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Bosses Say They Want Their Offices Back
by: Vanessa Fuhrmans
May 23, 2017
Click here to view the full article on WSJ.com

TOPICS: Office design

SUMMARY: This article focuses on office design, particularly as it pertains to the CEO of a company. Nearly 70% of U.S. office spaces are open-concept, compared with 64% two decades ago. Led by CEOs such as Michael Bloomberg and Zappos's Tony Hsieh, more executives have ditched the corner office for an open desk to project camaraderie with the masses and encourage collaboration. But as employees and managers squeeze closer together, productivity and morale have suffered. In a review of more than 100 studies of work environments, British researchers found that despite improving communication in some instances, open-office spaces hurt workers' motivation and ability to focus. "When you're in a territory that's clearly yours, you perform better," says Sally Augustin, an environmental psychologist cited in the article.

CLASSROOM APPLICATION: Ask your students to weigh in on the pluses and minuses of open office designs. Go to Google Images and type "open office design" into the search bar to get a good perspective of the different types of open office design concepts. Talk about the pluses and minuses of open office designs for student new business incubators.

QUESTIONS: 
1. (Introductory) What are the pluses of open office designs? To what degree do you think the value of open office designs depends on the type of work a company does?

2. (Advanced) In your judgment, what types of companies are best suited for open office designs? What types of companies are best suited for traditional office layout concepts (where the majority of workers have their own offices)?

3. (Advanced) If you were opening a student new business incubator and money and space weren't a consideration, would you select on open office design or put the student or student teams in individual offices? Explain your answer.

Reviewed By: Bruce Barringer, Oklahoma State University

Investors Bet on Unicorn for Spinning Classes
by: Cat Zakrzewski
May 25, 2017
Click here to view the full article on WSJ.com

TOPICS: Business Models

SUMMARY: Investors have left the old stationary bike behind. Instead, they're turning to a mix of slick tablet-sporting stationary bikes, high-octane spinning class instructors and interactive streaming video as the fitness industry's next big thing. For example, Peloton Interactive, which makes a $1,995 video-streaming stationary bike, has raised $325 million at a $1.25 million valuation. Part of Peleton's appeal to investors is the $40 a month it charges users for access to video streaming classes. This aspect of its business model provides Peloton recurring revenue. The downside is that the price of its bike and the monthly fee may limit how wide of a market it has. Peloton is not alone. The health and fitness market is expected to swell to more than $30 billion by 2020. The market consists of strong players at the low end, with gyms such as Planet Fitness and 24 Hour Fitness, and strong players at the high end, such as Soul Cycle and Flywheel.

CLASSROOM APPLICATION: Take a look with your students at Peloton (www.pelotoncycle.com) and speculate on how large Peloton's market is. Talk about the pluses and minuses of investing in Peloton (which offers remote video streaming spinning classes) opposed to SoulCycle (which offers live studio classes). Talk about the fitness market in general and its future potential.

QUESTIONS: 
1. (Introductory) On a scale of 1-10 (10 is high), how much potential do you think Peloton has, in terms of the size of its market and its earning potential? Explain your answer.

2. (Advanced) Is this a good time or a bad time to launch a startup in the fitness industry? Defend your answer.

3. (Advanced) If you were an investor and could invest in either Peloton or SoulCycle, which one would you choose?

Reviewed By: Bruce Barringer, Oklahoma State University

Drones Keep Flying Higher, but Makers' Profits Sputter
by: Dan Gallagher
May 25, 2017
Click here to view the full article on WSJ.com

TOPICS: Drones

SUMMARY: Consumer drone sales are taking off, but profits in the business have been hard to come by. Gartner estimates that consumer drones generated about $1.7 billion in global sales last year, up 55% from the year before. One company-DJI-dominates the market, and its position is likely to get even strong with the introduction of the Spark, the smallest drone DJI has ever produced. Starting at $499, the Spark can take off and land on its user's hand, and can be controlled either by gestures or smartphone. DJI is based in Shenzhen, China, and is valued at $10 billion, which makes it the 13th most valuable venture-backed company tracked by the Wall Street Journal. Although it is the fourth-largest seller of drones in the U.S., it remains unprofitable. Two other drone companies, 3D Robotics and GoPro (which makes a drone called Karma) have also struggled. 3D Robotics is reportedly trying to raise a new round of funding at a valuation that's lower that it commanded two years ago and GoPro has admitted that drone profits are thin.

