Sen. Jerry Moran on Startup Act 2.0

With the House of Representatives introducing parallel legislation to the previously-introduced Senate bill, Startup Act 2.0, this morning, we took the opportunity to sit down with Kansas Senator Jerry Moran to talk about the bill and its prospects. Moran, one of the original sponsors of the Senate bill, and a formidable advocate for entrepreneurship and startups in the Senate, spoke about his views on the bill, the issues, the chances of passing the bill and more.

Tell us a little bit about the Startup Act 2.0. How does it compare to the original Startup Act and what’s new and better about this version?

Startup Act 2.0 is a bipartisan jobs bill written to spur economic growth by targeting policies toward the young companies that are responsible for creating almost all of the net new jobs in America. It contains many of the provisions of the original Startup Act but also adds two new job-creating ideas.

Startup Act 2.0 incorporates language from the Coons-Rubio AGREE Act to eliminate the per-country cap for employment-based immigrant visas, which has been a major factor in causing the backlogs that currently hamstring our legal immigration system.

In addition to eliminating the per-country caps, Startup Act 2.0 creates a targeted research and development (R&D) tax credit for startups less than five years old with less than $5 million in annual receipts. Because the current R&D credit can only be used against income taxes a company pays, startups without taxable profits cannot benefit from the credit. The R&D credit created in Startup Act 2.0 is designed to allow startups to offset employee taxes—helping these young companies grow and create jobs.

How does Startup Act 2.0 help small- and medium-sized companies and startups?

To build a successful startup, an entrepreneur needs a good idea, talented employees, capital, and an environment that fosters growth. Startup Act 2.0 creates new opportunities for talented foreign- born students and workers to stay in America so that they can employ their skills at innovative startups. It also makes smart changes to the tax code that will encourage investment in startups and will reform the federal regulatory process so that entrepreneurs can spend more time growing their company rather than trying to comply with government mandates.

The Startup Act seems pretty uncontroversial -- after all, who is going to argue with enabling job creation in a post-recession America? What kind of shot at getting this legislation passed this year do we really have, and how can Engine and its members help make this happen?

Many Washington critics say nothing gets done in an election year. Yet, our country cannot wait another 6 months or more to act on commonsense job creating ideas. Other countries are not taking this year off and Congress shouldn’t either. Since March 2012, seven countries have changed their laws to attract talent or offer incentives for entrepreneurs and new companies. This is an urgent issue that demands attention now.

Given the stalled immigration bill proposed by Rep. Chaffetz, passed in the House but stalled in the Senate, it seems like there could be definite roadblocks for the Startup Act. Are there some things that are more likely to pass than others? Is this an all or nothing kind of deal? What kind of opposition do you anticipate and what are you planning to do to give this legislation the best chance of passing?

Startup Act 2.0 is more than an immigration bill - it is the jobs package of this Congress. As unemployment remains above 8 percent for nearly 40 months, Americans are losing faith that Congress can help our struggling economy. Despite the hyper-partisan environment in Washington, this legislation has strong bipartisan support in both chambers. Additionally, Startup Act 2.0 creates American jobs at little to no cost to taxpayers, making the package attractive to many members concerned about our country’s fiscal situation.

Cantor: No Limits to Entrepreneurship, Continue the Startup Discussion

House Majority Leader Eric Cantor pushed the cause of entrepreneurs and startups on Capitol Hill today, emphasizing the importance of government’s role in the formation and success of small businesses. America should be the “Startup country,” the Virginia representative said at a conference on entrepreneurism, “We want to be the destination for the world’s best and brightest, for those willing to work hard, to take a risk and make something of themselves.”

Lawmakers are continuing to shift their focus to issues facing entrepreneurs, startups, and small business this year. Despite the presidential election, partisan division, and other seemingly intractable differences, members of both parties have been able to agree that Washington needs to get to work for startups.

Last week, a bipartisan group of Senators -- Jerry Moran, Mark Warner, Marco Rubio, and Chris Coons -- introduced a bill titled Startup Act 2.0 which would make critical reforms to the immigration system, incentivize the rapid commercialization of research and development, and lessen the tax burden on profits made by small, thriving firms. Engine encourages lawmakers in the House of Representatives to take up similar legislation to bolster small business, help startups hire talented workers, and incentivize the development of innovative products and services that grow the American economy.

Midweek Policy Roundup

Immigration

Senators Jerry Moran, Mark Warner, Marco Rubio, and Chris Coons introduced Startup Act 2.0 on May 22, building on measures introduced in December 2011 that create more visas for immigrants with advanced degrees in STEM fields, among other critical reforms for startups. Engine’s coverage here.

Privacy

The Federal Trade Commission announced the final agenda for a May 30 workshop focused on privacy disclosures for advertising and social media on mobile devices. The workshop, titled “In Short: Advertising & Privacy Disclosures in a Digital World,” will include participants from companies such as Facebook, Groupon, and TRUSTe. 

