Congressional Hearing Highlights Troubling Practices at the Patent Office

Bad patents hurt innovation. This is especially true when they end up in the hands of patent trolls, who often use them indiscriminately to extort settlement payments. While we are glad to hear the Patent Office (PTO) has been increasing its efforts to improve the patent examination process and, in turn, patent quality, a recent government oversight hearing in Congress on telework abuse brought to light several PTO management practices that can’t help but hurt progress toward increased patent quality.

Some background on the joint House Judiciary and Oversight hearing: The PTO has long been recognized as a leader in telework, allowing employees the flexibility to work from home, and has leveraged it recruit and retain examiners. A few years ago, serious allegations surfaced regarding time and attendance fraud and ineffective oversight regarding the telework program. In response, the PTO conducted an internal investigation and issued a report in July 2013. Unfortunately, that report was considerably watered down from a more critical draft report, which—perhaps not surprisingly—was never released.

At the hearing, Oversight Chairman Issa, who has a few dozen patents of his own, emphasized the importance of patent quality; he even joked that he was sure some of his patents were invalid. Judiciary Chairman Goodlatte and Congressmen Connelly and Cummings zeroed in on PTO practices that hinder quality, and called for a reassessment of performance metrics to ensure that quality is not sacrificed to quantity. We couldn’t agree more.

Chairman Goodlatte and others expressed concerns about the examiner “count system,” which creates a series of incentives for examiners, essentially giving them credit for accomplishing certain tasks, e.g., approving a patent application. The count system is often criticized for pushing examiners to not give patent applications the time they really deserve and, as a result, issue unworthy patents. There have been efforts to reform the count system, however any real change has gotten mired in negotiations with the Patent Office Professional Association, otherwise known as the Patent Examiners Union.

Another issue that came up was "end-loading” of work by examiners at the tail end of each quarter and how that practice undermines quality. Supervisors, who have limited time to review the quarter’s work, cannot effectively monitor the quality of work submitted when it comes in a flood of end-of-quarter submissions. Apparently, the practice is rampant. At the hearing, PTO representatives reported that they were in discussions with the Union to address end-loading, but no details were provided as to how or when that would happen.

The patent system in this country is not working, and startups and small inventors, faced with a growing patent troll problem, shoulder the resulting costs. As Congress and the courts work to fix the problem, the Patent Office, too, must do its part. The mismanagement that came to light during the recent congressional hearing leads directly to more low-quality patents, which are a patent troll’s favorite weapon.

The good news is that President Obama recently nominated Michelle Lee to direct the Patent and Trademark Office. Michelle Lee, who currently acts as the agency’s deputy director, would not only be the first woman and first minority to hold that post, but she has a background rare in a long lineage of PTO directors: a patent lawyer from Silicon Valley who has worked for and at companies who operate in the software space. For all these reasons, and more, we strongly support Michelle’s nomination, and recently said so in a letter to Senators Leahy and Grassley.

We’re hopeful that under strong leadership, the PTO can clean up the problems that plague it and, in turn, return to its core mission of issuing patents that actually incentivize innovation instead of hindering it.

The SEC Could Drastically Limit the Pool of Startup Investors

It’s no secret that the availability of capital is critical for early stage startups. While entrepreneurs may find some initial financial support by tapping into the generosity of friends and family, once those pockets dry up, they often turn to angel investors—individuals who put their own money into what they see as promising ventures. While a small cadre of wildly successful angel investors have made millions from betting early on companies like Google and Twitter, thousands more across the United States are investing in early-stage startups in dozens of industries every day.

According to the Angel Capital Association (ACA), angels provide 90% of outside equity raised by startups. And in 2013, this group invested $25 billion in 71,000 companies. That’s impressive. But this number could drastically change depending on if and how the Securities and Exchange Commission acts after their review of the accredited investor definition, a status most angels depend on to pursue these private investments.

Whether the Commission should revise the definition of accredited investor was one of the topics at issue during the SEC’s Government-Business Forum on Small Business Capital Formation held last Thursday at its DC headquarters. The Dodd-Frank Act—the 2,300 page financial regulation bill—mandates, among other things, that the SEC undertake a comprehensive review every four years of what some consider an outdated definition.

By current SEC standards that were originally adopted in 1983, an individual is qualified as an accredited investor if she makes over $200,000 in annual income, her household has made over $300,000 in income, or she’s worth at least $1 million in assets, excluding her house. While this income level far surpasses the median household income in the United States, over 7 million individuals or nearly 4 million households still qualify, for now.

One proposal on the table at the SEC suggests adjusting these thresholds for inflation, which means you’d need to make around half a million dollars in order to invest your own money in a startup. According to numbers analyzed by the ACA, raising the income bar for inflation would disqualify nearly 60% of the accredited investor population. A decision like this could significantly reduce the pool of capital available for early stage startups.

This possibility is alarming. So it wasn’t surprising to hear many of the participants from the business community at the SEC’s forum express outright opposition to raising this threshold, not only because it would eliminate existing investors, but also because an income threshold to begin with misses the point. The entire reason for defining this class of people is to protect them from making poor investment choices.

Yet income is hardly an indicator of financial sophistication in undertaking risky investments, especially in the world of novel startups and high tech. By today’s standards it would be illegal for a bio-chemistry PhD making $190,000 a year to invest equity in a biotech startup on a site like Angel List. And if adjusted for inflation, someone making even twice that amount would still be prohibited from investing.

Voices in the startup and investment communities have suggested an alternative set of criteria which could include years of experience, licenses issued by a qualifying test, or relevant degrees to measure investor sophistication rather than only relying on an income threshold that offers virtually no insight on an individual’s understanding of capital markets.

Whatever the ultimate criteria, there’s clear opportunity for the SEC to expand participation in the startup economy, and facilitate capital formation, by allowing those with both interest and knowledge in innovative new companies to support the entrepreneurs building them.

At the end of the forum, attendees gathered to submit recommendations to the SEC as they review the definition. We hope the Commission takes these recommendations seriously. If not, they could end up significantly stifling a community that’s been an enormous asset for the startup economy, instead of expanding opportunity in it.

And whether anybody can invest equity in startups through crowdfunding—well, that’s another question the SEC will have to consider, but rules to regulate the equity crowdfunding market have only been proposed thus far. As far as we can tell, the SEC first wants to figure out who’s accredited. Visit engine.is/jobsact to learn more about the crowdfunding part of the JOBS Act and why we think that’s important, too.

