Vets Who Tech: Aaron's Story

Throughout the week, we're posting stories from veterans who’ve made strides in the technology industry on our blog and on Medium. You can also find them all here and follow the conversation about how to support more veterans in this growing industry at #VetsWhoTech.

When Aaron Saari applied to West Point in 2002, he was well aware that in a post-9/11 world a military deployment would immediately follow his graduation. “Our whole class knew what was coming after graduation,” he says. Indeed, Aaron did end up deploying twice after graduating from West Point in 2007. He spent 15 months in Iraq and another six months in Afghanistan as an officer. It was these experiences, leading a team of soldiers halfway across the world, that inspired him to become an entrepreneur.

“I’m less than a year out of college and at 23, I’m given 30 people—some older than me, some younger than me, some men, some women—and $15-20 million worth of equipment, and I’m told to do all these things I’ve never done before…if that’s not being an entrepreneur, I’m not sure what is.” His experience in the field also taught him risk analysis, leadership, how to be nimble, and how to pivot quickly in life-threatening situations.

Upon returning stateside, Aaron recognized a further career in the military wouldn’t entail the same kinds of responsibilities he had been afforded as an officer on the battlefield—it looked a lot more like a desk job. Growth opportunities seemed riddled with layers of bureaucracy and hierarchy, a stark contrast to the relatively flat and merit-based culture of technology entrepreneurship.

All the while, Aaron had been following and studying startups and successful entrepreneurs. While still in the military, Aaron read Tim Ferris’s The 4-Hour Workweek. “It was a paradigm-shifting book,” Aaron explains, “It gives you a glimpse into the future of work and how the global economy operates.” He picked up other ideas and skills from books on entrepreneurship, the lean startup model, and Internet marketing, teaching himself what it would take to eventually start his own business.

“When I got out, I started building the business,” Aaron says.

To pursue a career change from a military officer to a technology and marketing entrepreneur, Aaron first considered some of the resources the GI Bill provided. He could earn an MBA or take advantage of business education programs offered by Veterans Affairs and the Small Business Administration. But ultimately, he didn’t want to spend two valuable years sitting in a classroom gaining a graduate degree, and the other resources available to veterans just seemed outdated. “The concepts that they’re teaching are not the way the world works any more.”

In addition to the books he had read, Aaron also came across online resources covering the latest trends in digital marketing, data analysis, and usability testing. He sought out informal, online communities of veterans who had started their own businesses or worked at fast-growing technology companies. “I found people that were doing things, doing things well, doing things quickly... [who] created their own networks.” Aaron found these resources were relevant and easily available to prepare him to launch his own business and take a lead role at a growing startup.

Today, he runs Base of Fire, a growth and marketing consultancy for small businesses, but that’s not all. After focusing on Base of Fire for nine months, Aaron attended a startup event in San Francisco where he met the founder of a new company called Remoov—an online platform that helps people declutter their homes by integrating pickup, moving, and donation services. Soon, Remoov was recruiting him. Realizing that scaling operations at a young company would offer him even greater experience and exposure as a burgeoning tech entrepreneur, Aaron joined on as head of operations.

Aaron continues to tap into networks of veterans in the tech and startup world as he seeks out advice in growing and expanding his latest ventures. As a business leader, he also wants to hire veterans. However, he worries many veterans transitioning to the civilian workforce aren’t getting the education they need, noting that many of the officially accredited programs haven’t kept up with the pace of technological and business changes.

One thing is certain though—the veteran community is a unique workforce because more than anyone, they know how to “adapt and overcome,” Aaron says. “We’re a community of problem solvers. We’re going to find a way to get things done.”

It’s Time We Expand Veterans Benefits for the 21st Century Economy

You can also read this post on Medium.

Each day, nearly 550 military veterans transition to civilian life looking for jobs. Meanwhile, the technology industry is growing fast, driving up the demand for hardworking individuals who can take on roles in well-paid and understaffed tech fields. Technology itself is also lowering the barriers to entry for entrepreneurs to launch their own businesses, which in turn create new jobs.

Not only is there increasing demand for workers in the technology industry, military veterans are also uniquely positioned for roles in this field. Trained as leaders and decision makers in complex situations, many veterans have the fundamentals to quickly learn or adapt problem-solving skills as an entrepreneur launching a startup or an engineer at a fast-paced tech company.

Unfortunately, many veterans who choose to enter the tech industry—either as an employee or a founder—face major obstacles. One obstacle is the limitation on benefits that cover relevant training, education, and programming.

Federal funding guidelines make it particularly difficult for veterans to access non-traditional, skill-based education programs that are relatively new to the education landscape, but are already producing success stories. These programs provide crucial resources for making tech training accessible to people of all backgrounds, especially those new to the civilian workforce. Not only can these programs provide skills that bridge military experience with roles in the tech sector, but they also provide the tech vocabulary and network that enable veterans to land the job.

Similarly, federal funding guidelines make it hard for veterans to use the benefits they have earned through their service towards building a business. Twenty-five percent of active duty service members report that they would like to start their own company. Many veterans are empowered to create their own jobs and jobs for others. Unfortunately, restrictions around the use of GI benefits preclude them from putting that money toward a startup or un-accredited alternative entrepreneurial education programs that help bring their ideas to reality.