The FTC also announced the hiring of Paul Ohm, an associate professor at the University of Colorado, to serve as senior policy advisor for consumer protection and competition issues in the agency’s Office of Policy Planning. Mr. Ohm specializes in information privacy, computer crime law, intellectual property and criminal procedure, according to his personal website. 

Spectrum

The Federal Communications Commission held a workshop on channel sharing May 22. Channel sharing is an approach to broadcasting where two stations use the same broadcast infrastructure and television channel. This may maximize the amount of spectrum available in new wireless auctions. The commission will also consider a report and order on plans to ease the transition from 2G to more advanced technologies at its open hearing May 24. 

Cybersecurity

On May 21, Senator Ron Wyden gave a speech on the Senate floor opposing any cybersecurity legislation that would limit Americans’ privacy. The speech came as the Senate is said to be considering new cybersecurity legislation. Watch the speech here. 

Policy Update: Startup Act 2.0

Engine has been following closely the evolution of Startup Act, legislation designed to ease the way for startups to access the capital, skilled labor, and research that enables them to grow and prosper. We’re excited to bring to your attention the new and improved Startup Act 2.0, which was released this morning.

We voiced support for S.1965, the original Moran-Warner Startup Act, in March, which promised to provide tax credits for startups, reform the process by which foreign-born STEM graduates of U.S. universities are granted visas, and spur innovation by providing incentives for the commercialization of university research.

Startup 2.0 keeps many of the provisions of the original, and adds key measures for skilled immigration from the Coons-Rubio AGREE act -- in particular, the removal of per-country visa caps. A new R&D tax credit specifically for startups with less than $5 million in annual receipts has been added to allow startups to offset employee taxes and to counterbalance the existing credit which is overwhelmingly used by businesses with over $1 billion in receipts.

After consultation with universities, the new version of the Startup Act modifies the provision dealing with university research to ensure that the rules set forth in the Bayh-Dole Act are not altered. Bayh-Dole, or the Patent and Trademark Law Amendments Act, was adopted in 1980 to ensure that small businesses, universities and nonprofits have ownership of intellectual property created from government funded research.

Some of the earlier measures of Startup Act, such as the call for a comprehensive analysis of the impact of Sarbanes-Oxley on startups, have been removed from the new version due to an overlap with JOBS Act, which was passed earlier this year and dealt with access to capital for startups, most notably legalizing crowdfunding. The income tax credit of S.1965 has also been eliminated as a means to making the bill more fiscally feasible, with Startup 2.0 costing less than 20 percent of the original bill.

We are encouraged by the Senate’s willingness to work on policy initiatives that will have a direct impact on jumpstarting the American economy. We look forward to their colleagues in the House following suit. It’s time to set the table for legislation like Startup Act 2.0 and continue the debate on these fundamental issues that drive our economy.

Correction: An earlier version of this article incorrectly stated that the capital gains exemption of the original Startup Act has been eliminated. The actual provision removed for the release of Startup 2.0 is an income tax credit. Startup 2.0 features a permanent exemption of the capital gains tax on startup stock held for at least 5 years. 

Federal Trade Commission Review of Facebook-Instagram Gives Pause

The Federal Trade Commission is probing Facebook’s $1 billion purchase of Instagram, according to a May 10 Financial Times report. That the government is looking into the deal is no surprise -- the Hart-Scott-Rodino Act compels companies striking large deals to notify the FTC and Justice Department. While this first look is procedural, a deeper review may signal regulatory concerns about the deal.

Facebook’s purchase dwarfs the threshold for a “large” transaction under antitrust law, which uses an inflation-adjusted figure that was set at $68.2 million for 2012. So the Instagram purchase is literally a “big deal” to regulators, which means there is a 30-day waiting period before the deal can be consummated, or potentially much longer if the FTC decides to apply further scrutiny.

The two regulatory authorities -- the FTC and DOJ -- review transactions to ensure that companies do not possess “market power” that would harm competition. What does this mean? A post-merger company isn’t permitted to raise prices, reduce innovation or output, or otherwise harm consumers. It is important to note that it is harm to consumers, not competitors, that regulators primarily monitor. A transaction’s impact on competitors raises regulatory concern where it hits consumers, such as when a company controls supply of a good, which opens up the opportunity to unilaterally raise its price. An unnamed source suggested to the New York Times Bits Blog that the deal presents a threat to mobile advertising competition, potentially affecting prices.

A May 15 Securities and Exchange Commission filing by Facebook has ignited some speculation that the federal government is initiating a further review of the purchase. Facebook amended its S-1 ahead of the company’s initial public offering to extend the estimated closure of the deal. The filing originally anticipated the deal would close by the end of the second quarter, but the amended filing states that the deal is “expected to close in 2012.” (see page 66) Facebook also agreed to pay a $200 million termination fee to Instagram if the deal falls through.