President Obama's Executive Order on Immigration: A Small But Important Step Towards True Reform

Tonight, President Obama announced that he will sign an Executive Order that will, among other things, expand immigration options for foreign-born entrepreneurs and make it easier for high-skilled workers awaiting Lawful Permanent Resident status to change jobs. While the President’s actions fall short of the legislation we had hoped for, we are encouraged to see some movement toward fixing a broken immigration system that plagues all aspects of our economy.

In particular, we applaud the President’s efforts to bring more high-skilled workers to the United States. As the President said, we must promote policies that allow immigrant entrepreneurs “to stay and create jobs here, create businesses here, create industries right here in America.” While the political debate on immigration has long been contentious, one thing has always been clear: there is widespread and popular support for expansion of the H1-B visa program and other efforts to bring skilled workers, particularly those skilled in technology, here.

We are simply turning away far too many talented people that want to come to the US to grow businesses. This year, more than 100,000 high-skilled workers were turned away because of limitations on the number of H1-B visas available. As studies show that immigrants are twice as likely to start businesses as native-born citizens, failing to accommodate the many immigrants that want to come to the US to start businesses unquestionably harms the American economy.

Our potential for growth is limitless when the world’s best and brightest minds are here in America, building American companies, creating American jobs, and recreating the American dream for every new generation.

We wish tonight that we could celebrate real, comprehensive legislation that would fix all facets of a broken immigration system, but policymakers have not yet been willing to take up the difficult, politically fraught task of true reform. While the President’s Executive Order is a step towards meaningful reform, some worry that the President’s actions make a bipartisan compromise harder to achieve in the short term. We remain hopeful that the enormous economic benefits that will flow from comprehensive immigration reform will encourage policymakers on both sides of the aisle can put party politics aside and take lead by finding solutions to the myriad problems with our immigration system that still remain.

Engine and R Street Release Study of Ridesharing Regulations

Few startup innovations in the past few years have been as influential and controversial as ridesharing technologies. The emergence and explosive growth of companies like Uber, Lyft, and Sidecar signaled the rise of the sharing economy, allowing virtually anybody to put their spare time, spare car, or spare room to productive use. Not surprisingly, incumbents operating in the markets that these new startups shook up have reacted strongly to their new competitors. Taxi interests in particular have fought hard against transportation networking companies (TNCs), lobbying for restrictions on their operation, and even getting cities to ban their operation entirely.

Regulators will always have a hard time keeping pace with the development of new technologies, but we believe that the great consumer value of TNCs and other sharing economy services warrants a balanced approach between promoting competition and protecting legitimate public health and safety concerns. To better figure out which cities were doing the best and worst to foster competition and innovation in transportation markets, Engine, in partnership with R Street Institute, released a report ranking US cities on how friendly their regulatory climate is towards ridesharing.

The study shows a wide range of regulatory approaches to ridesharing, with some cities like Portland banning them outright, and some like Washington D.C. creating a specific regulatory framework for TNCs that allows them to operate in the city under rules designed for their particular concerns. With this paper, citizens can learn more about what their representatives are doing to promote healthy transportation markets in their cities and figure out what other cities are doing right or wrong to encourage innovative startup activity in the transportation sector.

Along with the paper, R Street launched an associated website that maps out the cities in the study along with their grades and provides tools for citizens to ask their representatives to enact better TNC regulations.

The recent debate about how to treat ridesharing companies is a great case study for how startups can have a quick and meaningful impact on a city’s quality of life and how regulations have a hard time keeping up with the pace of innovation. With this paper, we hope that policymakers can learn about what works and what doesn’t when it comes to regulating the sharing economy.

President Obama Makes an Important Move on Immigration Reform

Looks like there’s more big news coming out of the White House: reports (here and here) say that President Obama plans to announce next week that he will take long-awaited executive action on immigration reform.

While the headlines all focus on what’s called “deferred action,” or the ability for undocumented residents to avoid deportation—like parents of American citizens or those who came to America as children—we’re most interested in what the President will do around high-skilled workers. The executive action will reportedly “expand opportunity” for those with high-tech skills, and we understand it should make it easier for those workers’ families to join them in the United States.

This simple reform is long overdue and basic common sense.

Take, for instance, the problem with H1-B visas. Only 85,000 of these—awarded to high-skilled, speciality occupations (often in tech)—are issued every year. In 2014, more than 172,000 people applied for 65,000 of these spots, which means more than 100,000 high-skilled workers who could bring their entrepreneurial and technical skills to the United States are being turned away. It’s time to let these people in.

Research from the Kauffman Foundation found that, in 2010, immigrants were twice as likely to start a business than their native-born brethren. Between 1995 and 2005, immigrants helped to found more than 25 percent of all high-tech firms. What’s more, our research shows that high-tech firms create more jobs than non-tech firms. These tech jobs have a reverberating effect in local economies, creating even more jobs—spurring nationwide economic growth.

President Obama’s executive actions alone cannot solve this problem. Only Congress, through legislation, can fix our broken immigration system. We hope that congressional members of both parties in the Senate and the House can put politics aside and take the President’s lead toward solving one of the biggest problems plaguing our economy, and our nation, today.

The JOBS Act Could Open Startup Investment to More Americans, but it’s Stuck at the SEC

One of the core promises of the 2012 JOBS Act is that it would open the doors for investment to many more Americans, and—in turn—many more worthy startups. Currently, only a so-called “accredited investor” can make investments in startups, which means that only individuals making $200,000 in annual income over the past two years or with over $1 million in assets, excluding their home, qualify to take part in investing in the startup community. This high threshold unfortunately guarantees that average Americans cannot take advantage of investment opportunity and, in turns, limits the money that makes its way to growing companies.

The JOBS Act intended to change this, but as the new lively podcast, Startup, explains, the JOBS Act has been “stuck” at the SEC for over a year now. The SEC simply hasn’t issued the  rules it’s required to under the law that would make this kind of investment—what’s been called equity crowdfunding—widely accessible. This is why we’re urging the SEC to finish the job Congress set out for them when it passed the JOBS Act in 2012 and allow supporters of great ideas to invest in ventures they care about, regardless of income level.

Take for instance Nadia, one of the podcast Startup’s listeners. As explained more fully in the episode, Nadia reaches out to the podcast producers and offers to invest in their new podcasting startup company (more on that below). It’s only then that the company’s founders realize that, as ridiculous as it sounds, they actually can’t take Nadia’s money.

If you haven’t listed to Startup, a new podcast from former Planet Money and This American Life reporter Alex Blumberg, then find time in your day to check out Startup. The “public radio journalist turned entrepreneur” Blumberg’s newest venture is a podcast network called Gimlet Media, a startup based on the idea that there’s a massive market opportunity in well-produced, journalistic storytelling via podcasts. And fittingly so, Blumberg’s producing a podcast, called Startup, on the efforts behind building this new company. In each episode, he documents the challenges familiar to many entrepreneurs—like raising money. You should listen to the whole series.

