mentioned in this article.

How Whole Foods plucked this poultry startup for success

2015-05-20T14:25:56Z

Striking out as an entrepreneur is, if anything, a deeply humbling experience. Serafina Palandech, co-founder of artisanal poultry product maker Hip Chick Farms, knows this all too well. For Palandech, the harshest sting--and, arguably, the most important one for her business--came from none other than organic supermarket giant Whole Foods.

She was at the tail end of a loan application process with Whole Foods and was trying to figure out why her company’s products weren’t selling as well as she wanted. At the end of the meeting in Emeryvill, Calif. last March, a Whole Foods rep blurted out: You need new packaging. What you’re using is terrible.

Palandech was confused. After all, she and a friend had just redesigned Hip Chick’s packaging into tubs with an image of the product smack dab in the middle. She was proud of the design and didn’t think it needed to change. But it wouldn’t do, Whole Foods contested. And she had to face the facts. If she wanted a chance to bring her product to wider audiences and boost sales, she had to make a change.

After Sebastopol, Calif.-based Hip Chick Farms received a $35,000 loan from Whole Foods in May 2014, they put the entire sum toward a redesign. And it looks like it did the trick. The new packaging has colorful and crisp images, which are meant to highlight the products’ health-conscious and family-friendly focus. Hip Chick’s chicken fingers, wings, and meatballs are now in boxes, not the clunky tubs that proved too hard to stock in stores. Palandech said the new packaging had an impressive 500% sell-through rate beginning with its August launch last year.

Hip Chick’s organic chicken products are now in over 400 supermarkets, including 170 Whole Foods locations nationwide. Whole Foods put Hip Chick Farms on the map--as it has for many other small businesses, including Justin’s Nut Butters and Brad’s Raw Kale Chips--through its Local Producer Loan Program. The program started in 2007 and has since doled out $16.4 million in funds to 217 companies. Loans are disbursed directly from Whole Foods at an interest rate of between 4% and 6.5%. Erin Harper, who runs the program for Whole Foods, says she received the application for Hip Chick Farms in February of last year and the loan was finalized in May.

Whole Foods offers one of the only supermarket loan programs without the help of any aid from the federal government. The program isn’t only about giving money to small businesses, it also entails mentoring programs and networking opportunities for small business owners to work with local suppliers and to “develop long-term mission-driven companies,” a Whole Foods spokesperson told Fortune.

“Serafina and Hip Chick Farms are absolutely representative of what this program is about. They’re working to change the way the world eats,” says Harper. “This was created by concerned mothers” who wanted to feed their child with a healthy product, she continues. “That resonates with a lot of our customers.”

Palandech says that Hip Chick Farms doesn’t include starch, salt, or water fillers in its products, a rarity among chicken items in supermarkets. She and her wife Jennifer Johnson are also careful about their ingredient sourcing, making sure they know how the poultry has been treated from day one.

Hip Chick Farms was founded in 2013 by Palandech and Johnson, a chef with 25 years of experience. Johnson has prepared food for the likes of President Barack Obama and spent nearly a decade as a chef with Alice Waters at acclaimed California restaurant Chez Panisse.

Like many mothers, Palendech and Johnson wanted to feed their four-year-old daughter Rubyrose food they felt good about. But unlike other moms, they turned that desire into a growing business that is now on hundreds of shelves across the U.S. just one year after receiving that first Whole Foods loan.

While Hip Chick is aggressively entering new supermarkets in the U.S., Palandech admitted the company isn’t profitable yet. She expects the company to turn a profit by the end of 2015. Sales have been rising quickly, though, with the first three months of 2015 besting Hip Chick’s entire 2014 sales.

Why sell chicken? Johnson cooks for a Montessori school near their home in Sebastopol, Calif., and the kids always wanted one meal for lunch. “They just loved the chicken fingers,” Johnson says in an interview with Fortune.

The two knew they wanted to run a business together. And it looked like there was a market for chicken. “We wanted to pair Jen's amazing culinary skills and amazing recipes with real, transparent sourcing,” says Palandech.