In-depth antitrust review would likely play out over several months. Reuters reported May 10 that the FTC made inquiries to Google and Twitter about the transaction. Twitter also was rumored to have considered purchasing developer Tap Tap Tap’s Camera+ app after Facebook struck the Instagram deal. Neither the companies nor the agency are commenting on the process, so it is impossible to tell whether moves by other companies may have influenced the agency’s questions.

While a lot of noise has been generated about the regulatory probe, is it really likely that the government will pursue an antitrust injury created by the purchase of Instagram? The Obama administration has increased antitrust enforcement, particularly on horizontal mergers -- deals where companies acquire their direct competitors (think AT&T buying T-Mobile). Vertical mergers -- where one company purchases another in a different line of business -- have tended to see less competitive scrutiny (think Ticketmaster merging with Live Nation).

Moving to block the purchase of Instagram may pose a variety of new questions to antitrust experts, but should startups be concerned about the reports of an FTC probe? At this point, the likely answer is no. Most purchases won’t face the regulatory scrutiny that a buyer like Facebook generates. Between the company’s multi-billion dollar IPO, privacy investigation by the FTC, and acquisition activity, Facebook has repeatedly drawn attention from the government in 2012.

Government scrutiny of large companies’ acquisitions may be of growing importance to startups going forward, especially where industry-leading firms such as AT&T and Verizon aim to make acquisitions and face FTC or Justice Department review. Delaying the close of a deal can impede the development of small businesses and harm startups making the next step in the evolution of their businesses. Engine will update as the review progresses.

Marvin Ammori: One of Fast Company’s Most Creative People

Marvin Ammori was just named number 32 on Fast Company’s “100 most creative people in business” for his stewardship of the takedown of SOPA and PIPA. We caught up with him to talk about SOPA, First Amendment in tech, and what it means to be a creative leader in a digital world.

So, you're on Fast Company's Creative Business list...?

Yes. It's great that Fast Company decided to feature the creativity of the anti-SOPA movement and it was obviously an honor to be chosen as the person to represent that creativity. There were millions of activists involved and perhaps hundreds of leaders in business, academia, entrepreneurship, cybersecurity, music, and civil liberties. 

The Internet itself is the world's greatest engine of creativity -- for speech, culture, and business. The anti-SOPA movement was organized much like the web itself, with loose networks and nodes through which lots of people could contribute their creative ideas, test them, and collaborate to make them a reality. Fast Company profiled me, but I was just one of many devoted people fighting the bills, so many of whom exhibited amazing creativity.

Tell us about what you did for the SOPA fight and why it was important.

To stop SOPA and PIPA from becoming law, you couldn't play the usual inside-the-Beltway DC game. You needed activists, organizers, lobbyists, lawyers, and a coalition of business, civil liberties groups, entrepreneurs, and just ordinary citizens who rely on the Internet. 

I am a First Amendment lawyer. What I could do was interpret the statute as confidently as any of the opposing lawyers, and to analyze the First Amendment implications and problems. I also have experience working on public campaigns for Internet policy issues. So, while the other side would explain what the law did inaccurately, I could provide the right analysis, explain it clearly and simply to allies, congressional staff, and the general public. I was not the only lawyer fighting to stop SOPA, and we all learned a lot collaborating with one another.

Beyond the lawyers, other people were experts in cybersecurity (Paul Vixie), or handled the lobbying (Public Knowledge among others) and public activism (Fight for the Future, Demand Progress, Electronic Frontier Foundation) and organized Silicon Valley entrepreneurs (Engine). They could all rely on my legal analysis, just as I could rely on their skills.

What other tech issues have first amendment implications?

Almost all of them. The Internet is our infrastructure for speech in the 21st Century. We need to ensure all Americans have access to high-speed, open Internet connections, wired and mobile, and that individuals (not Hollywood or the telcos) control how people can use those connections. So network neutrality, bandwidth caps, Internet-for-all initiatives. All of these will determine who can speak to whom in our society, with what tools, and whether they need permission, and from whom.

What’s next for you?

I am thinking through a project on the connection between policies that foster entrepreneurship and those that foster freedom generally (like freedom of speech). And I'm supposed to be writing a book. I will probably call Hamish Chandra, an Engine Advocacy advisor who is my creativity guru, to coach me on becoming as creative as the 32nd most creative person in business should always be.

http://ammorigroup.com/

@marvin_ammori

From Geek to Wonk

Thomas Gideon has been a programmer for over ten years. He has created a podcast for the last five that examines public policy issues that impact the tech sector -- in particular copyright and privacy. Learning about public policy is not all that different from learning about technologies, he says -- both are complex and multifaceted systems. Furthermore, if technologists want sensible policies and regulations for the sector, they need to inform themselves about the current structure in order to enact change.

In his latest podcast, available here, Gideon discusses his own experience with learning about policy. He talks about the frequently rallied battle cry of technologists to abolish all regulation in the space and that policymakers shouldn’t legislate on issues they don’t understand. His argument? There is also value in the existing structures, and we need to understand them better before we try to scrap everything and start fresh. And the policymakers will legislate whether they understand or not.