Congress should develop policies that help veterans transition into roles in the tech sector. Growing the diversity of the tech sector and expanding innovation in America depends on it.

Throughout the week, we’ll be posting stories from veterans from around the country who’ve pursued careers in the technology sector following their military service. Each of their stories is unique: some built on tech skills that they had already acquired during their services, others sought to build an entirely new skill base, and several of the veterans profiled here have started their own companies.

Together, these men and women showcase the enormous potential within the veteran community to serve and lead in our country’s most rapidly growing job sector. Yet to accelerate these successes and enable more veterans to enter into this industry, we must do more.

Watch this space for stories from veterans who’ve made strides in the technology industry or find them all here. You can also follow the conversation about how to support more veterans in this growing industry at #VetsWhoTech.

Startup News Digest 10/30/2015

Our weekly take on some of the biggest stories in startup and tech policy.

SEC Finalizes Crowdfunding Rules. At today’s SEC open meeting, the Commission voted to adopt Title III crowdfunding rules, finalizing the last and most highly-anticipated provision of the 2012 JOBS Act. Once the rules go into effect, (180 days after they’re enter in the Federal Register,) any investor can buy equity shares from companies raising capital online, marking a new era of financing for startups and investors alike. As Engine and industry experts have commented, the rules aren’t perfect, but their long-delayed release is the first critical phase in working with policymakers to improving and expanding the crowdfunding ecosystem.

Cybersecurity Bill Passes Senate. On Tuesday, lawmakers voted 74-21 to pass the Cybersecurity Information Sharing Act (CISA). The bill has been largely opposed by the tech community over concerns that the bill’s core information-sharing mechanism would compromise user privacy. Amendments aimed at providing additional privacy protections  didn't garner sufficient support, leaving industry stakeholders and civil liberties advocates frustrated. But the debate will not end here—there is a chance these issues will come up again as the Senate’s bill goes to conference with the House.  We’re tracking.

EU Passes (Bad) Net Neutrality Rules: The tech world's focus shifted to the EU this week, as the European Parliament voted on net neutrality rules that have caused consternation amongst open Internet advocates worldwide. Though the new European-wide rules look similar to rules the FCC passed earlier this year, the EU's regime contains many vague definitions that will allow ISPs to create and exploit loopholes that could render the EU's nominal ban on so-called "fast lanes" ineffective. For example, the rules create an exception allowing ISPs to prioritize "specialized services," but define that exception so broadly that ISPs could effectively create the types of fast lanes that the rules nominally ban. Similarly, while the U.S. rules allow the FCC to evaluate the legitimacy of zero-rating plans on a case-by-case basis, the new EU protocols allow zero-rating. While there may still be opportunities to correct these loopholes going forward, the future of an open Internet in Europe looks uncertain.

EU and US Close on New Safe Harbor: After the European Court of Justice’s rejection of the “safe harbor” that allowed U.S. companies to easily import EU customer data to the U.S., the tech world was left in a state of confusion as to what exactly was supposed to happen next. While the EU and U.S. had been hammering out a new safe harbor framework even before the old one was rejected, news this week that negotiators agreed in principle upon a new frameworks came as a pleasant surprise. Whether the new framework satisfies the ECJ’s concerns and what companies should do in the meantime remain open questions.

New Copyright Exemptions. In what has become a triennial reminder that it's impossible for the law to properly keep up to date with changing technology, the Librarian of Congress this week granted a number of exemptions to a rule in the DMCA that outlaws "circumventing" certain digital locks. This year's exemptions include rules allowing the public to tinker with car software and to jailbreak devices in order to run third party software. Of course, the exemption for security research on cars came way too late to prevent the VW emissions scandal, and the jailbreaking rule was perhaps most notable for fixing an absurd distinction between jailbreaking phones (already legal) and tablets (now legal). It's great that there is a mechanism for updating the law to reflect technological realities, but a system in which you have to wait three years before finding out whether it's legal to install third party software on your tablet needs an overhaul rather than a triennial tweak.

Can Tech Help Copyright? In an op-ed this week, Mike Masnick explores the potential for technology to solve the entertainment industry’s copyright woes. Take Sweden, for instance, where not long ago, piracy was rampant. But with the rise of forward-looking services like Spotify, which calls Sweden home, piracy rates have steadily declined. Policy lessons from other countries, detailed in a recent report, demonstrate that “attempts to reduce piracy by passing strict anti-piracy laws...had little long-term impact on piracy rates.” Instead, policymakers should embrace and support innovative ways to support the creative industry through new technologies.

Amazon Faces Worker Classification Suit. Four former Amazon Prime Now delivery drivers have sued the company, arguing that they were misclassified as contract workers instead of employees with full benefits. The suit is the latest in a long list of ongoing legal battles between on-demand workers and their employers (see Uber & Lyft, Grubhub & others, Postmates & others). As the debate continues around how to best support this growing class of workers, these cases have the potential to completely reshape the 1099 economy and the companies that operate within it.

Campaigns to Talk Tech in Iowa. Engine joins the Cedar Rapids Gazette and the Technology Association of Iowa in inviting Democrat and Republican Presidential contenders to the Iowa Presidential Tech Town Hall in Cedar Rapids this December. Candidates will share their agendas for supporting the innovation economy and take questions from a panel of tech policy leaders and local entrepreneurs. Potential topics include technology innovation, STEM education, broadband access, and entrepreneurship. More information and tickets to this event at PresTechTownHall.org.