Whole Foods paved the way, explains Palandech, who runs sales and marketing and manages the day-to-day operations at Hip Chick. Johnson is “definitely the creative,” she says of her wife, who works with ingredient sourcers and packaging partners. The business is expanding, and the duo has hired staff and opened a new office in Sebastopol (that’s not in their living room).

Palandech says that at least part of the company’s success so far has come down to luck. “We're literally in the right place at the right time,” she says. “Particularly, meat and poultry is doing very well.” These days, U.S. consumers want natural and organic products, while demand for fast-food has been flagging. Data from the U.S. Poultry and Egg Association shows that sales in 2013 for poultry products was $44.1 billion, up 15% from the year before.

David Lannon, Whole Foods’ executive vice president of operations, also offered a hand. Lannon, who also lives in Sebastopol, helped Hip Chick Farms get its initial loan after realizing they were neighbors. “It's a fun journey for them and for us,” he says, “It's celebrating the little guy.”

For more on Whole Foods, check out Beth Kowitt’s April cover story from 2014, “Whole Foods takes over America.”

FX probe settlements and Target’s turnaround–5 things to know today

2015-05-20T12:36:19Z

Hello friends and Fortune readers.

Wall Street stock futures are mixed this morning, while the dollar is stronger after April’s housing starts and dovish ECB talk earlier in the week.

Today’s must-read article is from Fortune’s Patricia Sellers and reveals who Yahoo CEO Marissa Mayer credits for giving her the best leadership advice. You just might be surprised.

Here’s what else you need to know today.

1. DoJ to settle with banks over FX manipulation

The Justice Department is expected to announce settlements with five banks over allegations that they manipulated global foreign exchange benchmark prices. The settlements are expected to include up to $6 billion in fines, as well as some guilty pleas after the banks violated earlier non-prosecution agreements with the DoJ over rigging interest rate benchmarks. UBS has already said it will pay $545 million to the DoJ and Federal Reserve.

2. A Fed update.

The Federal Reserve publishes minutes from its April meeting this afternoon at 2 p.m. ET, which could shed more light on what’s weighing on the central bank’s decision to eventually raise interest rates. The release could likely end any chance of a June rate hike, economists told MarketWatch. Following its March meeting, Fed officials seemed much more optimistic about a June move, but after a weak first quarter GDP reading economists are resetting their expectations.

3. Target reports earnings.

The Minneapolis, Minn.-based retailer reports its first quarter financial results before the market opens today. Analysts expect the company to report earnings of $1.03 a share on sales of $17.1 billion, representing flat year-over-year revenue growth. Target TGT will be trying to show investors that CEO Brian Cornell’s strategic turnaround plan, which includes a sharper focus on the baby, kids, style and wellness categories, has been making progress. (For more a deep dive into Cornell’s plan, Fortune’s Phil Wahba got it straight from the source.)

4. Is Salesforce looking for a buyer?

Salesforce CRM reports its first quarter earnings today, but investors will be looking for any indication of a possible takeover. Reports surfaced earlier this month that Salesforce was drawing buyout interest from tech bigwigs, possibly from Microsoft MSFT and Oracle ORCL . No official deal has yet surfaced. Investors will also be listening for an update on the company’s cloud software services and growth in their subscription and support revenue, which accounts for 93% of total revenue.

5. David Letterman bids farewell.

After nearly 22 years, David Letterman will grace the stage of CBS’s “The Late Show” for the last time. He passes on the hosting torch to comedian Stephen Colbert, formerly of Comedy Central’s “The Colbert Report.” It will be the end of an era for late night television. Letterman, which first started his show “Late Night with David Letterman” on NBC in 1982, surpassed Johnny Carson to become the longest-serving late-night talk show host in history.

Los Angeles just raised its minimum wage to $15

2015-05-19T21:19:34Z

The Los Angeles City Council has voted to ramp up the city's minimum wage to $15 an hour from $9 over the next five years.