Gideon’s solution is for technologists to take the first step in bridging the gap of understanding. We need to act on multiple fronts, he says. For every agitator that brings issues of importance to the attention of policymakers, there needs to be at least one counterpart committed to finding ways to connect these two forces and steer policy changes that affect us on a day to day level. We here at Engine aim to be one such conduit by aiming to give you, as an entrepreneur or founder or investor, a voice in these debates.

So take a listen to Gideon’s comments, and let us know: what issues are you facing as an entrepreneur or as a developer? What solutions have you found that you would like to communicate to people in positions of power who can effect change on those issues?

Midweek Policy Highlights

This week in Washington: the FTC goes deeper on privacy, Facebook amends its SEC filing to account for potential regulatory review, and immigration and spectrum remain hot topics.

Finance

Facebook amended its S-1 filing with the Securities and Exchange Commission ahead of its initial public offering May 15. The filing extended the expected closure date of the $1 billion Instragram purchase from the second quarter of 2012 to 2012 generally. The move could signal deeper scrutiny by regulators on the competitive impact of the deal. Currently, the transaction is in a procedural 30-day review under the Hart-Scott-Rodino Act premerger notification program. Engine will continue to monitor the review and its potential impact on future startup acquisitions.

Privacy

Associate director of the Federal Trade Commission’s division of privacy and identity protection Maneesha Mithal spoke at a Congressional Internet Caucus event on Monday about the agency’s recent report on privacy. She highlighted recent settlements with social networks including MySpace that involved companies’ adherence to their privacy policies.

Edward Felton, the agency’s chief technologist on leave from Princeton University’s Center for Information and Technology Policy, also blogged this week on the technical details of recent moves by the government to address privacy on social media platforms.

Immigration

Engine blogged earlier this week on moves by the Department of Homeland Security and Congress that may help startups gain access to more highly-skilled immigrant workers. Senator John Cornyn is said to be introducing a bill that would boost the number of visas available to immigrants with graduate degrees in science, technology, engineering, and mathematics fields.

Spectrum

Federal Communications Commission chairman Julius Genachowski is slated to give a speech May 17 at 10:30 EST on spectrum reallocated to support “medical body area networks” (MBAN). GE Healthcare and Philips Healthcare are scheduled to demo MBAN devices. Repurposing spectrum for new technologies is a major priority to open innovation across industries and MBAN is a major development in the healthcare field. A live stream can be viewed here.

Mapping New York’s Tech Startups

Mayor Bloomberg announced the rollout of the Made in New York digital map today as part of his continuing push to brand New York as a tech hub. The map, available here, visually lays out tech startups across the five boroughs by geographic location, lending credence to Mayor Bloomberg’s assertion that New York’s Silicon Alley is growing as a nexus of innovation and entrepreneurialism. The map also allows startups to post job listings -- according to TechCrunch’s count, 324 startups are currently looking for applicants.

A study released last week by the Center for an Urban Future showed New York’s rapid expansion in this sector -- in terms of pure growth, New York is second only to Silicon Valley and San Francisco when it comes to tech startups, growing 28.7% in the past 5 years. The study also hit on key measures to ensure the continued rise of innovation in the city, which we discussed in depth here. The study found that, as in Silicon Valley, continued opportunity and growth in the sphere of tech innovation and entrepreneurship in New York depends on the enactment of key policy reforms in skilled immigration and broadband access.

The growth of this sector of the economy is not only confined to Silicon Valley or New York. Cities across the U.S. and around the world are celebrating their own successes in the sphere. London has a startup map similar to the Made in New York map. But what is most encouraging of all is that policymakers and city officials like Mayor Bloomberg are showing their commitment to fostering startups. There is plenty more to do, locally and nationally, but we’re glad more advocates are standing up for startups, wherever they are.

Congress Weighs STEM Visas as DHS Extends Some Grads’ Stay

The Department of Homeland Security announced Friday an expansion of the number of Science, Technology, Engineering, and Mathematics (STEM) degree programs that qualify students to stay in the United States after they graduate. The move comes as legislation is set to be introduced that would expand the number of visas available to STEM graduate degree holders. Reforms like these are a step in the right direction toward meeting the demand for highly-skilled labor in the United States.

STEM graduates fuel the startup ecosystem by providing skilled labor critical to startups that develop innovative products and grow the American economy. Research has shown that many high-skilled immigrants go on to start successful companies of their own, further boosting job prospects for native-born Americans and generating large amounts of revenue. On Friday, CQ reported that Senator John Cornyn plans to unveil legislation that may increase the allotment of visas for immigrants with graduate degrees. While no specific language has been released yet, Engine will monitor and update on the bill as it emerges.

