Let me just start by mentioning that I have become quite politically independent and bi-partisan over the past 10 years. In fact, I am probably going to register as an Independent soon. I was not always that way, when I worked briefly as an intern for Senator Bill Bradley on Capital Hill in the 1980s. Things have changed dramatically since then mostly related to influence and money. Now in my mind there is little difference between the political parties when it comes to what is good for startups. Sitting with another startup friend of mine last week, we both concurred that big money and big donors have decided to move into politics and decide for us what is good for us. Trust me, big money is not looking out for startups (unless they own it).
We had a saying in our tech startup incubator we ran for a year in Boca Raton that whatever political party walked in the door, we would be that party. So I have been a Democrat, a Republican and an Independent at times.
I am not specifically endorsing a political candidate or any political theory what-so-ever. In fact, since we are in the most interesting presidential primary elections I have seen in my lifetime, I just want to express what would be the best for startups that would result from this election.
This year has turned the normally uninteresting political season into an episode of reality TV.
All the winners of this week’s New Hampshire primary are the candidates who refuse to take any money from SuperPACs. It has been a crazy primary season. But it all makes sense to me. Just follow the money.
The concept of Citizen’s United, that funds can be raised in any amount for any candidate is so ridiculous and dangerous it seems to be most important factor startups should pay attention to.
Another dirty little secret if you don’t know it already is presidential candidates can personally take their campaign funds and legally pocket the money if they drop out with funds left over, while Senate and Congressmen can not pocket leftover campaign funds. So, some are in it for all the wrong reasons. Well, once again if they are in the race for the money, don’t vote for them.
Anyway, there are some obvious things the startup community would like to see happen that could have a tremendous impact on the startup economy around the US if important legislation are carried out or removed. Some are in the works. Some are just a sketch of mine on a pad. Some are things happening in other countries that are seemingly working. But, no doubt, and I am not mincing words about this, we need to stop funding big corporations to create jobs! It may have some temporary impact on the economy or military, but trust me in the future jobs will not be created by large corporations, but rather by startups that become competitors and innovators along side the existing corporations. So, we need to at least talk about strategies to help startups compete and grow.
But, this concept of looking out for Startups is an idea no SuperPAC supports! We don’t see money flowing into “let’s create tons of startups-dot-com”. I only see money with an agenda, hiding behind Citizen’s United, which basically states that the largest corporations are equal to individual citizens in their freedom of speech and therefor the Wal-Marts of the world (as well as Chinese political groups, the richest and the most powerful and let me throw in Saudi princes, ISIS, Vladimir Putin and drug dealers as well) can spend anything they want on political elections in the US without anybody knowing who put up the funds! That is the law today as it stands if you were not listening carefully to the facts.
Sounds pretty ridiculous and dubious to you, right? Well, that is what is going on right now. Obviously this law needs to be changed to even consider startups getting a chance. We will get to the power of the startup community later on, because if you are a member you should listen up.
Here are critical things that need to happen this year and hopefully next year with potentially the election of non SuperPAC candidates. I think you are starting to see I am for any candidate as long as they are not beholden to corporate interests and they believe in startups.
Title 3 and Title 4 Equity Crowd Funding
Equity Crowd Funding is where you can raise up to a million dollars from friends, family and guys you meet on the Internet legally and directly through qualified parties. Equity Crowd Funding is not the same as the current KickStarter and Indiegogo. Those crowd funding platforms are crowd funding for a product, service, prize or future something. We are talking real stock, real equity crowd funding, where small time investors get a piece of the pie (stock) with investments under $2,000. There are a ton of regulations and rules to follow to protect investors. I believe Title 3 crowd funding was supposed to happen this February. But it almost seems like an insidious Wall Street and SEC are pushing back and seem to be wary and keep delaying it. Crowd Funding is obviously a competitor of Wall Street. So, trust me the forces to slow it down and trip it up are there and continue to slow down the passage of the final equity crowd funding laws. Your political answer: Find out if your candidate is for startup equity crowd funding. If they are against it, tick them off your list of candidates.