Startups on the Hill for Patent Reform. Engine and the Consumer Electronics Association hosted a Capitol Hill fly-in Thursday where we were joined by four startups that have battled patent trolls first-hand. Together, we spoke with eleven Senate offices, including directly with Senators Heinrich (R- NM) and Peters (D-MI), about our support for the Senate’s PATENT Act. We also delivered the letter signed by nearly 200 startups in support of the Innovation Act (House bill) and PATENT Act (Senate bill). These bills would help disincentivize bad actors in the patent system and give startups tools to defend themselves against frivolous patent litigation.

Better Broadband Competition. Startups depend on internet connectivity and benefit from greater competition among providers. Over the next few weeks, we will be highlighting a number of policies that would improve competition in the broadband market and better encourage entrepreneurial activity. Read our first post outlining the series here and stay tuned for more.

SEC Passes Historic Investment Crowdfunding Rules

After more than three years of delay, the SEC has finally passed rules making investment crowdfunding a reality. Considering it’s been so long since Congress passed the legislation authorizing investment crowdfunding, it’s easy to forget how significant of an achievement today’s news represents. For the first time, entrepreneurs can raise capital from everyday investors over the Internet, opening up a vast new pool of funding for startups throughout the country. For the 20% of entrepreneurs who have identified a lack of adequate capital as one of the three biggest challenges they face, the SEC’s passage of final rules couldn’t have come at a better time.

Grand pronouncements about investment crowdfunding’s potential shouldn’t be dismissed as mere hyperbole. Simply put, investment crowdfunding has the potential to revolutionize startup financing and enable new groups of entrepreneurs to participate in the startup ecosystem. The success of rewards-based crowdfunding platforms like Kickstarter and Indiegogo suggests that investment crowdfunding will make it far easier for startups outside of traditional tech hubs in New York and California to raise funds. Consider this: the average venture capital investor resides within 70 miles of his or her portfolio companies, while the average crowdfunding backer resides, on average, 3,000 miles away from the companies they support. With traditional venture funding concentrated on the coasts (75% of all VC funds go to companies based in California, New York, or Massachusetts), investment crowdfunding will enable more capital to flow to emerging startup hubs throughout the country. Similarly, investment crowdfunding has the potential to help fix the tech sector’s troubling lack of diversity. While women entrepreneurs have been excluded from traditional venture funding (female-owned companies are 18.7 percent less likely to raise a successful venture round than male peers), they have found far greater success through rewards-based crowdfunding platforms.

While investment crowdfunding has great promise, much work remains to be done for crowdfunding to reach its full potential. As outlined more fully in the white paper we released earlier this month, a few key changes to the investment crowdfunding regime could go a long way towards making crowdfunding a viable option for smaller companies and the investors supporting them. For example, the current rules impose significant disclosure obligations on issuing companies that may increase the cost of raising crowdfunded capital to a point where all but the riskiest companies will turn to other forms of financing for low-volume raises. As demonstrated by the success of the investment crowdfunding market that developed in the U.K. as the U.S. market waited on the SEC to pass final rules, these additional requirements are unnecessary for investor protection and may unduly inhibit the growth of the crowdfunding sector. Though the SEC’s final rules improve on the disclosure rules in earlier drafts, there’s still more work to be done.

Hopefully, today’s announcement is just the first step towards perfecting the U.S. investment crowdfunding market. For cash-starved entrepreneurs and everyday investors eager to join in the innovation economy, today is a seminal moment. For advocates and policymakers working to ensure that investment crowdfunding fulfills the ultimate promise of the JOBS Act, today is just the beginning. We look forward to working with Congress and the SEC in the future on this important issue.

Engine Broadband Deep Dive: Policies to Promote Broadband Competition

We all know how it feels to have a terrible internet connection, or worse, no connection at all. We’ve experienced the intense frustration of “no service.” The agony of waiting for a video to buffer or a web page to load. The disappointment of paying an outrageous sum for crappy service.

In September—the same week that President’s Broadband Opportunity Council (“the Council”) published a report that included 36 actions that federal agencies will take to better facilitate broadband deployment across the nation—Akamai published its “State of the Internet” report, ranking the U.S. 20th worldwide in terms of broadband connectivity.

While the proximity in timing is pure coincidence, the release of Akamai’s report highlights why it is so important that the government take steps to expand broadband access. The U.S. has a broadband problem. Everywhere you look there is a new data point highlighting deficiencies in the market. Almost 55 million Americans still lack access to advanced broadband and more than 25% of American households do not subscribe to broadband at home.

Beyond this lack of access, there is also a lack of competition.  As the Council notes in their report, “nearly 40% of American households either do not have the option of purchasing a wired 10 Mbps connection or they must buy it from a single provider.” The state of competition in the mobile market is similarly disappointing, with just two dominant wireless companies controlling nearly 75% of the low-band spectrum in the country—the type of spectrum most valuable for mobile Internet use.

This is problematic, since competition is what makes access more meaningful. Competition brings lower prices, higher speeds, and more incentives for companies to build out better networks. Startups depend on this sort of a healthy and competitive broadband market. We’ve elaborated on why competition matters to startups in previous posts, but in short, improved access and competition mean more customers, lower operating costs, and an enhanced ecosystem for innovation.