Bad immigration policy not only constrains the labor market, it also impedes the creation of entire businesses. U. S. Citizenship and Immigration Services (USCIS) has launched an initiative aimed at easing the visa process for foreign-born entrepreneurs. This is just one step forward in fixing a broken immigration system that is in need of broad reform, but these small changes can have a meaningful impact on small- and medium-sized businesses that are fighting for the talent to make their startups succesful.

Health IT Dashboard Opens More Government Data

Developers have expanded access to government health IT data through a dashboard released Wednesday -- a move which opens up possibilities for the creation of new applications and tools in the health IT sector. The Heath IT Dashboard allows the public to track and analyze data from the Office for the National Coordinator for Health IT. The information is beneficial to the startup ecosystem, expanding a valuable toolkit for the development of products using data.

Open government data can fuel products that empower citizens and

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grow businesses. At a May 7 Code for America event in San Francisco, Ellen Miller of the Sunlight Foundation and Tom Steinberg of MySociety demonstrated tools built on government data that give everyday individuals valuable information on government services and a voice in their communities. These web-based tools demonstrate the potential market for developers to both build businesses and add value to local, state and national governments.

There are plans to expand the dashboard in June. More data are to be added on electronic health records and other health care technologies implemented by the federal government. Technology may play a critical and non-partisan role in making care more affordable, accessible, and straightforward for patients in the United States.

In addition, the expansion of wired and wireless broadband to remote communities may open the door to telemedicine for rural Americans. Mobile medical applications and innovative medical devices offer the opportunity for startups to make a move into the health care market as well. Open government data is one step to opening up data-driven innovation across government and industry, with health care representing just one field for growth.

“New Tech City”: Improve Education, Expand Broadband, Reform Immigration

Image by kaysha.

Education and immigration reform are vital for the continued success of startups and of the American economy as a whole. A study released on Wednesday highlighted startups’ importance to the economy and recommended broader efforts to incorporate technology in schools and more innovative approaches to the U.S. visa system. In no place are these needs more apparent than the focus city for the study, New York.

The study -- “New Tech City” -- was conducted by the Center for an Urban Future with support from AT&T and the Association for a Better New York. The findings of the study demonstrate New York’s place as a tech hub, eclipsed only by Silicon Valley and San Francisco purely in terms of growth. The study identified 486 startups that had received angel, seed, or venture capital funding in the city of New York since 2007 and more than 1,000 web-based startups, most of which haven’t received funding. The number of jobs in the New York information technology industry grew 28.7 percent over the past five years, increasing by about 12,000 according to data the study drew from the New York State Department of Labor.

The study addresses key issues facing startups around the country, emphasizing the need for the reform of key issues that are affecting startups today. We need immigration reform to allow more highly-skilled immigrants to work at startups, enhancements of broadband and wireless infrastructures to connect businesses and consumers, and support for schools to prepare teens for careers in STEM fields.

Silicon Valley and New York City are known centers of innovation, but the startup story of these places can be replicated in communities all across the United States. To achieve these successes, policy should support small companies, which play a vital role by creating new jobs, improving local economies, and providing consumers with innovative products and services.

Fighting a Global Battle with Startup Act

Sen. Jerry Moran (R-KS) took to the

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Senate floor this morning to urge his colleagues to take action on Startup Act, a bill to facilitate job growth through startup businesses. You can watch the video here.

Startup Act, sponsored by Sen. Moran and Sen. Mark Warner (D-VA), aims to create an environment that makes it easier for startups to thrive and by doing so to boost the U.S. economy. Sen. Moran cited evidence that startups are responsible for almost all new net job growth in the last 30 years, and highlighted the fact that startup growth is slowing down for the first time in recent history -- an indicator that should prompt us to act now to pass policies that encourage the growth of this vital sector of our economy.

Among its many provisions, Startup Act aims to retain top talent in America through the expansion of entrepreneurial visas. Moran said that the danger of creating a hostile environment for U.S. businesses to retain foreign-born talent is that it will start to make more sense for them to move their operations overseas, to places like India and Brazil, where there is access to high concentrations of high-skilled STEM workers -- a situation in which

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“The future of our economic competitiveness depends on America winning the global battle for talent,” he said.

Sen. Moran urged Congress to buck conventional wisdom that legislation can’t be passed in an election year and act on these urgent issues. And with an issue as important as securing a place for startups leading the American economy, we hope his colleagues heed his call and begin more work on Startup Act soon.

Midweek Policy Highlights

This week in Washington, lawmakers consider issues including immigration reform, privacy, and wireless innovation.