The urban center is the largest among several cities--including Seattle, San Francisco, and Oakland, California--that have moved to increase pay for their lowest-earning workers. Once signed by the mayor, the L.A. law could affect as many as 800,000 workers, reports the Los Angeles Times.

Other cities, including New York and Washington, D.C., are still considering laws that would also set the local minimum wage at $15. (See this map of places where local minimum wage increases have been enacted or proposed.)

The first pay bump would occur in July 2016, increasing wages in Los Angeles to $10.50 per hour.

Why some employers are ditching the office — literally

2015-05-15T13:21:19Z

The workplace has reconfigured over past decades from private offices to cubicles, and now the de rigeur open plan schemes are seeing a backlash. It may well be that some people just have a problem with working out of an office — rather than their homes.

Nearly two out of three large companies in the U.S. permit occasional telecommuting, about double the number from 2005, a 2013 study found. But just 33% of major employers allow “regular” telecommuting–just 2% more than what it was in 2005. And the Telework research network found in 2013 that only 2.5% of Americans consider home their primary workplace.

Still, a small but growing number of companies are taking a more radical stance and doing away with offices altogether, relying on collaborative tools like Slack and Dropbox. There are 76 companies on the most recent list from FlexJobs of virtual companies and distributed teams. Those companies, which operate either mostly or entirely virtually, include tech outfits like Basecamp, Mozilla, Upworthy, and FlexJobs itself. The inaugural list last year had just 26 companies. The number of remote or telecommuting job listings on the site also rose 26 percent in 2014 over the previous year.

The open source software startup NodeSource has no headquarters and operates virtually using cloud-based tools like Google Hangouts, Slack, and Dropbox. Its CEO Joe McCann calls the work scheme “Distributed by Design,” since they planned it this way from the beginning. NodeSource has about 25 employees, about three quarters of whom are full time, scattered from New York to Austin to San Francisco, and internationally from London to Singapore to Australia. Employees are given Airbnb stipends, and everyone meets up once a year for an all-hands retreat.

McCann has not met them all, which he admits is “super weird,” but he brings up an example of seeing engineers sitting next to each other in an office, wearing headphones while communicating to each other via instant messenger.

“There's this bullshit myth that you gotta put them in the same room, but they don’t even talk to each other in person.”

McCann tells new hires, “Your job is not important–your life is.” But left on their own, they do take care of business. “We trust them enough to enable them to be great. It’s self-elevating because they feel this level of responsbility and autonomy in their lives–the results have been outstanding. My concern is how does that scale. I don't know. We're learning as we grow, but that core philosophy, that your life is the most important thing, has worked tremendously well.”

The idea goes back to McCann himself having a successful stint of working remotely abroad in 2010, and was bolstered when Marissa Mayer took over at Yahoo and began to rein in virtual workers. “When you build your business to be centralized from the ground up, it is nearly impossible to transition to virtual,” he said. But, he adds, “if we build it from the beginning, our natural process from sales to HR would be woven into the way the business was created.”

While the majority of companies on the distributed teams list are tech firms and startups, McCann sees this scheme working for businesses in the creative communications space, and creative professionals such as writers, design teams, and his brother, who worked for a large fashion design label from beaches in Thailand.

In McCann’s company, the job interview doesn’t even need to be in person. NodeSource recently hired Kevin Stewart as Director of Product Engineering, who McCann called “unpoachable” from Adobe–and whom he has never met in person. “We have a great working relationship, but I never saw the guy.”

However, some hires are better done in person–McCann recently traveled to Austin to hire a Vice President of Product. “He was the type I wanted to meet because of his specific role….I need to have that visceral feeling.”

And one department that benefits from meeting in person more often is the management level. McCann said that when meetings are held virtually, “The speed at which we can make decisions as leaders tends to be slower than if we were all in a room together and we can just make decisions.” They’re addressing that currently by tacking on in-person meetings when they gather monthly for board meetings.