So what can government actually do to solve this problem?

The Council’s September report and resulting cost-neutral actions represent a step in the right direction. For example, a number of agencies plan to expand existing program support to cover broadband projects, allowing for increased funding for entities building out broadband in un- or under-served areas. Additionally, the report recommends extending the Department of Transportation’s “dig-once” policy to other agencies’ infrastructure projects. Dig-once policies encourage the laying of one tube, through which any provider can later route their fiber or cables. The Federal Highway Administration has reported that these policies can reduce broadband deployment costs by as much as 90%.

However, there is still more that Congress, the FCC (which was not included in the Council because of its status as an independent agency), and specific states or localities can be doing to improve the broadband ecosystem.

Over the next few weeks, we will be highlighting a number of policy actions that could be taken to improve competition in the broadband market and better encourage entrepreneurial activity. We will look at everything from special access services to federal spectrum to municipal broadband and much more, so stay tuned!

Inviting Presidential Candidates to Talk Tech in Iowa

On December 7, Engine is partnering with the Technology Association of Iowa (TAI) and the Cedar Rapids Gazette to host the Iowa Presidential Tech Town Hall in Cedar Rapids, Iowa. This first of its kind event offers candidates a platform to articulate their vision for supporting the innovation economy. Candidates will discuss issues including technology innovation, STEM education, broadband access, the sharing economy, and the promise of entrepreneurship.

The Presidential Tech Town Hall will also connect candidates to the Iowa technology and startup community. From Cedar Rapids to Des Moines to Iowa City, Iowa’s tech and startup community includes more than 76,000 workers from across the state and accounts for 9% of the state’s GDP. (Read more about Des Moines startups in our dispatch from Rise of the Rest last year.)

“The Technology Association of Iowa is excited to partner with Engine and The Gazette to deliver the Iowa Presidential Tech Town Hall. Iowa has a long history of creating technology solutions and investing in the future by supporting entrepreneurship,” said TAI President Brian Waller. “TAI members and Iowans are eager to hear from our presidential candidates on the topic of Technology and Entrepreneurship”

The Tech Town Hall will give candidates an opportunity to communicate directly with hundreds of caucus-goers, and well as many more watching the event via livestream around Iowa and across the country. In addition, The New Hampshire High Tech Council plans to host a live viewing event for their members and other primary voters in New Hampshire.

“It’s critical for the startup community to make its voice heard in this election cycle, and drive the conversation about tech and entrepreneurship,” said Engine Executive Director Julie Samuels. “The positions our next president takes will have far reaching impact, and will help determine whether even more Americans can launch and grow a startup and create good jobs - here in Iowa, and in communities all over the country. Engine is excited to engage in a thoughtful discussion with 2016 candidates, and we’re grateful to TAI and the Cedar Rapids Gazette for partnering with us on this event.”

For more information and to register to attend, visit www.PresTechTownHall.org. Join the conversation at #IowaTech2016.

DOE Pilot Improves Student Access to Tech Bootcamps

Last week, the Department of Education announced a pilot program that will allow federal financial aid to be used toward coding bootcamps and similar “nontraditional” educational programs. The EQUIP (Educational Quality Through Innovative Partnerships) program will make it easier for students who rely on federal aid to access these in-demand educational programs. It will also provide an opportunity for the Department to evaluate the effectiveness of these programs and explore how to best monitor their quality.   

In recent years, the prevalence and popularity of coding bootcamps and other nontraditional education programs have skyrocketed. According to the Education Department, coding bootcamps will graduate 240 percent more students in 2015 than they did in 2014, up from 6,740 to over 16,000 graduates.

This growth is not surprising—as the 21st century economy requires an increasing number of skilled workers, these institutions have risen to meet demand. The courses they offer help to alleviate current pipeline problems by channeling talented individuals into open, high-paying positions. General Assembly, one of the largest and most established bootcamps, reports a 99 percent placement rate in the field of study. And overall, 75 percent of coding bootcamp graduates are finding employment in their field of study and see a 44 percent increase in income according to a 2014 study.

However, there is still a significant roadblock in place: students of most of these nontraditional programs do not qualify for federal financial aid.

Imagine this: you’re a single parent working in an entry-level programming position. You’re looking to advance your career and have read about the emerging field of data science. You don’t have the resources—time or money—to attain a four-year degree in data science, but you find an interesting immersive “bootcamp” program that will train you in data science in just twelve weeks.

Even though this specialized program will train you at a fraction of the cost and duration of a traditional degree, in most cases you would not be able to obtain a federal student loan to help pay for it.

There are two main reasons for this: First, in order for an institution to be eligible for federal aid, it must be accredited. The accreditation process is complicated and ill-equipped to assess these sorts of innovative programs whose courses are constantly evolving based on market demand. As we’ve written before, nearly all modern coding bootcamps and schools lack accreditation.

Compounding the problem is a restriction on accredited colleges that limits the types of partnerships they can have with nontraditional education groups. For example, colleges offering federal aid cannot outsource more than 50 percent of any given program to third party institutions. So, if a resource-deprived community college wants to partner with an outside institution to offer a new program in an emerging field like data analytics, they can only do so if the outside institution offers less than 50 percent of the curriculum, assessment, or faculty.