In the most recent episode, where we meet Nadia, Blumberg explores financing this new venture utilizing avenues provided by the 2012 JOBS Act.

As Blumberg explains, before the JOBS Act was passed in 2012, the SEC prohibited private companies from publicly soliciting investment. Businesses of any size seeking funding needed to have an established, pre-existing relationship with a defined accredited investor in order to raise money from them, or as Blumberg succinctly concludes, “Only rich insiders could invest in these companies.”

In an age of social media, near seamless access to information, and well, podcasts, this rule was clearly outdated. And on September 23, 2013, the SEC lifted the ban on general solicitation, making the primary intent of Title II of the JOBS Act effective. (Title I of the law addresses how startups pursue IPOs and went into effect immediately after the bill’s passage.)

The law now allows for the mass marketing—posting on social media, a crowdfunding website, or in a podcast—of these more common security offerings. Consequently, Blumberg invites listeners over the air to invest in Gimlet Media: “If you share in our vision, and you want to share in our business,” he asks you to check out their crowdfunding portal to invest. But here’s the thing: even still, you have to fit under the limiting definition of an accredited investor.

So while the JOBS Act originally set out to change the accredited investor requirement and make investing a possibility for a wider range and income level of Americans, this hasn’t yet happened. Experts have proposed rules based on experience or investor education as alternatives, yet there’s been no sign of progress at the SEC. “Today, to become an investor through one of those public solicitations, you need to be the exact same rich person you were before the JOBS Act was passed,” says Blumberg.

Blumberg’s business, Gimlet Media was able to raise $200,000 from accredited investors in the seedround announced on the podcast. Nonetheless, “there are still a lot of regular people who are not allowed by law to invest in our company,” says Blumberg, and for that matter, hundreds of other exciting ventures around the country.

We’re telling the SEC it’s time they issue JOBS Act rules and fulfill the promise of what Congress set out to do when it passed the bill two years ago: booster the startup economy and spur participation from a wider range of Americans. Sign and share our letter at engine.is/jobsact.

A Tech Bootcamp for Real Bootcamp Vets: How One Technology Company is Training Our Veterans

You can also read this post on Medium.

We’ve said it before and we’ll say it again: the unemployment rate for veterans is way too high. Nearly 250,000 Americans who have volunteered to serve our country and put their lives at risk are out of work entirely. Meanwhile, technology companies are actively seeking larger talent pools.

There’s enormous opportunity here to provide high-demand job training to some our our country’s most dedicated, disciplined, and hard-working citizens.

Karen Ross, CEO of Sharp Decisions, a strategic business and technology consulting services firm based in New York City, recognized this opportunity and decided to take initiative. In 2013, Sharp Decisions established a training program tailored exclusively to veterans. They hire, train, and deploy groups of veterans on client-based technology projects around the country.

Today, Sharp Decisions employs around 50 veterans who receive full salaries and benefits, and are hoping to expand their veteran pool to 200 by the end of next year, said Jared Baiman, a strategist at Sharp Decisions.

Their V.E.T.S. program—Vocation, Education and Training for Service members—recruits tech-savvy armed services veterans who undergo intensive training centered on quality assurance and software testing, a set of skills well-suited to military personnel with some level of technical background. "Vets have a unique skill set,” explained Jared. For one, they know how to perform in high-pressure situations.

Sharp Decisions hires veterans with a baseline of technical experience, whether from their positions in intelligence gathering, as operations specialists, or using highly classified technology unfamiliar to American consumers. During “technology bootcamp”, trainers use military terminology that resonates with vets: client projects are deployments, objectives are missions, and the client teams they put together are squads.

“A lot businesses don’t understand how veterans’ technology experience translates,” said Jared. But veterans are uniquely qualified for many kinds of work in technology: “They bring leadership, an unparalleled work ethic, strong self-motivation and a respect for each client’s unique culture and chain of command,” explains the V.E.T.S. website.

Veterans train together and offer one another support with a kind of no-man-left-behind mentality. Sharp Decisions then assigns them to client projects together, where they can continue to work in teams and support one another. In the past year, these veteran squads have been deployed on technology assignments in cybersecurity, quality assurance, and payment processing for major clients including EmblemHealth, Experian, and Freddie Mac.

With a 94% retention rate, Sharp Decisions is doing something right—and they’ve run the program without even touching the GI Bill. The GI Bill has been a critical part of educating our country’s veterans since World War II, but its benefits are only available for federally accredited programs. As we’ve written before, nearly all modern coding bootcamps and schools lack this accreditation, (though Galvanize recently became accredited through its partnership with the University of New Haven.) Where private companies like Sharp Decisions aren’t taking initiative, (and picking up the tab,) for educating veterans with today’s high-demand skills, a reformed GI Bill could. What Congress can and should do is create a special category of accreditation that would pave the way for veterans to receive this kind of technical training.

Despite GI Bill limitations, we’re excited to see programs like the one at Sharp Decisions as well as other companies team up with developer bootcamps to offer scholarships to veterans. General Assembly now offers an $8,500 scholarship sponsored by Microsoft for veterans through their Opportunity Fund, and Code Fellows has invited veterans to join some of their summer intensive coding programs.

As a country, we can do better for our veterans. We hope other companies and organizations can follow the lead of Sharp Decisions and come up with innovative ways to solve the vets job crisis. In this time of unprecedented opportunity in the technology sector, it would be a dishonor and a disservice to leave these men and women behind.

BREAKING: White House on Net Neutrality: Supports Title II

Big news out of the White House this morning: President Obama released a statement —in the form of a custom landing page on whitehouse.gov —laying out in no uncertain terms a strong defense of the kind of real Net Neutrality that we and the startup community have been long asking for from the FCC.

The statement makes clear that the White House supports reclassification of the Internet under Title II:

"So the time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services. To do that, I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act — while at the same time forbearing from rate regulation and other provisions less relevant to broadband services."

This isn't the first time the President has spoken in favor of an open Internet, but this is the first time he's publicly supported reclassification, which is the only way to ensure real Net Neutrality. Encouragingly, the statement also fully supports the extension of strong rules to mobile. (It's worth reading the full statement from the White House, which you can find here.)

The following can be attributed to Julie Samuels, Executive Director of Engine:

The White House's action shows that it has listened to nearly 4 million Americans who have made their voices heard in this important public debate and heard the concerns of countless startups who have made clear that only reclassification supports a level playing field where everyone has an equal chance to succeed. Which, of course, is the promise of the Internet.