Another challenge of distributed teams is scheduling meetings. “It's a pain in the ass, I'm gonna be honest,” McCann says. “If everybody was in North America, it would be easier. We have an influential gentleman employee in Australia, so every Monday at 6 p.m. when I'd like to be winding down my day I have to have a very focused call. You end up iterating different ways until everyone gets comfortable. We use UberConference, which lets you record when everyone can't make the meeting, which gets used heavily.”

Despite those challenges, McCann says “Distributed by Design” is working. “We're going to have to uncondition our brains–this is somewhat of an experiment that we're succeeding at so far.”

How the nail salon industry can clean up its act

2015-05-14T16:51:28Z

Last week, Sarah Maslin Nir's two-part New York Times expos? on New York City's nail salon industry spurred Governor Andrew Cuomo to enact emergency protections for the state's nail salon workers to guard against alleged labor, wage and safety violations. The story also raised an important business question: What should the industry do now to protect workers and rehabilitate itself in the eyes of customers? Unfortunately, getting an unvarnished answer isn't easy.

Most big brands don't want to talk about it. Nail product brand OPI, a division of Coty, and spa and beauty product giant Bliss World didn't return Fortune‘s requests for comment. L'Or?al USA, which acquired popular salon polish brand Essie in 2010, sent along a predictable email response citing customer safety as its "number one priority."

From those in the industry who will talk, there’s little agreement. Some spokespeople insist that products are safe, as long as they're used as directed, and say that educating nail technicians is the key to avoiding risk. Others, however, say that the industry must take broader action. Not surprisingly, many workers' advocates are calling for more regulation and enforcement, along with harsher penalties for nail salons that don't protect employees.

"The manicure-pedicure industry needs to look at what measures it can instantly impose upon itself voluntarily to head off substantial regulation. And [those measures] could be onerous," says Sam Singer, president of Singer Associates, a San Francisco-based crisis communication firm.

Wage and hour protections

Beyond allegations of wage theft and other violations alleged in the Times story, it's not unusual for salons to hire nail technicians on commission, which may not equal the minimum wage for the number of hours worked, says nail salon consultant Jaime Schrabeck, who is also the owner of Precision Nails, a salon in Carmel, California. Even workers who went to school and are licensed often do not know this practice is illegal, she adds. Schrabeck says cosmetology schools and other training facilities should also teach students and trainees about their rights when it comes to getting paid.

New York's new regulations require salons to be bonded, so those assets can be tapped for worker reimbursement if salon owners aren't paying fairly. Getting such a bond for several thousand dollars shouldn't be too prohibitive for salons, and would further protect employees, says New York City employment attorney Lloyd Ambinder, a partner at law firm Virginia & Ambinder, LLP, which is representing workers who filed suit against Envy Nails, alleging wage and other labor violations.

And while increased wages and bond requirements also increase overhead, investing in workers isn't necessarily a death knell for affordable services. Nail and waxing salon chain MiniLuxe, which has nine locations in Massachusetts and Texas, offers full-time employees 401(k) options, health care benefits, and paid time off. CEO Sue Thirlwall says these policies also helps it retain workers. MiniLuxe's signature manicure is still only $20 and its signature pedicure is $39.

Education and licensing

Over the past five years, the Occupational Health and Safety Administration (OSHA) has spent more than $1 million in an effort to educate the nation's roughly 87,000 nail salon workers about possible health and safety issues. But the licensing process, which is required in all 50 states, is the best route to reaching and educating them, says Bridget Sharpe, government affairs and industry relations manager with the Professional Beauty Association (PBA), an industry trade group. Licensing standards and requirements vary from state to state and the industry could use more consistency, she says. Sharpe adds that the PBA will be "reaching out to the [New York] governor's office to work together."