These limited partnerships have been successfully attempted by several educational companies—General Assembly with Boca Raton's Lynn University; edX with Arizona State University; Galvanize with the the University of New Haven—but there is still huge untapped potential being stifled by overly-restrictive and outdated rules.

The EQUIP program aims to change this by loosening restrictions on schools that want to do innovative work with an alternative education provider. The program waives the existing 50 percent outsourcing prohibition for selected institutions under two conditions: a third party “Quality Assurance Entity” evaluates the outside partner and the college’s accreditor approves it.

While the scope of the pilot will be relatively small, this balanced step will allow the Department to evaluate a model that could later be expanded to cover any partnership between an accredited institution and a nontraditional program.  

Right now the innovation economy desperately needs skilled individuals. Creative initiatives like the EQUIP program are a sensible way for the federal government to rise to meet this challenge and we hope to see more efforts like this one in the future.

Startup News Digest 10/23/2015

Our weekly take on some of the biggest stories in startup and tech policy.

Judicial Redress Act Heads to Senate. On Tuesday, the House passed the Judicial Redress Act, which would extend rights to judicial redress to citizens of the EU and other designated countries. The bill has broad support within the tech community, where it is seen as both a sensible next step in surveillance reform and essential to advancing an updated safe harbor agreement between the U.S. and the EU. The bill was slated for Senate consideration as an amendment to the Cyber Information Sharing Act (CISA), but was pulled on Thursday for procedural reasons. The bill’s sponsors are working with Senate leadership to schedule a vote and we will continue to track. Meanwhile, the White House chose to endorse CISA, but also criticized it for allowing companies to share data with any agency, rather than having a centralized clearinghouse.

A National Drone Registry: Recreational drone users will soon be required to register their unmanned aircrafts, federal agencies announced this week. The decision comes amidst national airspace safety concerns from the Federal Aviation Administration and the Transportation Security Administration as reports from piloted aircrafts of drone sightings of or close calls with rogue drones have mounted in the past year. The details of the registration system are still being worked out and the FAA is currently seeking input from the public. Hobbyists and drone users can submit their comments here until November 20.

Bitcoin Teams up with the Feds. A new technology-government alliance is bringing together Bitcoin experts and advocates with government officials. The Block Chain Alliance was established to help federal authorities better understand the complexities of bitcoin transactions, and to change the perception of bitcoin as a "currency for criminals". The alliance will also offer digital currency companies an opportunity to demonstrate power and potential of these new technologies, especially for law enforcement agencies. The Justice Department and Secret Service and are already exploring how to use Bitcoin to more securely track the flow of digital currency across borders.

‘Dig Once’ Bill Introduced in House. On Thursday, Reps. Walden and Eshoo introduced the Broadband Conduit Deployment Act of 2015, which would mandate installing broadband conduit pipes during federal road construction. This would allow service providers to easily install fiber lines years down the road without having to excavate the road to re-dig a channel. The Federal Highway Administration has reported that ‘dig once’ policies like these can reduce broadband deployment costs by as much as 90%.

Code.org letter on CS education. Code.org and several major tech industry players sent a letter to the legislators leading education reform efforts this week. The letter urges lawmakers to include provisions that promote computer science education in any revision of the Elementary and Secondary Education Act (ESEA). Among their requests: maintain computer science as a “core academic subject” and retain resources that would improve teaching and learning in STEM subjects. You can read the full letter here.

Coding Behind Bars. This week Vice reported on the first and only coding bootcamp behind bars. Non-profit The Last Mile, runs Code.3730, a six-month coding course for inmates at San Quentin prison. The curriculum - Java Script, HTML, CSS, and Python - is similar to other code academies, but it’s taught on on dry-erase boards, without Internet. In January, students in the program will be eligible to get paid for entry-level front-end coding work for companies on the outside.

Data Security for Startups. As startups generate, collect, and use data at an increasing rate, state and federal regulators expect them to have security protocols in place. On Tuesday, Engine co-hosted a data security panel at the Nasdaq Entrepreneurial Center in downtown San Francisco to dig into these security issues. Read our blog post recapping the event and unpacking existing resources, including the FTC’s “Startup with Security” guide, to help startups navigate data security regulation and ensure they are adequately prepared for a breach.

Navigating Data Security Policy: a Primer for Startups

For most startups, it’s not a matter of whether you’ll have a data breach, it’s whether you’ll know about it and how well you’ve prepared for it. That’s been the main takeaway at two recent events highlighting the importance of data security protocols for startups. Last month, the Federal Trade Commission (FTC) held a “Start with Security” conference in San Francisco, the first in a series of events under the Commission’s new initiative aimed at providing businesses with resources for navigating the world of security (you can watch the full event here). And yesterday, Engine co-hosted a data security panel at the Nasdaq Entrepreneurial Center in downtown San Francisco. The conversation began with a presentation by Jim Dempsey of the Berkeley Center for Law & Technology, followed by a panel featuring several experts on how technology companies, especially new ones, should manage and protect their users’ data.

These conversations are particularly timely, as companies are generating, collecting, and using more data than ever—and regulators are taking notice. Every day, even a one-person startup can handle sensitive data from hundreds of thousands of users and is expected to have security protocols in place.