Low Cost Startup Space
Because startups do not have a SuperPAC nationally (that I know of) and they obviously don’t always have a voice on where government spending should be carried out, it is not always clear where low cost space for startups will come from. A bunch of national co-working firms like WeWork and Workville have emerged. Co-working is not startup space. It is cool space, but it is not free and in NYC it costs quite a bit. Once again don’t quit the day job when building a startup. The only startup space that is free today is at your mother’s house, your friend’s couch or in the confines of Universities, which can be stifling. Also, tech incubators are not free. They often require taking a chunk of equity of the startup, which is a potential answer like Y-Combinator. Let me let you in on a secret. Startups all across the country are parked in libraries and Starbucks, where they get wifi for free already. So, don’t close libraries just yet! Instead add a bunch of conference rooms and a coffee bar! Ever notice all these people with Macbooks at your local Starbucks. That’s our next economic growth in action. So the government is indirectly funding them or Starbucks is! Let’s just say, if your candidate is asked about funding low cost startup space and they’d rather fund Lockheed Martin, Exxon, Verizon or Halliburton as a job stimulus. Well, let’s just pass on that candidate.
Trans-Pacific Trade Agreement
Take a look at this article which is not good news on VentureBeat.com about the Trans-Pacific Trade Agreement: http://venturebeat.com/2013/11/16/what-startups-need-to-know-about-tpp-the-secret-global-trade-agreement/. This article points out that this agreement has the potential to give large global corporations potential to stifle startup innovation and competition through allowing greater global enforcement of patent, copyright and trademarks. It is good news for Patent Trolls, the people who contact you and tell you things like you can’t put a URL in smartphone text without a license from them (which costs $700k). Not sure if you know that one! The biggest issue is the rules for this trade agreement were completed behind closed doors. Let’s just say the outside candidates in both red and blue parties that just won the primary are not in favor of this Trade Agreement passed by the Obama administration. At least the red candidate has said he is against it. This is actually a big one for Startups and it is not a red vs. blue issue. It is however an issue of reading the law and understanding the impact.
Immigration & Illegal Aliens
Not sure if anybody really acknowledges the contribution of immigrants to the startup community. Immigrants are still more likely to start a business in the US that US born citizens. While I am not a big fan of outsourcing anymore, I am saying that immigrants are a good thing for the startup world here in the US. eBay was founded by an immigrant and so was an early Facebook founder. Every other tech startup person I meet is an immigrant. So you can’t attack immigrants and be for the startup community. They go together. What you can do is be for reasonable laws and directives for immigrants, where they can follow a path to citizenship. Immigrants are motivated more than most Americans to start a business and to go to places like Detroit where nobody else will… Large numbers of illegal aliens are in the US because they are being lured by farms, manual labor and household work. How should we approach the issue politically related to startups. Transparency. Let people who are not criminals come to the US, but they need to contribute and not live off the system.
More tax dollars go towards stopping illegal aliens and paying their unpaid medical bills at hospitals than money going into Startups. There is something wrong with that.
Once again I only see the outsider candidates really wanting to discuss these issues. If a candidate plans on doing nothing about immigration and illegal aliens, then tick them off your list.
The movement to legalize marijuana has already created a massive startup industry in both Denver and California. There are positives and negatives to legalization, but the fact is that startups are doing well and growing in this area. Therefor, you may not believe in it, but you can bet that this is a growth area that does not need to be stopped, but rather carefully managed. In general the startup community is for it. The question for you is, is your candidate for legalization of marijuana? If they are not, tick them off your list.
I give health care an exclamation point because this is probably the biggest financial obstacle to running a startup. There is no good answer. If you are under 26 and covered by your parents, that helps, but come on, is every startup founder under 26? Actually we estimate the startup founder age in Boca Raton, Florida to be around 45. And as you know most 45 year old startup founders have kids of all ages from 1 to 29 years old. And they have health issues. If you don’t qualify for Obamacare, which you can if you are not making anything, you are basically stuck with a crappy high deductible plan for your family. That means you pay every dollar up to $20,000 a year in addition to the premium. And all you are really covered for is catastrophic. Not every startup founder is a serial entrepreneur from silicon valley on their 5th venture with savings. If you are even considering leaving your job to startup, take notice!
So the political answer is clear. Startups benefit from health costs having nothing to do with business! So, not sure which side will do it, but the answer is a regulated system and somehow startups get a break. Both the outsider red and blue candidates are saying this! One thing I have noticed in the past year is a ton of startups coming out of France and other western European countries. Why this sudden surge? Well, we are talking about the real startup issues here. They don’t have to lay out $6,000 to $20,000 a year in health care premiums before going to the doctor. The government has set the prices and during the startup period, these startups get coverage. The US government should do something in this case. At least fix the prices and qualify startups somehow. It just makes sense.
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Have a great day. If you disagree with me completely, let me know.