Charlene Obernauer, executive director of New York City Committee for Occupational Safety and Health (NYCOSH), a membership organization of groups concerned with worker health and safety, believes that barriers to licensure also put workers at risk. In New York, NYCOSH advocates removing requirements such as immigration status and having a tax identification number so workers can be licensed regardless of their citizenship status. She also says the exam should be offered in Nepali, as people from Nepal make up one of the largest populations of nail workers in the city.

"That’s a huge issue, and I think it's where New York State can really step up," Obernauer says.

Health and safety protections

Nail salon health concerns include long-term exposure to chemicals, transmission of infection and disease, and repetitive stress injuries. Schrabeck says that many major manufacturers have already removed the controversial chemicals toluene, dibutyl phthalate, and formaldehyde from their formulations. However, some salon owners buy cheaper brands that may contain the chemicals, which are legal in the U.S.

An emailed statement from OSHA says that it has been concerned about nail salon health issues and is looking at updating the agency's "outdated" Permissible Exposure Limits for Workers, which have not changed since their adoption in 1971. But regulatory consultant Doug Schoon, co-chair of the Nail Manufacturer’s Council (NMC) which was created by the PBA and includes nail care product manufacturers, says most risk can be eliminated through using products according to manufacturers' directions. That includes using gloves where indicated and ensuring that the salon is properly ventilated.

Still, not all nail salon workers are in a position to stand up to poor workplace practices. Schrabeck says salon owners need to take responsibility for the products they use and the working conditions in their salons. "At some point the salon owners have to be held accountable for what they’re doing. You can’t tell me they don’t know that what they’re buying, based on the price, based on the packaging, is not adequate, that it’s not meeting what would be considered the minimum standards for what should be used," she says.

In addition, she says simply requiring workers and customers to wash their hands before a manicure can help make conditions more sanitary. Giving workers adequate breaks, comfortable seating, and proper sanitizing equipment are all basic, but important practices in a well-run salon, she adds.

MiniLuxe avoids some of these issues by simply not offering certain services, such as acrylic nail application and others that contain harsh chemicals. The company's gentler approach helped it close $23 million in Series C funding in October 2014. Thirlwall estimates it will double its number of locations over the next year.

Enforcement

Ambinder says widespread enforcement of labor and health laws will be an essential part of change. He suggests giving salons letter grades, much like New York City restaurants currently receive. After a regulatory inspection, the salon would get a "grade" based on its ability to demonstrate compliance. If your salon meets health and wage standards, it may get an "A." Have poor ventilation or can't prove you paid your workers properly? You might get a "C."

Posting the report cards could motivate compliance and help some businesses attract customers. "I think that nail salons [with good grades] could double or triple their business," Singer says.

But, many experts agree that this is also an economic issue, driven by consumer demand for cheap grooming services. Even with all of the attention that's been paid to nail salon workers, the industry as a whole and salons, in particular, need to inform consumers about why it's time to stop shopping for nails done on the cheap.

"Ultimately everyone is getting shorted except for the salon owner," Schrabeck says.

Eurozone GDP, and Dupont shareholders vote — 5 things to know today

2015-05-14T13:39:46Z

Hello friends and Fortune readers.

Wall Street stock futures are higher this morning, helped by hopes for more stimulus measures in China and a broadly positive set of 1Q GDP data from Europe.

Today’s must-read story is by Fortune’s Matthew Ingram, who explains why Verizon will likely put The Huffington Post on the auction block shortly after it completes its $4.4 billion purchase of AOL to become the “world’s biggest media platform.”

1. Eurozone GDP outpaces U.S. in 1Q.

The Eurozone’s economy grew by 0.4% in the first quarter, according to a preliminary estimate by Eurostat. That’s the first time since 2011 that Europe’s currency union has outpaced the U.S., and owes much to the fact that low oil prices are a more unambiguous gain for energy-importing Europeans. All four of the region’s biggest economies–Germany, France, Italy and Spain, posted positive figures, while Greece fell back into recession, contracting by 0.2%.