The principal federal body that oversees companies’ data practices is the FTC, which has the authority to police “unfair or deceptive practices” under section 5 of the FTC Act. At its recent conference, FTC Chairwoman Edith Ramirez remarked that “in the rush to innovate, privacy and security cannot be overlooked—even in the fast-paced startup environment.” Ignorance is no longer an excuse in the eyes of the Commission. Startups should take this admonition to heart because the FTC can—and will—bring lawsuits against companies that fail to meet cybersecurity standards. Just last month, this authority was cemented by a federal court in FTC v. Wyndham. While the FTC cannot create new industry security regulations without direction from Congress, it now has explicit authority to police companies’ cybersecurity practices using its consumer-protection mandate.

This presents a conundrum for startups. As Josephine Wolff unpacks in a recent post in Slate, even “experts disagree on which computer security practices are reasonable and which are unreasonable.”

So how should startups ensure they’re not upsetting the FTC? One option is to look to the agency itself for some guidance. Published in conjunction with its outreach initiative, the FTC’s “Start with Security” paper outlines ten data security principles they advise companies to adopt, from data encryption to password policies.

At Tuesday’s event, Dempsey expounded on this document, arguing that the overarching takeaway is security by design: companies should build security into their products at every stage of development. The panelists, including a privacy lawyer, agreed emphatically, suggesting that companies of all sizes develop several security and privacy guidelines, implement them, and most importantly, document them. These include an internal IT security policy, a privacy security policy that specifically addresses how users’ personal information is handled, and finally, an incident response plan to refer to if and when a data breach occurs.

But data security requirements don’t stop at the FTC. Any startup operating in a regulated industry such as finance, healthcare, or education is likely well aware that additional laws apply in managing sensitive financial, health, and student data respectively. And to further complicate the process, there are additional state laws regulating data issues. Dempsey explained at least 47 states have their own requirements for companies’ treatement and security of user data. California, for instance, is one of the many states that have breach notification-specific laws, requiring companies to notify residents whose unencrypted personal information was acquired in an attack.

While all these laws can create a compliance nightmare for startups who lack the internal capacity to decode these various guidelines, they’re not going away. Congress has debated questions around data security for years now. Should a data security bill include enumerated, prescriptive standards or take a more loose, industry-specific “best practices” approach? Should a bill include specific requirements or should those be left to the FTC to write? We’ve seen more than six federal data security proposals already in 2015, each of which takes a different approach to answering the above questions. While it is not yet clear which (if any) of these bills will become law, the increasing momentum behind passing something sends a clear message—startups can no longer defer addressing security issues until it is convenient.

The tech community should be engaging in more conversations like the one Engine hosted today. They provide clarity around best practices so that when Congress finally passes a data security law or when a breach eventually happens and the FTC comes knocking, startups already have security protocols in place that will pass muster. Further, as our technology improves, our privacy expectations evolve, and our lawmakers better understand the extent to which policy can dictate practices, startups voices should be heard in the debate around better policies that work for both companies and users around the world.

Startup News Digest 10/16/15

Our weekly take on some of the biggest stories in startup and tech policy.

Federal Aid for Coding Bootcamps. On Wednesday, the U.S. Department of Education announced a new pilot program that will make it easier for a more diverse range of people to attend alternative education programs like coding bootcamps. Until now, students enrolled in “nontraditional” educational programs have not been eligible for federal financial aid.  The new EQUIP (Educational Quality Through Innovative Partnerships) program will waive existing restrictions to allow federal aid dollars to be used towards approved alternative programs. While the scope of the pilot will be relatively small, this initiative is a great move by the Dept. of Ed towards making these popular and essential programs more accessible to all.

White House Opts Against Legislating Back Door for Encryption. At the end of last week, the White House made a long awaited decision: they would not push for legislation that would mandate companies be able to decode messages at the request of law enforcement. At least, that’s what they’ve decided for now. Even if the White House’s decision maintains status quo, advocacy groups worry about the White House’s definition of “strong encryption” and whether the Administration will “weaken security through other methods.”

EU Safe Harbor Ruling. Ars technica takes a deeper look at the far-reaching consequences of the EU’s safe harbor ruling in an article published on Thursday. Evan covered the impact this ruling will have on startups in a blog post last week, noting that “while larger companies have quickly moved to establish new legal pathways for importing EU data or have secured data centers in the EU, smaller companies face a more daunting task in trying to comply with now unclear data protection rules.” Ars goes even further, arguing that this ruling will have a dramatic effect beyond short-term global commerce—it will likely impact future trade agreements between the U.S. and EU, as well as the UK’s surveillance practices.

Evidence of “Over-Removal” by Intermediaries. When intermediaries receive a take-down request, the easiest, least risky response is to take down the cited material - especially for small companies that don’t have the resources to hire a legal team to thoroughly evaluate each request. A literature review by Stanford revealed growing amounts of empirical evidence of “over-removal” by intermediaries (e.g. Google, Twitter, Facebook), further defining a problem that puts free-expression at risk.