Immigration 

Senator Jerry Moran is expected to speak on the Senate floor Wednesday, May 9 on the subject of immigration, visas for highly skilled workers, and the U.S. economy. Senator Moran introduced the Startup Act of 2011 which aims to increase grants for university-based research and adjust the number of visas available for highly educated immigrants, among other

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provisions. (Politico Morning Tech) 

Privacy

The Senate Commerce Committee will hear testimony from Federal Trade Commission Chairman Jon Leibowitz on the agency’s privacy report. FTC Commissioner Maureen Ohlhausen and Commerce Department General Counsel Cameron Kelly also are slated to testify on privacy recommendations made by the administration. (Senate Commerce Committee) 

The Federal Trade Commission also announced a settlement with Myspace on Tuesday May 8 over the company’s misrepresentation of its protection of users’ personal information. In addition to releasing a statement on the settlement, the commission published a blog post underlining the importance of companies’ adherence to their privacy policies. (Federal Trade Commission) 

Spectrum  

Federal Communications Commission Chairman Julius Genachowski addressed International CTIA Wireless 2012 -- the wireless industry association’s New Orleans-based conference -- leading by welcoming the confirmation of two new FCC commissioners: Ajit Pai and Jasseica Rosenworcel. Chairman Genachowski also addressed the commission’s effort to increase the efficient deployment of spectrum for next-generation wireless services. (Federal Communications Commission) 

Cybersecurity

Senate democrats are said to be reworking a cybersecurity bill introduced in 2012 by Senators Joe Liberman and Susan Collins. A new measure would follow on the heels of the Cyber Intelligence Sharing and Protection Act (CISPA) which passed the House last month over protest from many in the online community and a veto threat from the Obama administration. (The Hill) 

Privacy from a Developer's Perspective

Micah Jaffe is the Engineering Lead at Hattery, working on iOS and Android development with one published app on iTunes. After 15 years as a developer in Silicon Valley at Stanford, Yahoo and many startups he has a special interest in and appreciation for the legal and ethical issues which developers must navigate. Follow him on Twitter @zeade.

Data is at the core of mobile technology offered by startups across the United States. The popularity of smartphones, tablets and other connected devices has led to an explosion of data consumption and generation by consumers. Pervasive mobile technologies -- paired with new businesses, social networks, and applications -- have created opportunities for innovators to grow a vibrant market of applications. Aggregate data from Google and Apple show 40 billion downloads of available mobile apps, according to a March post by Flurry and a May post by the Verge. 

Reviews, geolocation, status updates, and a host of other information create a base upon which thriving startups provide exciting and unforeseen services to consumers. Without access to this data, many companies growing the national economy would not have the opportunity to develop new products or enhance services for their customers.

It is in this context that lawmakers in the U.S. and around the world are considering new rules and regulations for consumer privacy protection. The Federal Trade Commission released its final report on consumer privacy in March including recommendations for businesses and policy makers. The FTC also announced a workshop on mobile privacy to be held May 30, 2012. 

Despite efforts in Washington, the requirements and responsibilities for app developers remain unclear. There seems to be a broad, if unofficial, consensus that the app maker should be accountable for consumer privacy -- but there isn’t a roadmap for developers to navigate this challenging legal landscape.

Last week I attended the App Developer Privacy Summit, hosted by the Future of Privacy Forum. The event’s purpose was to engage mobile app developers on present and emerging privacy regulation on the use of consumer data in apps. As a developer, this seemed like a rare opportunity to have some of my questions about privacy answered and to participate in the process of policy development. However, I was disappointed with the lack of clarity provided to developers on how to implement sound privacy practices.

What we need is a new perspective on privacy. Often, when we say “privacy,” we really mean “trust of personal information.” A privacy policy is about creating trust, and when a user feels that trust has been broken, that’s when strong measures like litigation come into play. App makers must be vigilant -- and government should legislate accordingly -- to protect and secure personal information online.

The fact is, there are very few practical tools to achieve perfect compliance with the demands for consumer privacy, especially for startups. Small business startups are feeling the most pressure; as the financial and opportunity cost expended on understanding and complying with policy become larger and the fear of litigation grows. To prevent a chilling effect on innovation in the mobile app space, there needs to be a transparent process that clearly dictates the following:

• To policy makers: what compliance looks like.
• To developers: transparency regarding the spirit of what you’re planning to do with the consumer data you collect.
• To the users: clear expectations of what specific types of information will be used for regardless of context, in order to “future-proof” the process.
• To the enforcer: when to enforce based on what contravenes “safety” in this space.

These are the questions that should be addressed in state and federal legislation. Too much regulation, poorly conceived regulation, or ill-informed enforcement must be avoided. Private sector solutions may prove to be the best way forward.

Clear privacy policies are a good start -- like those created by generators including iubenda and other concise policies. Clear communication of the spirit of the policy in regards to the app is also important. For example, it’s expected that an address book app would in fact read your address book, but taken out of context, that behavior seems much more sinister -- as was the case with Path.

By altering our approaches to these types of data, policy makers and app developers can move the privacy debate into new territory and take steps to create an environment where startups will continue to thrive. I’m hopeful that government and startups will take the right steps together toward security, privacy, and openness by developing more a mutual understanding of data.