We applaud President Obama's leadership on this issue and we look forward to working with the White House to ensure the FCC follows the President's lead. To be certain, the fight for an open Internet is not over. But this morning we've taken an important step that puts us one step closer to real Net Neutrality. We hope is a signal of things to come.

Why We're Writing the SEC

In 2012, Congress passed the Jumpstart Our Business Startups Act with resounding bipartisan support. For startups, entrepreneurs, and investors, the JOBS Act is easily one of the most exciting pieces of legislation to come out of Congress in the past few years. Among other things, the bill allows businesses—principally startups—to go public more quickly and raise money more easily. And many of its provisions have already had a significant impact on startup growth and capital formation. In the year after the Act passed, the rate of IPOs increased by 58 percent.

When Congress passed the JOBS Act, it recognized that the pre-existing laws dating back to the 1930s no longer reflected today’s financial system. It recognized that the growth of startups is essential to America’s long term economic vitality. And it recognized the potential for new investment platforms to spur participation in the startup economy from a wider range of Americans.

Despite this, in the two years since its passage, much of the JOBS Act’s promise remains unfulfilled. This is not because of bad legislation, but simply because the Securities and Exchange Commission has not done its job.

Two crucial pieces of the Act—1) making it legal to raise capital through online crowdfunding; and 2) allowing for companies to openly seek investment—will only take full effect if the SEC puts forth implementing rules. Such rules will clarify how companies can pursue these new investment channels that are vital to growing our country’s startup economy. 

It’s been over two years since the passage of the bill and months since the comments period has closed on SEC’s proposed rules. Yet, we’ve seen nothing from Commission. Without these rules in place, much of the JOBS Act remains an empty promise.

We now call upon the SEC to fulfill its statutory obligation and make what the JOBS Act set out to do a reality.

On behalf of entrepreneurs, startups, investors, and crowdfunding platforms, we’re asking the SEC to finalize the rules without further delay.

Check out our letter to the SEC, follow #JOBSActNow, and make sure you’re signed up for our email updates. 

At Hackbright Academy, No Men Allowed

You can also read this post on Medium.

Hackbright Academy is software development school in San Francisco exclusively for women. Launched in 2012, Hackbright has since graduated 163 women from its 10-week program. According to its blog, 90 percent of graduates land jobs in tech and 73 percent as software engineers.

Hackbright is one of dozens of new developer “boot camps” that have sprung up in the past few years to teach the essential skills of software development. Students in these short, fast-paced programs learn the basics of coding within a few months and soon after pursue, and often take, jobs at technology companies eager for more qualified applicants. According to a New York Times survey of 48 programs like Hackbright, over three quarters of graduates are now employed.

What’s distinctive about Hackbright, though, is that only women need apply. Deliberately acknowledging the gender gap—or what they refer to as the Dave-to-Girl Ratio (the ratio of guys named to Dave to women in computer science programs) on their site—Hackbright founders think a women-only computer science school is one way to start closing this gap.

Jane Williams graduated from Hackbright in August and recently took a job as an implementation engineer at OPower, a tech company that builds software for the utility industry. Jane had had some exposure to data analysis in her previous job, but felt she was missing out on the kinds of tools she could be building herself to make her work more efficient and also, more creative. Jane considered several programs but ultimately found Hackbright the most appealing because of the community it fosters. “They’re clearly committed to women,” she said.

Small classes, dedicated mentors, and a strong alumnae network all help shape this community. “The space that’s created when it’s all women tends to be nurturing, friendly, and supportive” said Paria Rajai, who works in marketing for Hackbright. “That just happens naturally.” And alumnae, like Jane, attest to this: “It’s a no-question-is-stupid kind of environment.”

Part of Paria’s job at Hackbright is to attract potential students by dispelling myths about learning computer science that discourage women from entering the field. “One is you have to be good at math,” Paria said and listed off others: that you need have been coding since you were young, that you’re introverted, that you’re the white guy in a dark corner at his computer all day. For many women, such perceptions are a deterrent from even considering a career as a software engineer.

These perceptions run deep in our culture, yet many women are shrugging them off altogether to make their way to Hackbright and other coding programs. Students range from recent college graduates seeking more employable skills than what their majors offered, mid-career women looking for a change or mothers hoping to re-enter the workforce with a new kind of expertise.

Hackbright’s 10-week program (which costs $15,000, though scholarships are available) includes structured content in python, javascript and other coding languages, plus algorithms, best practices and interview skills, followed by 5 weeks of project work. In those final weeks, students build their own tools and apps, then exhibit them at a demo day attended by prospective employers.

And employers are hiring from these programs. Hackbright has alumnae at Facebook, Pinterest, Indiegogo and Eventbrite. These companies are not only dedicated to hiring more women on their engineering teams, but are also devoting resources to continued training and mentorship, recognizing that graduates from accelerated coding schools--and any computer science program, for that matter--still have much to learn. Even so, Jane acknowledges she would not have been qualified for her new job without the skills she attained at Hackbright.

Woman by woman, Hackbright’s graduates are part of a movement to tilt the scale of gender equality in tech nationwide. It’s programs like this one that are lowering the barriers to entry, changing perceptions and empowering women with the skills necessary to be contributors and eventually, leaders in technology.

Engine's Response to FCC's Reported Net Neutrality Plan

After many months of public debate, the FCC appears close to deciding on new net neutrality rules to replace those vacated earlier this year. Though the issue has to date been framed as a binary choice between the Chairman’s original proposal featuring toothless rules grounded in the Commission’s authority to encourage the deployment of broadband under section 706 of the Telecommunications Act and strong net neutrality regulations based on a full reclassification of broadband as a common carrier service, recent reports suggest that the FCC is settling on what many think of as a so-called hybrid solution.

According to the Wall Street Journal (sub req’d), the FCC is leaning towards adopting a framework that treats all Internet communications as the product of two separate and distinct relationships: 1) a relationship between an end user and an Internet service provider (ISP); and 2) a relationship between an edge provider (i.e. an Internet content provider like Netflix or Amazon) and an ISP. These separate relationships would get different regulatory treatment, but in theory, the plan could support non-discrimination rules that protect both sides of the communication.

The biggest problem with the plan outlined in the Wall Street Journal article is not the authority the FCC may invoke to justify the rules it wants to create (more on that below), but rather the proposed rules themselves. According to the article, the Commission will not ban paid prioritization but will instead allow priority deals so long as they are offered equally to all comers.

In this sense, the FCC’s proposed plan as reported in the Journal is an abandonment of net neutrality principles and will put startups at an enormous economic disadvantage. Enacting net neutrality rules is a two step process—first creating a workable framework for agency authority and then using that authority to create meaningful rules—and the FCC’s proposed plan appears to fail miserably at this second step.