2. DuPont shareholders vote on the company’s fate.

A four-month proxy battle between DuPont DD and activist investor Nelson Peltz’s Trian Fund comes to a head today when shareholders vote on new board members at the company’s annual meeting. Trian is DuPont’s fifth-largest shareholder with a 2.7% stake and is aiming to get Peltz and three other nominees on the 12-member Board of Directors. Peltz paints DuPont as an underachiever in its industry and is trying to split DuPont’s volatile materials business from its more stable agriculture, nutrition and health, and industrial biosciences units. Fortune’s Stephen Gandel has the full story.

3. U.S. retail sales continuing to recover?

U.S. retail sales likely bounced back from the winter doldrums in April as pent up demand sent shoppers into stores. Analysts predict that the Commerce Department will report a 0.2% gain in retail sales. Without car sales, shopping likely ticked up an even higher 0.5%, analysts estimate. Official numbers will be released at 8:30 a.m. ET.

4. Macy’s reports earnings.

Macy’s M updates investors on its quarterly results before the opening bell today. Macy’s has been making big moves to boost its bottom line, including expanding its beauty business through its recent acquisition of Bluemercury and opening “off-price” locations like competitors Saks and Nordstrom JWN . The first four pilot off-price stores will open in New York City this fall, the company said. Investors will be looking for more details. Analysts expect the department store to report sales of $6.3 billion and earnings-per-share of 62 cents.

J.C. Penney JCP also reports its quarterly earnings today after the market close.

5. Belgian biotech makes a splash.

Galapagos, a Belgian biotech company, will become the biggest biotech to debut so far this year when it opens on the NASDAQ exchange today. The company will raise as much as $250 million, with Johnson & Johnson JNJ and AbbVie ABBV accounting for $55 million of that sum. The company, which is valued at about $1.6 billion, already trades in Europe and its stock has gained over 130% year-to-date. The drug maker posted promising results from a mid-stage study of its rheumatoid arthritis drug in April.

--Reuters contributed to this story.

Square raises more money to make small business loans

2015-05-21T15:39:09Z

Square, the Silicon Valley payments company, is expanding its program that offers cash advances to small businesses using its payments app. The company announced on Tuesday that Square Capital has received additional funds from previous backer, Chicago-based Victory Park Capital (which tripled its original investments) and new investor Colchis Capital for its lending business.

Cash advances differ from a loan because they are generally for merchants who need money fast and may not qualify for a loan. Merchants receive a lump-sum payment in exchange for an agreed-upon percentage of future sales, as well as a fee. While cash advances can be a quick way to get extra cash, this particular financial product can also be expensive. Fees tend to be higher because the lender is taking on additional risk. Additionally, cash advances are not regulated as heavily as traditional loans.

Square, co-founded by Jack Dorsey, claims that its capital arm is growing at a fast clip. It has advanced more than $100 million to more than 20,000 businesses over the past year. In April, Square Capital advanced nearly $25 million in capital.

Square Capital offers cash advances to businesses that are using its credit card payments app who need cash fast, and don’t want to apply for a loan from a bank. Similar the way banks decide whether to issue a loan, Square will take into account company sales data and cash flow, among other information to determine if a business qualifies for a Square Capital advance (and what its fee structure should look like).

After Square lends the money, it recoups the money as part of a merchant’s future sales using Square point of sale app, Register. For example, Square may offer a business a $10,000 advance plus another $1,000 in fees, or 10% of the advance. The business will then have to pay back $11,000 and this money will automatically (and gradually) come out of future credit and debit card daily sales using Square over a fixed time. Square says it will take more money out of a merchant's' sales if business is doing well, and will take less if business is suffering.

Square says that 80% of merchants who have completed their first Square Capital advance have applied for a second cash advance.

Square burst onto the scene in 2009 when Dorsey, who co-founded Twitter, introduced a sleek white credit-card reader that plugged into a mobile phone, allowing anyone to accept credit card payments. It attracted nearly $600 million in venture capital and has grown to process as much as $100 million dollars in transactions per day for merchants. But it has also stumbled.