Microloans: Powering Local Startups

Local initiatives like the San Francisco Revolving Loan provide entrepreneurs with access to small, low interest loans, and have proven to be incredibly successful for the startups that use them. These microloans are a great resource for local entrepreneurs and can be used by any qualifying startup, be it food truck or mobile app.

For startups, the first big challenge they most often face after creating their product is getting funded. There are a host of federal legislative measures currently being discussed that are aimed at easing the way for entrepreneurs to access capital, like the JOBS Act, which legalizes crowdfunding -- smaller, crowdsourced investments for equity in companies. But there are also plenty of local initiatives to spur the growth of startups.

Jason Elliott, the Director of Legislative and Government Affairs at Mayor Ed Lee’s office, spoke to Engine about the San Francisco Revolving Loan Fund. The fund was started by former Mayor Gavin Newsom and has proved very successful -- it provides “microloans” for small businesses to be used for any purpose in the business aside from hiring, which are recycled back into the program once they have been paid back. Mayor Lee’s desire to continue to foster the initiative as part of his agenda to create jobs means that 1.5 million dollars will be added to the fund this year with supplemental appropriation from the city’s general fund, which was extra robust this year.

“The need is astronomical. We have had hundreds and hundreds of businesses contact us, in the 300-400 business range, saying ‘I want to access this program’”, Elliott said.

The businesses that have used the program -- 28 of them so far -- have created or retained 74 jobs, and are largely founded by non-traditional entrepreneurs: 56% of the founders are women, 37% are minorities, and 67% come from economically disadvantaged backgrounds.

Urban Bazaar is one such business -- founders Briana Bers and Brandi Chalker, who spoke to Engine, are low-income women, without access to bank loans or other traditional sources of capital. They accessed the loan through TMC Working Solutions. “We were able to open our business because of the SF Revolving Loan Fund, which was our only outside source of startup capital”, Brandi said. Urban Bazaar, like its founders, is focussed on nurturing a community, and sources its products from a network of Fair Trade groups, small artisan cooperatives, and independent U.S. artists and craftspeople. Along with sourcing from local artists, Brandi and Briana involve the local community by hosting events and offering various workshops -- from craft and terrarium building to as marketing and business building workshops for local independent artists that are aimed at inspiring and educating others to do what they’ve done.

“I love small businesses and the small business culture in San Francisco especially. I believe that  more investment in startup businesses is a surefire way to help our economy recover and inevitably see more sustainable growth. It's unfortunately too difficult to find the funds to start a business for many people who have great ideas and the skills to make their ideas into a reality, which is why programs like the Revolving Loan Fund are so important,” Brandi said. 

Programs like the Revolving Loan Fund can breathe life back into local economies nationwide. “Any city that can make the commitment to support small business will reap the rewards of expanded economic development and economic activity,” Elliott said.

San Francisco isn’t the only city with programs that promote local entrepreneurship. Here are a couple of other government initiatives for startups:

• The federal program for Small Business Innovation Research, or SBIR
• Seattle’s CDBG Small Business Loan Fund 
• Ohio’s Third Frontier program 
• Michigan’s SPARK business accelerator 
• And all of the cities on this list: 

Know of any others? Let us know about what your city is doing.

Image by teamjenkins

Downes Recommends Congressional Action on Spectrum

With mobile broadband users gobbling up bandwidth at unimaginable speed and the prospect of new FCC auctions for more radio frequency years away at best, attention is turning back, once again, to the federal government itself. Federal agencies are the largest single holder of licensed spectrum. And they are notoriously unwilling even to acknowledge what, if anything, they’re doing with it.

In 2010, the FCC raised the alarm on spectrum in its National Broadband Report, estimating that mobile users urgently needed an additional 300 MHz. by 2015 and 500 MHz. by 2020. The White House followed up with an executive order directing the Department of Commerce’s National Telecommunications and Information Administration to identify as much spectrum as possible that could be freed up by government users. 

Nearly two years later, the NTIA has now issued its first substantive report. After polling twenty different federal agencies holding some 1,300 frequency assignments, the report seemed to offer good news. The agency identified nearly 100 MHz. of desirable spectrum that the government could vacate within ten years. In some cases, it might even be possible to share the frequencies with commercial users during a transition period starting as soon as five years.

But behind the summary, the details proved less encouraging. Not one of the agencies believes its current uses were or would become obsolete by 2020, meaning that for every band being cleared, replacement spectrum would have to be found elsewhere—and elsewhere, as it turns out, is in every case a frequency already licensed to another public or private entity. 

Relocation costs were estimated by the agencies themselves at $18 billion. Either the agencies didn’t tell NTIA how they arrived at these numbers, or else the report simply chose not to include the details. Perhaps that’s because the reported costs appear to have been reached simply by picking a number high enough to discourage the FCC from moving forward with the plan. (By law, the FCC cannot auction the spectrum if the expected returns don’t exceed the costs of relocation.) 

Any sharing, finally, would be conditioned on new commercial users acknowledging the priority of any remaining government squatters, a factor likely to depress auction prices further.