Now for the really wonky part: Under a so-called hybrid proposal, the FCC would regulate these two separate relationships—ISP/end user and ISP/edge provider—differently. The relationship between an ISP and end user will keep its current classification under rules that have been in place since 2002, while the FCC will recognize a new relationship between an ISP and edge provider and classify it as a common carrier service, meaning that the FCC could then impose strong net neutrality rules on ISP/edge provider activities, such as a ban on ISPs charging edge providers for access to Internet fast lanes. According to proponents of hybrid rules, because every Internet transaction necessarily involves an interaction between an ISP and an edge provider, regulating only the ISP/edge provider relationship under Title II is more or less the same as regulating all broadband under Title II.

If this all sounds hopelessly convoluted, that’s because in many ways it is. The legal approach that the FCC is considering is novel, untested, and conceptually complicated. The plan carries significant legal risk and could end up getting thrown out in court.

But, putting aside for a moment concerns about the legal viability of hybrid approaches, it’s important to recognize how far we’ve come in getting the FCC to this point. Hybrid rules are, after all, grounded in Title II and would likely give the FCC authority to block paid prioritization arrangements. Though full Title II reclassification would be a far easier and simpler way to preserve an open Internet, hybrid rules could offer functionally similar protections.

Any net neutrality rules absolutely must prevent ISPs from extracting rents from edge providers and creating Internet slow lanes. While we’re encouraged that the FCC is moving in the right direction in considering rules grounded in Title II authority, the FCC’s consideration of actions that do not include banning paid prioritization deals renders its move towards Title II meaningless. Whether the FCC opts for full reclassification or a hybrid approach, it must use its authority to establish rules that protect startups and consumers or its efforts will have been in vain.

In Colorado, the Future of High Speed Internet is Up to Voters

Nov. 5, 2014 Update: Boulder voters overwhelmingly approved the measure to give their city authority to create municipal internet. 

As truly high speed Internet access becomes more and more crucial for businesses and consumers, cities are stepping up to provide their citizens with the next generation fiber networks that the incumbent commercial ISPs are simply unwilling to build. But in the case of Boulder, Colorado, despite the fact that nearly 100 miles of high speed fiber already lie beneath its streets, the city is barred from investing in and expanding the network to the wider public. That’s because in Colorado, as well as in dozens of other states, prohibitive state laws—laws practically written by the large ISPs—block municipalities from building or operating competing networks.

On November 4th, voters in Boulder, as well as Yuma County in eastern Colorado, will decide whether to exempt themselves from the restrictive state law and give their cities the freedom to control the future of their own broadband infrastructure. With no vocal opponents, the referendums seem likely to pass.

For Boulder, the choice could not be more obvious. With the highest startup density and growth of any metropolitan area, the ability for Boulder to independently invest in and expand high speed Internet is integral to maintaining its ascendancy as a hotbed for new business ventures. “We’re in competition to attract and retain the highest quality employers and the highest quality talent,” said a spokesperson for Boulder Chamber of Commerce.

The law currently restricting both Boulder, and the much smaller Yuma County, from taking Internet access into their own hands—The "Competition in Utility and Entertainment Services” bill (or SB 152, as it’s commonly called)—passed in the state senate in 2005, and precludes municipal governments from providing broadband services to its citizens. Under the bill, however, a city may seek an exemption under the law and reestablish local control over broadband policy through a referendum. So far, only a few other other Colorado cities have done so. The city of Longmont, just 15 miles north of Boulder, opted out of SB 152 in 2011 and started construction in August to deploy fiber networks across the city. Its new service will be available to consumers November 3.

Just as ISPs lobbied hard to enact these anti-municipal broadband laws, they have fought equally hard against efforts to overturn them. Longmont first sought an exemption from SB 152 in 2009, but failed after telecom companies spent $192,228 to defeat the referendum, compared to only $95 from proponents of the measure. In 2011, Longmont tried again and the referendum passed, despite a record $300,000 campaign by Comcast to prevent it.

Comcast doesn’t seem to be putting money against the Boulder referendum, but has made its opposition to the measure known, writing to Boulder’s local newspaper, "Comcast does not believe that government-owned networks are a good use of municipal funds in areas where the private market is already providing services.” Yet the services they provide are not only slower and more expensive than what municipal gigabit networks pose to offer, the ISP also routinely ranks lower in customer satisfaction than any other company in the industry.

Thus, Comcast’s response isn’t surprising, especially considering its interest in maintaining near-monopoly power in the broadband market. As the proposed merger between Comcast and Time Warner Cable shows, large ISPs would much rather eliminate potential rivals through acquisitions and legislative restrictions than have to face competition.

As we’ve said before, municipal broadband networks provide consumers with alternatives in markets desperately in need of competition. With the US lagging behind its industrialized peers in fiber deployment and growth, we need to use every tool possible to generate competition in broadband markets and give consumers and businesses the high-speed broadband access they need to thrive in the Internet economy.

Municipalities like Boulder deserve the right to build fiber networks for its citizens when ISPs won’t. We stand behind Colorado voters next Tuesday when they head to the polls to vote “yes.”

FCC Pauses Review of Comcast - Time Warner Merger

The FCC once again slowed down its review of the proposed merger between Comcast and Time Warner Cable, indefinitely pausing the comment period because certain content companies—including CBS, Disney, Time Warner, and Viacom—refused to allow commenters to access information they deemed “Highly Confidential.” Most of the information that the content companies refused to disclose relates to agreements pursuant to which Comcast gets distribution rights for their content.

This is not the first time the Commission extended the review period for the mega-merger due to poor information disclosure by the companies at issue. In the beginning of October, the FCC pushed back its deadline for accepting public comments on the merger because Comcast dumped 850 pages of long-overdue data about the merger, but somehow still failed to include adequate responses to many FCC information requests.

These tactics should come as no surprise. Comcast—the “worst company in America”—is facing significant public opposition to its proposed merger, which would make Comcast-TWC the only provider of high-speed broadband service available to nearly 40 percent of current subscribers. The combined company’s monopoly power would be even greater in the market for truly high-speed broadband (>50 Mbps download speed). Giving a single company terminating access monopoly power over half of the country’s Internet users is an obvious problem that startups and consumers both recognize.

And yet, even as Comcast continues to obfuscate and intentionally conceal important information about the merger, it boldly argues that the merger should be approved because opposing commenters “don’t cite any credible, specific facts that refute the extensive evidence” Comcast has put forward. Withholding information while chiding opponents for not citing enough information is the definition of chutzpah.