CLASSROOM APPLICATION: Discuss with your students the consumer drone market. Analyze it based on Porter's Five Forces model. Speculate on why profits have been hard to come by, and whether now is a good time or a poor time for an entrepreneurial firm to enter the consumer drone market. Discuss the future of consumer drones. Also, discuss the current status and future of the commercial drone market.

QUESTIONS: 
1. (Introductory) Spend some time looking at DJI's Web site. What do you think of the company's drones? Would you enjoy owning and operating a DJI drone? Why or why not?

2. (Advanced) Why do you think profits have been hard to come by in the consumer drone industry?

3. (Advanced) On a scale of 1-10 (10 is high), how would you rate the future potential (in terms of both sales and profitability) of the consumer drone industry? Do you think interest in consumer drones will continue to increase or do you think it is somewhat of a "faddish" industry and interest will wane over time?

Reviewed By: Bruce Barringer, Oklahoma State University

Venture Funds Flood the Sector With Wads of Cash
by: Scott Martin
May 25, 2017
Click here to view the full article on WSJ.com

TOPICS: Venture Capital

SUMMARY: Venture capital investing is heating up. Investors injected $14.5 billion into U.S. venture-backed startups in the first quarter of 2017, up 37% from the previous period. Recipients of venture funding included financial services, which saw a 15% bump in funding. Fintech startup Social Finance raised $500 million in the period. Another winner was information-technology startups. After a cooling period the past year, investment edged higher. Investments in software companies edged higher as well. Consumer services did not fare as well. The consumer services sector saw a 17% decline in investment dollars in the first quarter. Instacart, a food delivery startups, bucked the trend. It raised $400 million in the period. Among the biggest winners was health-care. Health care investors returned in earnest in the period. Grall, which is developing cancer tests, attracted $914 million, the largest deal in the period.

CLASSROOM APPLICATION: Go over these results with your students. Speculate on the reasons venture capital investing is heating up. Look at the specific sectors mentioned in the article, and discuss why some sectors are doing well while other sectors have experienced a decline in investment. Look at Social Finance, Instacart, and Grall. Discuss why each company has attracted substantial venture capital funding.

QUESTIONS: 
1. (Introductory) Speculate on the reasons venture capital investing is heating up.

2. (Advanced) Why do you think health care is attracting substantial venture investing?

3. (Advanced) Look at Social Finance, Instacart and Grall. Discuss why each company has attracted substantial venture capital funding.

Reviewed By: Bruce Barringer, Oklahoma State University

Startup's Rocket Reaches Space but Misses Orbit
by: Andy Pasztor
May 26, 2017
Click here to view the full article on WSJ.com

TOPICS: Industry Evolution

SUMMARY: Rocket Lab, a startup seen as a trailblazer for frequent, ultralow-cost access to space, failed to reach orbit on its first flight. The launch was a partial success, because the Electron rocket's nine main engines and the single engine powering the upper stage lifted a test payload high enough to reach space. Rocket Lab is a closely held U.S.-New Zealand company. Rocket Lab's hope is to carry what is anticipated to be swarms of small commercial and scientific satellites in the next few years. Rocket Lab exemplifies the fledgling industry known as "New Space": a more nimble, Silicon Valley-like approach to designing, producing and testing rockets and small satellites that relies heavily on automated manufacturing and frequent modifications to hardware. Other companies in the "New Space" industry include Blue Origin, SpaceX, and Virgin Galactic. Rocket Lab was able to design, build and launch its rocket in roughly four years and with a relatively small staff.

CLASSROOM APPLICATION: Discuss the "New Space" industry with your students. Talk about the promise of the industry and how the industry's approach to designing and building spaceships differs from NASA's. Discuss Rocket Lab specifically, and the role it hopes to play in the industry.

QUESTIONS: 
1. (Introductory) Compare and contrast Rocket Lab to SpaceX and Blue Origin.

2. (Advanced) If you were an investor, would you invest in a "New Space" company? Why or why not?

3. (Advanced) How does the New Space industry's approach to designing and building spaceships differ from NASA's approach?

Reviewed By: Bruce Barringer, Oklahoma State University