Wyden Calls for Greater DMCA Exemptions. As the U.S. Copyright conducts its periodic review of requests for exemptions under the Digital Millennium Copyright Act (DMCA), the agency should consider the importance of these exemptions to the  continued expansion and improvement of American technologies, Sen. Ron Wyden explained in this week’s Wall Street Journal. Wyden expressed his concerns about the EPA and FDA’s pleas to limit exemptions for new software in cars and medical devices, thereby prohibiting such new technologies from being legally tinkered with under the DMCA. Sen. Wyden and Rep. Jared Polis (D-CO) have introduced the Breaking Down Barriers to Innovation Act, a bill that aims to streamline “the process to obtain exemptions to the DMCA to promote scientific research, innovation and the fair use of copyrighted works.”

Better Crowdfunding Policy. In anticipation of the SEC’s impending release of the Title III crowdfunding rules, Engine published a white paper this week, “Financing the New Innovation Economy: Making Investment Crowdfunding Work Better for Startups and Investors.” The paper analyzes trends in U.S. and U.K. crowdfunding markets, which offer important lessons for U.S. regulators and lawmakers as we move closer to launching investment crowdfunding for retail investors.

In Celebration of Ada Lovelace. On Tuesday we commemorated Ada Lovelace Day and celebrated the achievements of the first programmer and women in science and technology everywhere. News from Stanford emphasized progress: 214 women have enrolled as computer science majors, 30% of all enrolled computer science students.

Statement on FCC "Lock Up" Investigation

Engine welcomes the Federal Communications Commission’s (FCC) announcement today that it plans to review the business practices of a number of dominant broadband companies that “lock up” demand in the high-capacity broadband market.

Startups depend on a healthy and competitive broadband ecosystem. Improved access and competition mean more customers, lower operating costs, and an enhanced ecosystem for innovation. Currently, the market for high-capacity broadband services is dominated by a few monopoly-like carriers who use their power to engage in anticompetitive “lock up” agreements that distort the market, jack up prices for all users, and restrain buildout by competitors. These anticompetitive practices represent a hidden tax on all startups—money that would be better spent hiring new employees, improving products, and driving growth.

The FCC’s decision to investigate these practices represents an important step towards a more competitive broadband market that encourages economic growth, innovation, and improved access for all.

Making Investment Crowdfunding Work Better for Startups and Investors

The Jumpstart Our Business Startups Act (JOBS Act) was signed in law over three years ago and in that time, it’s had a notable impact on the startup economy. The IPO “on-ramp” has made it easier for private companies to go public, general solicitation has allowed startups to openly solicit investment from high net-worth investors, and the new Reg A+ has revamped another channel for capital formation for expanding companies. But the JOBS Act’s most exciting and promising achievement—investment crowdfunding open to all Americans—has languished at the SEC, held up in the commission’s rulemaking process. This delay has been frustrating to the entrepreneurs, new crowdfunding platforms, and to everyday investors ready to participate in this exciting new market. We even echoed those frustrations ourselves earlier in fall when we gathered over 200 signatures urging the SEC to act. However, since then, we’ve also gathered additional intel on how similar forms of crowdfunding have flourished, and the regulatory frameworks that have facilitated their successes. Evidence from these ancillary markets suggest the proposed policy framework would benefit from a modified approach.

Our latest white paper, “Financing the New Innovation Economy: Making Investment Crowdfunding Work Better for Startups and Investors,” addresses these concerns. In the paper, we analyze activity from similar crowdfunding markets including rewards and donation-based crowdfunding; accredited investor crowdfunding under Title II of the JOBS Act; as well as investment crowdfunding in the United Kingdom, where everyday investors have been able to invest in emerging companies in exchange for equity since 2012. These crowdfunding markets have experienced exponential growth in the past few years, offering important lessons for regulators as we move closer to launching investment crowdfunding for retail investors in the U.S. One of the most salient takeaways is that fraud has been virtually non-existent, even though issuers are subject to few, if any, of the disclosure requirements that typically accompany public capital raises. Conversely, the current policy framework for investment crowdfunding under Title III includes substantial, onerous disclosure requirements that we believe could be detrimental to the long term growth and sustainability of investment crowdfunding.

Identifying lessons for policymakers from similar crowdfunding regimes, we propose several improvements to the current Title III regulatory framework. These changes will help ensure that investment crowdfunding for non-accredited investors is a successful, sustainable, and efficient market and most importantly, that it attracts quality companies without debilitating costs.

Enabling investment crowdfunding for all investors is critical for expanding capital access to emerging entrepreneurs and startups across the country. Raising capital is often the greatest challenge an entrepreneur faces when getting his or her business off the ground, and too many potential business leaders are left behind because they lack adequate personal finances or can’t tap into sources of angel financing or venture capital. Because investment crowdfunding will allow millions of new people to easily provide capital to startups, it has the unique potential to drive much-needed capital to underrepresented groups of entrepreneurs.

It’s with these entrepreneurs in mind that we believe more work remains to be done to perfect the investment crowdfunding regime. With the Securities and Exchange Commission rumored to finalize rules for Title III by the end of the year, we hope this paper spurs a productive dialogue with policymakers about how to continue improving upon the statute and the forthcoming rules, especially as we garner new insights from the impending U.S. crowdfunding market.

Startup News Digest 10/9/2015

Our weekly take on some of the biggest stories in startup and tech policy.