Beyond engaging in shenanigans with its information production, Comcast’s case in favor of the merger is rather weak, claiming that the combination wouldn’t be anticompetitive because Comcast and Time Warner don’t currently compete in any single market, so merging the two companies won’t give consumers any less choice. Of course, this is really just a concession that the high-speed broadband market is already anticompetitive; Comcast is essentially claiming that competition won’t decrease because there isn’t any competition. Twisted logic aside, several of the country’s leading antitrust experts wrote a letter to the FCC cogently outlining the merger's anticompetitive impact and arguing that the merger “should be blocked in its entirety because it would substantially lessen competition...and is not in the public interest.”

Even with minimal information available to evaluate the merger, it is clearly a bad deal for startups, consumers, and the economy. Allowing Comcast and Time Warner to merge would greatly decrease their incentives to build faster networks and would give the combined company immense power to discriminate against startups offering competing services. The merger is a significant threat to the continued viability of the Internet economy and should be stopped at all costs.

Innovation for All: Kicking Off a Series Celebrating Diversity in Tech

You can also read this post on Medium.

The fact that not enough women work in tech is a serious problem that has been well documented. But this predicament is meaningful well beyond our industry. If women and other underrepresented minorities aren’t creating the technical tools that benefit our society writ large, then those tools simply won’t address the problems faced by those groups. And we will all suffer as a result.

The numbers are bleak: only three percent of startups are founded by women, and women represent fewer than 13 percent of employed engineers. Across the United States, women hold fewer than 25 percent of science, technology, engineering and math (STEM) jobs. In 2010 (the most recent year that data is available), only 17 percent of computer science graduates are female, down from 28 percent in 2000, according to the NSF.

It’s not just women, of course, but all underrepresented minorities. Last year there were eight states where zero Latino students took the Advanced Placement exam in computer science, and 11 states where no black students took the test. In three states, not a single female student sat for the exam.

This is significant.

Many of today’s technology companies — whether they make hardware or software — provide tools to a broader society. Those tools might be a tablet or a smartphone; a health tracking app or a game; a word processing program or a document management tool. The majority of these projects are widely available to anyone who can afford them. And this is particularly true given the widespread adoption of smartphones, which, among other things, serve as a revolutionary way for developers to share their applications.

In the best instances, these products also solve problems. Many at least make life easier, some fundamentally change the world. Take GPS mapping apps and WiFi. Or apps that let users monitor their health information or compare prices for consumer goods. In many instances, one can see how technology developed by women might then be best suited to meet the needs of women.

This is not to say that every woman or underrepresented minority who works in tech will — or needs to — create technology that primarily benefits women or those minorities. But if we fail to give a real cross section of society the tools and the platform to make things, then they surely won’t. This is not even to mention, of course, the proven benefits of having a diverse workforce.

But even when women do work in the tech industry, it turns out they leave tech companies at twice the rate of men, according to the Center for Talent Innovation. They report being frustrated about their lack of advancement, the long hours and the lack of flexibility. These women report serious problems with their companies’ cultures.

That’s the bad news. The good news is that everyday we hear of new promising initiatives that will help fix the problem. Take Etsy’s developer program, organizations like Black Girls Code and university initiatives like one at Harvey Mudd. Each has come up with a creative approach to narrowing this gap.

There is more work to be done, of course. The so-called pipeline problem — not enough women and minorities getting the necessary education to work in tech (in both technical and non-technical jobs) is very real. Potentially even worse is the cultural problem, which shuts women and minorities out and continues to propagate itself.

Neither of those problems will get fixed without strong examples of how the community can raise itself up. Which is why we’re going to highlight those programs here as part of our Innovation for All series. Watch this space for inspiring stories of industry, government, and individuals coming together to fix this problem and make sure that everyone who is qualified has access to careers in the booming tech industry, no matter sex, race, or creed.

Alice Ruling Not Enough to Stop Patent Trolls

This post originally appeared in Roll Call.

The House and Senate bills were both carefully crafted to shift the playing field just a bit — to make it easier for small companies and individuals to defend themselves against patent threats while holding patent holders accountable for the lawsuits they file. Despite loud complaints from the traditional patent holder community, the bills’ provisions were actually quite modest, such as a requirement that patent holders set forth the basic framework of their case — who owns the patent, what product allegedly infringes the patent, and what parts of the patent are at issue. Or reasonable limits on discovery, usually litigation’s most burdensome and expensive phase that hits an operating company much harder than a non-practicing entity who has little to no information about its so-called business practice to share.

To be honest, I didn’t think the proposed legislation went far enough. But it represented an important compromise to fix a very serious problem.

Perhaps, most importantly, there was nothing in either bill that would prohibit a patent holder with a strong patent and a legitimate claim of infringement from bringing a lawsuit. Ownership of a patent alone should not be a blank check to, as President Obama said, extort money out of an operating company. This is not to say that patents do not have a place in today’s economy or to condone infringement. It is to say, however, that the current system is skewed way too heavily in favor of patent owners and this has to change.

We will only see this change through legislation. Strong champions of real patent reform — President Barack Obama, Sens. John Cornyn, R-Texas, and Charles E. Schumer, D-N.Y., and Rep. Robert W. Goodlatte, R-Va. — know this. So do the countless victims of patent trolls. Which is why the prospects for reform look especially good in the 114th Congress. It can’t come soon enough.

Every City Can Be a Startup City: The Promise of Entrepreneurship Across America

You can also read this post on Medium. 

This summer and fall, we rode a bus to cities in the Rustbelt and the Midwest, visiting communities where startups are thriving. The Rise of the Rest bus tour, organized by Steve Case, was inspired by the premise that great ideas, and great companies, can and should start anywhere. The cities we visited were vibrant examples of this belief, and the tour celebrated their successes in building startup communities and we hope, will help accelerate their growth.

Along the way, we also learned what it means to create and enhance the right ecosystem to facilitate emerging businesses in cities not traditionally considered hotbeds for startups.

That ecosystem is a powerful thing. “A community’s entrepreneur support network […] is critical for new firms to succeed,” wrote Yasuyuki Motoyama, Ph.D. and Karren K. Watkins in a recent report for the Kauffman Foundation. They examine the connections among entrepreneurs and organizations that make up this network, many of which were on display during our tour. In Des Moines, for example, one startup founder inspired another to take off. In Minneapolis and Cincinnati, long-established Fortune 500 companies are offering mentorship and other resources to new entrepreneurs.