Parts of Square's high-profile deal with Starbucks SBUX recently ended--for about two years, the coffee purveyor accepted mobile payments using Square Wallet, a way for consumers to pay merchants using an app on their phone. Square discontinued this consumer-facing mobile payments app but continues to process payments for the retailer.

Square Capital is part of the company's renewed efforts to focus on providing financial and payments services to small businesses. Square also offers peer to peer payments, disputed purchases protection, analytics, and instant deposits for merchants using its Register app.

“Ultimately, Square Capital is a revenue generating tool for Square,” says Sucharita Mulpuru, analyst at Forrester Research. “And small businesses are Square’s bread and butter.”

Square isn’t the only company focused on offering cash adances to small businesses. PayPal and Kabbage offer similar services.

Verizon buys AOL, and a Picasso record — 5 things to know today

2015-05-12T14:36:38Z

Hello friends and Fortune readers.

Wall Street stock futures are lower this morning in the pull of the bond markets, which are being spooked by the prospect of higher U.S. rates and the threat of a Greek exit from the Eurozone.

In major M&A news, telecom giant Verizon VZ announced Tuesday morning it is buying AOL for $50 per share, or about $4.4 billion. AOL Chairman and CEO Tim Armstrong will continue to run AOL operations once the transaction is done. The deal is aimed at advancing the telecom giant's growth plans in mobile video and advertising.

Today’s must-read story is by Fortune’s Stephen Gandel and gives readers an inside look at the bruising four month battle between Dupont and hedge fund Trian, which will be decided this week. It offers a new window into whether shareholder activism is good for corporate America or crippling it.

Here’s what else you need to know today.

1. Picasso painting smashes world record at auction

A painting by Pablo Picasso became the most valuable piece of art ever to be sold at auction, fetching over $179.4 million in a sale at auction-house Christie's on Monday evening in New York. More records are expected to fall tonight when rival Sotheby’s holds its spring sale of Contemporary art.

2. Zillow earnings may not be up to snuff.

Zillow, the real estate website operator, reveals its first-quarter results after the market close today. Analysts aren’t too bullish on the company, which is expected to report revenues of $128 million and a loss of 42 cents per share. Zillow closed its acquisition of Trulia in February, though a Federal Trade Commission review may have held up the smaller competitor’s ability to sell, according to analysts. Zillow said in April that 2015 is a “transition year” and acknowledged that the company is “a couple quarters behind” where it would like to be post Trulia acquisition.

3. GoDaddy reveals its first quarterly results.

GoDaddy reports its first-quarter earnings after the market close — it’s first since going public in April. The web-hosting company, known for its racy commercials, has earned seven “buy” ratings from analysts, according to the Wall Street Journal. GoDaddy raised about $460 million when it debuted on the public markets April 1. Revenue grew about 52% in the past three years to about $1.39 billion. Analysts expect the company to report sales of $371.5 million and a loss of 37 cents per share.

5. Boeing holds its annual investor conference.

Boeing investors and executives gather at the company’s Chicago headquarters today starting at 10 a.m. ET. CEO Jim McNerney, COO Dennis Muilenburg and other executives will lead presentations followed by a question and answer session. Boeing is on track to meet its annual goal for Dreamliner deliveries based on its results released to date. So far 41 of the 787 models have been delivered this year, about a third of the 120 planes it intends to ship out in 2015. The airplane manufacturer has faced ongoing cost issues with the Dreamliner’s production, and CFO Greg Smith expects the company to start breaking even on incremental 787 sales later this year. The conference will be live casted here.

4. San Francisco Fed President John Williams speaks.

Federal Reserve Bank of San Francisco President John Williams will talk about the economic outlook before the New York Association for Business Economics today. The talk follows an appearance on CNBC Monday where he reminded investors that policy makers could raise rates at any meeting, depending on economic data. Williams is against pre-broadcasting any upcoming rate hike. “It’s healthy for the future actions to be uncertain because economic conditions can change,” he said.

--Reuters contributed reporting to this story.