Congress, it seems, is none too pleased by bureaucratic foot-dragging thinly disguised as enthusiastic cooperation. Earlier this week, bi-partisan leadership on the House Energy and Commerce Committee announced the formation of a task force that will "take a comprehensive, thoughtful, and responsible look at how to improve federal spectrum use.” 

The committee went farther Thursday with the introduction of bi-partisan legislation that would require government agencies, particularly the Department of Defense, to clear out of a key 25 MHz. block of spectrum (a block included in the NTIA report) within five years. Under the proposed law, the FCC would be required to auction that spectrum for use by mobile broadband consumers, paired with frequencies in higher bands that has already been cleared. (Spectrum is often paired in this manner to enable devices to use different frequencies for sending and receiving information.)

Committee members don’t say so explicitly, but it’s hard to miss the implication that technology-focused lawmakers aren’t impressed by the slow progress NTIA has made in freeing up some of the government’s vast spectrum holdings. Not that NTIA is entirely to blame here—the agency only coordinates federal spectrum use; it has no power equivalent to the FCC’s role in private licensing and oversight.

Congress is right to give the agencies a swift kick in the butt. The spectrum crisis is real. It is already, as users in some metropolitan areas well know, having a negative impact on the remarkable expansion of mobile services, one of the few bright spots in a sour economy. We need to free up spectrum quickly, and stop coddling users—public and private—who are hoarding spectrum for which they paid nothing and with which they are hosting uses that are increasingly obsolete or inefficient.

The FCC and the NTIA are either unwilling or unable to move fast enough to head off disaster. So Congress needs to accelerate its deployment of both carrots and sticks. This week’s developments are steps in the right direction. But we need to be sprinting, not walking, toward real solutions to the spectrum crisis.

Larry Downes is the author, most recently, of “The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age.” His earlier books include “Unleashing the Killer App: Digital Strategies for Market Dominance.” Follow him on Twitter @LarryDownes.

Energy Department Highlights STEM Education for American Jobs

This week, the Department of Energy is highlighting the importance of science, technology, engineering, and mathematics (STEM) education to the future of America’s workforce. The department devoted about $100 million to smart grid workforce development as a part of the 2009 economic stimulus.

Beyond promoting more sustainable energy consumption in the United States, smart grid technologies provide the opportunity for innovators to develop products and create jobs for American workers. An education agenda that prepares students for a high technology future is a critical component for continued economic growth and a sustainable energy infrastructure.

Startups are already playing a role in smart grid development and deployment. The Energy Department’s green button initiative gives 15 million households access to their energy consumption data by securing commitments from utility companies including ComEd, Pepco and PG&E to use common standards allowing for the development of web and smartphone applications.

The department has also launched the “apps for energy” challenge offering $100,000 prize to software developers that create an application that allows consumers to make the most of the green button data.

Another Way to Start the Conversation

This past weekend in Seattle, the first ever government focused Startup Weekend was held in City Hall. It followed the usual Startup Weekend model of building a product over the span of just one weekend, but with a special emphasis on taking advantage of open data to build businesses that worked with government to provide a product or service to the public. Seattle Mayor Mike McGinn, already a big proponent of open data, opened the event.

If you’re not already familiar with Startup Weekend, it’s an event series hosted worldwide in which enterprising developers, designers, and business experts come together, pitch ideas for businesses, form teams, and then get it done -- all in the span of a weekend. Come Sunday night, the teams present a demo of their product and their business plan in a pitch, and the best are selected as winners.

In this session, there was no shortage of ideas to fuse open data with private sector entrepreneurship, from web and mobile apps that engaged with arts and events data, to local community volunteer opportunities, socially curated legislation, and a directory for Seattle’s best locally grown businesses. WhichBus, a public transit trip planner that showed route safety based on crime data, tied first place with ArtRover, a mobile app that used geolocation technology and data on public art works to make the art of Seattle’s streets easier to access. The teams from these apps will meet with Mayor McGinn to discuss their business ideas. 

Participants proved their mettle at finding private sector solutions to public sector challenges, often under the mentorship of local government attendees, and in a shorter time than many who are familiar with the general timeline in the public sector might think possible. And while these businesses are not fully formed at the end of a weekend, some teams will stick together and keep working at it.

Zachary Cohn, facilitator of the event, noted Startup Weekend’s knack for bridging divides for common cause -- the Startup Weekend held in Gaza sparked business ideas that Israelis and Palestinians formed teams to work on together in easy accord, he said. With previous successes like that, bridging the divide between public data and private sector entrepreneurship was easy by comparison. And the teams that competed this past weekend demonstrated this, with great ideas transforming into great products in a very short amount of time.

Startup Weekend hopes to continue these open government workshops, including one coming up in Washington in June. We’re very supportive of their efforts and look forward to working with companies that grow out of these and other Startup Weekends in the months and years to come.