What else does it take to form a startup ecosystem? Rise of the Rest sponsor UpGlobal, an organization that promotes and coordinates networks of startups around the world published a recent report entitled “Fostering a Startup and Innovation Ecosystem.” They point to five essential ingredients for a healthy startup ecosystem: talent, density, culture, capital, and the right regulatory environment. These ingredients are not geographically specific, and each city or region has the power to uniquely cultivate them in ways that complement and build on local resources.

Talent: Many of the cities we visited are within miles of major universities with talented, ambitious students who may have a vested interest in building businesses in their college towns. In Madison, at least two of the founders we visited were University of Wisconsin-Madison graduates and in Pittsburgh, Carnegie-Mellon University has spun out dozens of local startups through collaborations among students, professors and the local business community. And talent doesn’t just come from universities. Take Minneapolis, which has a high concentration of health professionals. It’s no surprise that health-tech is a growing sector there.

Density: Bringing people together can enable great things. Through business clusters in downtown areas like Kansas City’s Crossroads district or Nashville’s Trolley Barns, home to the Nashville Entrepreneur Center, entrepreneurs find space, support, and ideas. City planners and neighborhood associations are integral in facilitating the development of spaces like these.

Culture: In each city we visited, there was palpable excitement around entrepreneurship from the local political leaders, to the university representatives, to the business and investor community. Fostering a culture that prizes openness and creativity, accepts some level of risk and failure, and promotes opportunities at startups as well as their leaders is essential to supporting the startup ecosystem.

Capital: Access to capital cannot be underestimated. As we toured the country, it became more and more clear that raising money is one of the biggest challenges startups face. In some cities, like Nashville, we’ve seen local governments really commit to the startup community, which helps drive capital. But far and away the most important way to increase the flow of capital is to engage local investors and bring in more non-local investors, including those form the coasts. In each city we visited, this remained a major roadblock to the growth of the local startup ecosystems.

Regulatory Environment: As we know well here at Engine, good policy is critical for fostering the startup ecosystem. In some instances, local governments have recognized this by creating tax incentives for new businesses. Yet at the national level, there’s still a lot of work to be done. Many of the factors laid out here — especially talent and access to capital — are uniquely in the purview of federal government. The time for comprehensive immigration reform, which is necessary to increase talent pools, has long passed. And while passage of the JOBS Act was an important first start, there’s still much work to be done to ensure that capital flows from investors to startups.

These factors are each essential, but they’re not isolated. We know there’s a lot more policymakers can do to attract and retain talent in their districts and in this country, to encourage urban density and make capital accessible.

We believe every city in America has the potential to be a startup city and we’re working with policymakers to help make that happen.

If you’d like to help us join that fight, make sure you sign up for our newsletter here. 

President Obama Reiterates Support for Strong Net Neutrality

Yesterday, President Barack Obama unequivocally stated his support for real net neutrality, putting to rest any doubts about where he stands on the issue, emphatically opposing any rules that would allow ISPs to enter into paid prioritization agreements and create fast and slow lanes on the Internet:

"I know that one of the things people are most concerned about is paid prioritization, the notion that somehow some folks can pay a little more money and get better service, more exclusive access to customers through the Internet: that is something I’m opposed to," Obama said.

The President’s latest comments come as the FCC begins the process of sorting through the 3.7 million comments filed in response to FCC Chairman Tom Wheeler’s proposed rules to replace the Commission’s Open Internet Order that was vacated by a court ruling in January. President Obama’s position is consistent with the vast majority of those commenters, over 99% of whom want the FCC to institute strong net neutrality rules.

This is not the first time the President has publicly supported net neutrality. As recently as this summer, he trumpeted the importance of an open Internet. Yet the President’s strong words yesterday left no room for doubt: it is clear the Administration supports Title II reclassification.

Which is why, in opposing Internet regulations that would permit companies to pay ISPs for priority access, President Obama voiced his opposition to the FCC Chairman’s proposed net neutrality rules. Under the Chairman’s proposal, the FCC would permit any paid prioritization deals that were “commercially reasonable.” While it is entirely unclear what “commercially reasonable” paid prioritization deals would entail (one of many major problems with the proposal), the Court of Appeals that vacated the FCC’s prior rules made clear that, unless the FCC reclassifies broadband under Title II, any new rules will have to permit paid prioritization. If, as the President said, he wishes the FCC to refrain from promulgating rules “creating two or three or four tiers of Internet,” the FCC must act in accordance with the overwhelming tide of public opinion and reclassify broadband as a common carrier service under TItle II. Having the President reiterate his strong commitment to net neutrality rules should remind the FCC of the importance of its decision and the widespread desire for meaningful rules preventing ISP discrimination.

Kansas City: It Takes a Village (and Fiber)

This week we’re traveling with Steve Case on the Rise of the Rest road trip to celebrate entrepreneurship, in all its forms, across America. Every day we’ll post dispatches from the cities we’ve seen. Read our earlier updates from Madison, Minneapolis, and Des Moines.

We continued our tour across the Midwest today in Kansas City, a city with a rich history of entrepreneurship and a growing startup community taking off on the back of its incredibly fast, low-cost Internet access, courtesy of Google Fiber.

Notable in Kansas City is its engaged civic servants—we were joined this morning by Sen. Jerry Moran, Mayor Sly James (from KC, Missouri), and Mayor Mark Holland (from KC, Kansas)—and its community institutions, namely, the Kauffman Foundation. The Kauffman Foundation’s role in supporting entrepreneurship is acutely felt both here in Kansas City and throughout the nation, and its roots in the local community provide the basis for a city that has launched an initiative to be “America’s Most Entrepreneurial City.”

The Kansas City Startup Village anchors the city’s startup community. The Startup Village—a collection of homes hooked up to Google Fiber—provides office space for startups seeking to disrupt search (more on them below), using eye biometrics for security verification, and creating platforms to increase user engagement. Perhaps most importantly, the Startup Village might be the country’s first “Fiberhood”—a startup community that grew out of fast Internet access, proving that reliable and affordable Internet really does drive economic growth.

Like other communities we’ve visited in the Midwest, we met startups in Kansas City committed to making a difference. One was MindMixer, a company creating tools for citizens to engage with their local governments. But also like the other Midwestern communities, Kansas City has to contend with a culture traditionally averse to risk, a lesson we heard from local investors. The good news is that with the support of the Kauffman Foundation and the excitement local startups have generated, the community here is clearly on the road to continued growth.

That promised growth was on display during the day’s pitch competition, where we saw companies looking to disrupt post-college job placement, making government payments, and expanding personal wearables into the world of basketball. And today’s winner—Leap.it, a Startup Village resident—takes search and turns it on its head by adding visual and social collaboration. As Steve Case put it, the company is trying to disrupt Google by relying on Google Fiber.

