Business Advice

What you can learn from these seven controversial stories that put companies in the spotlight in 2017

Emma Koehn /

From branding blunders to company names that miss the mark, each day in the world of startups and small business sparks conversation and controversy.

Running a business is a complex process, and some of your decisions as an entrepreneur will attract more attention than others. This year SmartCompany and StartupSmart have asked the experts for their take on hundreds of incidents that have got the business world talking.

What can you learn from these high-profile stories that got big attention this year? Have a look at these seven examples. 

Target’s ‘gendered’ toy kits

The story: Target Australia was accused of promoting gender stereotypes last month after customers hit out at its ‘My First Carry Along” product, which included a blue medical kit and a pink beauty kit.

The expert view: Head of Marketing Angels Michelle Gamble said that while Target has made headway in showing diversity in its catalogues, the backlash in this instance shows brands still have a long way to go when advertising to kids.

Equality is really high on the agenda right now, so the quicker a business embraces it, the more forward thinking and progressive they will appear,” she said.

500 Startups controversy prompts national discussion on startup culture

The story: The Victorian government pulled support from a planned “500 Melbourne” accelerator program in the middle of the year after allegations emerged against the founder of US outfit 500 Startups, Dave McClure, who was reported to have engaged in inappropriate conduct towards those in the startup ecosystem.

The expert view: In discussing what Australian startups can do to prevent a culture of harassment from taking hold here, chief executive of Startup Muster, Monica Wulff, said it was critical that company leaders set the tone for acceptable behaviour.

I see it coming down to culture and senior members of staff reinforcing that culture. You can create policies, but unless they’re reinforced and led through example they won’t be followed,” she told StartupSmart in July.

Competitors hit out at $2.5 million Shark Tank company

The story: Three Australian coffee capsule companies raised questions about the Shark Tank pitch of a business that secured a $2.5 million investment offer from Andrew Banks.

Mad Coffee Capsules, Coffee Caps and Smart50 alumnus Podpac wrote an open letter to Network 10, suggesting claims that the iCapsulate business had contracts with “Australia and New Zealand’s largest coffee companies” were false. The founders said “vague statements” contained in the pitch did not reflect “the true state” of the coffee pod industry in Australia.

The fallout: iCapsulate did not respond to requests from SmartCompany for comment back in June. At the time, Andrew Banks confirmed he was undertaking a long process of due diligence on the company, and was awaiting answers on the biodegradable status of the company’s products.

Coles chocolate change courts vegan rage

The story: A change to the ingredients and packaging of Coles’ own-brand dark chocolate product prompted widespread concern from vegans, who claimed the much-loved item was no longer free from milk products.

The expert view: Branding expert Michel Hogan told SmartCompany at the time that the mass outrage actually presented an opportunity for smaller operators.

Given the supermarket had already changed the product, Hogan said the controversies was a good time for small businesses to share vegan products with potential new customers.

“So if I was an SME chocolate provider with a vegan, fair trade chocolate in my arsenal, I’d be all over social media with this one,” she said back in July.

Fair Work pursues Her Fashion Box

The story: The Fair Work Ombudsman took Shark Tank contestant Her Fashion Box to court in June, alleging the the company underpaid three workers more than $40,000 between 2013 and 2015. The Ombudsman also claimed the business had engaged a university graduate with a graphic design degree for two days a week for six months through an unpaid internship agreement.

The expert view: Trent Hancock, a senior associate at law firm McDonald Murholme, told SmartCompany at the time the claims were a reminder for businesses to think about how workers are being classified.

On the topic of unpaid internships, he said to think carefully about the nature of the work being done by interns. 

The most important factor to consider is the type of work done by the worker in question. If it produces revenue or profit to the business, they would be considered an employee,” he said.

The Bodega controversy

The story: The founders of an automated store startup in the US were heavily criticised when they unveiled their name choice this year, with many people claiming the name of the business was culturally insensitive.

Calling their startup “Bodega”, the founders said the aim was to remove the need for “centralised” shopping locations, with customers instead relying on small, automated popups. However, the launch prompted concerns that the startup wanted to put traditional corner stores, known as bodegas in the US, out of business.

The fallout: In a post on Medium, Bodega co-founder and former Google employee Paul MacDonald admitted the startup did not realise the name would cause such offence, and said the team would take the criticism on-board.

Despite our best intentions and our admiration for traditional bodegas, we clearly hit a nerve this morning, we apologise. Rather than disrespect to traditional corner stores  —  or worse yet, a threat  —  we intended only admiration,” he wrote.

Handsome Her’s choice sparks backlash

The story: A Melbourne cafe caused a stir when it launched in Brunswick in August because of its choice to introduce a voluntary 18% tax for male customers to acknowledge the gender wage gap.

Handsome Her also informed customers that women would have priority seating in the venue. The news prompted mixed reactions on social media, with some questioning why male customers should be asked to pay more.

The expert view: Director of Inside Out PR Nicole Reaney told SmartCompany the cafe had clearly targeted a female customer base, and appeared to have a strong strategy around the 18% tax.

She advised businesses looking to employ similar policies that could attract criticism to first plan how they intend to respond to concerns. 

“In this day and age, if you are putting yourself out there in the public domain, you have to prepare for both the positive and negative comments,” she said.

“Just let it ride its wave, and it will settle down eventually.”

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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  • bezbox

    That Handsome Her gender tax one was a disgrace. How a business can deliberately target a particular sex and tell them to pay more for an identical product is beyond me. It flys in the face of anti-discrimination, but because it hitched its cart to the “gender pay” issue it was left alone by authorities and championed as “brilliant” by many.