The importance of that fiber here cannot be understated. The availability of fast and cheap Internet access has clearly helped make Kansas City an American startup destination. An engaged investor community, led by Kauffman Foundation (and amazing community cheerleader and Rise of the Rest bus tour guide Lesa Mitchell), also helps. Together, they’re putting Kansas City on the entrepreneurial map.

Des Moines: Startups Thrive in Middle Iowa

This week we’re traveling with Steve Case on the Rise of the Rest road trip to celebrate entrepreneurship, in all its forms, across America. Every day we’ll post dispatches from the cities we’ve seen. Stay tuned for updates from Kansas City and St. Louis.

Every four years, thousands of reporters descend on Des Moines to follow every move of presidential hopefuls at the Iowa caucuses, but there’s another reason to visit this small city in central Iowa. Its startup scene, which accounts for at least part of the reasons that Forbes named Des Moines the #1 City for Young Professionals in 2014, is on the rise.

So, why Des Moines? “I just happened to have been here and this place is awesome,” said Ben Milne, founder and CEO of the payment platform, Dwolla, one of the Des Moines’ most successful startups. But there’s clearly more to it.

Aside from the political caucuses, Des Moines is a major center for insurance and  agribusiness—industries that many startups have built business strategies around. The region has a reputation for hard-working residents as well as a low cost of doing business—17 percent below the national average. It’s also attracted a younger population in recent years through revitalization projects that added urban gardens, new retail, and entertainment venues to their downtown.

We stopped by Dwolla’s offices, where the company employs more than 40 people (with more in San Francisco, New York, and Kansas City). Founded in 2008, Dwolla has become a household name around Des Moines (and the entire country), inspiring others to start and keep their businesses here. Down the street, we visited Gravitate, a brand new co-working space where we met many startups, including Tikly. Tikly’s founder, Emma Peterson, told a story that highlights Des Moines’ strong community: it was none other than Dwolla’s Ben Milne who encouraged her to start her growing business.

We were also joined by Iowa Gov. Terry Branstad and Lt. Gov. Kim Reynolds who both trumpeted the startup activity across the state, including in Iowa City and Cedar Rapids, where tour partners Seed Here Studio are based. Co-founders Andy Stoll and Amanda West lived all over the country and the world before returning to Iowa to grow the grassroots entrepreneurial and creative communities here in Iowa.

"In 2008, Cedar Rapids experienced the fourth worst natural disaster in US history, Amanda said. "Watching our state work through the clean-up process, we saw an opportunity to help the region not only rebuild but reimagine a classic American city for the Innovation Age. The movement today in Iowa is 2000+ people strong with many leaders. It’s amazing to see what is possible  just a few short years when brilliant people get connected."

The pitch competition featured many more startups and their ideas to improve construction worksite efficiency, update classroom technology, digitalize baby books, and eliminate medical appointment waiting times. The winner, Bawte, is poised to solve the age-old problem of cataloging the products you own, along with their  warranties and attendant details.

The network of startups in Des Moines is still “percolating,” as Dwolla’s Milne put it. Steve Case, along with our own Julie Samuels, gave some advice on what the community here can do to support it. “You need to get your stories out here,” Julie said. “People need to know what’s going on here in Iowa.”

There is a lot happening in Iowa. The engaged, tight-knit startup community is supporting its youngest members and creating jobs that are bringing Iowans back home. We can’t wait to see what percolates out of Des Moines next.

Minneapolis: Land of Lakes...and Startups

This week we’re traveling with Steve Case on the Rise of the Rest road trip to celebrate entrepreneurship, in all its forms, across America. Every day we’ll post dispatches from the cities we’ve seen. Stay tuned for updates from Des Moines, Kansas City, and St. Louis.

After driving 270 miles across the state of Wisconsin, we rolled into the Twin Cities that span the Mississippi River and spent Tuesday there. With over 3 million residents in the metro area and an impressive 18 Fortune 500 companies, including major brand names like Target and General Mills, Minneapolis and St. Paul are an economic force. There is a culture of hard work, innovation, and industrial success in the Twin Cities, so it’s not surprising that startups are increasingly becoming part of the economic landscape.

“Entrepreneurial energy is sweeping across this region,” remarked one business leader at our roundtable breakfast that kicked off another packed day of startup visits, a luncheon at the University of Minnesota, a livecast conversation with Steve Case, and finally, a pitch competition featuring ten CEOs.

We began the tour at CoCo, the nucleus of startup activity in Minneapolis, located on the historic trading floor of what was once the Minneapolis Grain Exchange. They’ve kept some of the old exchange boards intact, but on the floor are dozens of small businesses. We met teams from Zipnosis, Estate Map, Apruve, Rowbot, and others - each with a unique solution that capitalizes on existing markets and expertise in their hometown. And later, we stopped by Field Nation and Sports NGin, who’ve experienced substantial growth in the past year and have their own office spaces downtown.

Senator Amy Klobuchar also joined our crew for part of the ride. She shed light on the economic prowess of the area, (Minneapolis has the lowest unemployment rate of any major metro area, she told us), and discussed ways to support the startup community through policy and legislation as well as efforts like the Rise of the Rest.  

With Sen. Klobuchar on board, we learned about the Neighborhood Development Center, a 20-year-old organization in Minneapolis that trains, finances, and offers retail locations to low-income entrepreneurs, many of whom come from the Twin Cities' large immigrant and refugee community. The NDC’s premiere business space is the Midtown Global Market, a formerly vacant building that’s revitalized the surrounding neighborhood of South Minneapolis. The internationally themed public market hosts over 40 independent businesses selling speciality foods and products and has created 475 jobs in its time. The stories we heard here from entrepreneurs who had come to Minneapolis from all over the world were truly inspiring—a testament to how supporting entrepreneurship in its many forms can benefit a city’s residents, and its neighborhoods, at all levels of society.

The tour wrapped up at the Pitch Competition and the winner - 75F - took home $100,000 to help expand their business that makes wireless sensors and software to regulate building temperatures and thereby reduce energy use and costs.

What became obvious to us during our visit to this accomplished city is that there’s still immense potential for growth in the concentration and network of startups here. There’s room for the startup community to encourage more collaboration, garner more support and become more recognized in this city where the Fortune 500 companies remain the dominant economic influence. Steve Case and the Rise of the Rest team shared ideas about how to enliven this startup ecosystem, including encouraging big businesses to become customers of smaller ones, creating opportunities for mentorship, and sponsoring more initiatives like the Minnesota Cup, an annual competition that rewards new business ideas. Considering how things are going, we look forward to seeing what the entrepreneurs of the Twin Cities do next.