ECJ Invalidates Data Safe Harbor. On Tuesday, the European Court of Justice (ECJ) invalidated the European Commission’s “safe harbor” rules that permitted U.S. companies to self-certify compliance with European data protection rules in order to legally transfer EU customer data to the U.S. The court determined that U.S. legislation permitting the NSA to secretly collect and review consumer data was inconsistent with the EU’s Data Protection Directive. Consequently, the safe harbor framework was itself inconsistent with the Directive, as U.S. companies could not claim to have adequate data security protections in place. While larger companies have quickly moved to establish new legal pathways for importing EU data or have secured data centers in the EU, smaller companies face a more daunting task in trying to comply with now unclear data protection rules.

Governor Brown Signs CalECPA. In a huge victory for startups and digital privacy, Governor Jerry Brown signed the California Electronic Communications Privacy Act (SB178), now the nation’s best digital privacy law, on Thursday. This landmark bill (which we’ve covered in past digests) updates digital privacy laws by requiring law enforcement to obtain a warrant before accessing an individual’s electronic communications. We are hopeful that this action by California will prompt similar movement in other states or at the federal level.

Closing the Gender Gaps. California passed a (another) landmark piece of legislation that would require women to be paid the same as men for doing “substantially similar work.” Though the governor acknowledges that this bill won’t solve the problem, he expects it to “help accelerate [the] progress.” It’s an interesting development in light of the dialogue in Silicon Valley regarding the promotion and retainment of women in the tech industry. Meanwhile, on the federal level, Senators Maria Cantwell (D-WA), David Vitter (R-LA) and Jeanne Shaheen (D-NH) introduced a bill that would reauthorize and increase funding for the Women’s Business Center Program, which improves business training and counseling opportunities for women entrepreneurs.

Capital Formation Bills Pass in House. The House passed two bills earlier this week aimed at making raising capital just slightly easier for startups. H.R. 1525, the Disclosure Modernization and Simplification Act and H.R. 1839, the Reforming Access for Investments in Startup Enterprises Act, contain measures that simplify and codify some of the regulations that govern how growing private companies raise capital. It’s encouraging to see members of Congress seek out ways to support capital formation for our country’s emerging companies and we hope our senators follow suit.

Marco Rubio Addresses Tech in NYC. Civic Hall hosted Senator Marco Rubio this week to talk about the on-demand economy. He spoke to the advantages of working for on-demand services, (flexibility of hours, mobility of work,) and recognized the need for a middle ground status between W-2 employees and independent contractors. He also called out incumbents, such as the taxi and hotel industries, for hindering innovation. It is the role of the government, Rubio said, to help those displaced by the new economy access the new economy through education and other opportunities.

Regulating Drones. As the popularity and pervasiveness of drones, (or unmanned aerial systems, UAS,) increases, lawmakers are grappling with the best way to ensure safety and privacy without needlessly inhibiting innovation in this growing industry. On Wednesday, Representative John Garamendi (D-CA) and Senator Barbara Boxer (D-CA) introduced the SAFE DRONE Act of 2015, which prohibits drone flights within two miles of an airport or active fire. While some argue these sorts of rules should be left to the Federal Aviation Administration to craft, others are growing tired of waiting on the agency to act after it missed a Sep. 30 deadline to implement drone rules.

What the EU Data Safe Harbor Ruling Means for Startups

This week’s decision from the European Court of Justice (ECJ) vacating the European Commission’s “safe harbor” rule that allowed U.S. companies to quickly and easily import consumer data from European users has left many in the tech community unsure about exactly what went down and what happens next. While the ultimate impact of the ECJ’s ruling is hard to predict, the incident serves as an interesting lesson on the often poor fit between policy and technology.

What exactly happened?

Unless you’ve recently taken a course in EU civics, figuring out precisely how things got to this point and what it all means is rather difficult. To summarize: the EU’s data protection laws are more stringent than those in the much of the rest of the world—the U.S. included. Under the EU’s Data Protection Directive, data from EU citizens can only be transferred to countries that provide certain protections for said data. Recognizing that compliance with these data protection rules could create a giant bureaucratic headache for companies and countries, in 2000, the European Commission created a “safe harbor” that allowed any U.S. companies to self-certify that they complied with the Directive and thereby legally import EU consumer data into the U.S. This safe harbor rule is at the heart of the present dispute.

In 2014, an Austrian citizen filed a lawsuit in Ireland, claiming that U.S. laws permitting the NSA to surreptitiously collect and analyze vast amounts of consumer data violate the Directive. The Irish court then referred the case to the ECJ, the highest court in the EU, to consider the application of the safe harbor rule. Ultimately, this week, the ECJ held that the safe harbor doesn’t prevent individual member states from considering whether U.S. rules allowing government data collection render U.S. companies in violation of the Data Protection Directive and that the safe harbor itself fails to provide adequate data protections. With the ruling, the most commonly used legal pathway for importing EU data to the U.S. disappeared.

So what happens now?

With the rule allowing U.S. companies to import EU consumer data eviscerated, do EU-U.S. data transfers suddenly stop altogether? Did EU citizens wake up to find they couldn’t access their email accounts run by American companies? Not quite. The ruling will impact different companies in different ways.

Different legal pathways for data transfers

The safe harbor isn’t the only way that U.S. companies can import EU customer data. For example, companies can craft “binding corporate rules” (essentially, intra-company privacy policies) that, once approved by the data protection authorities in EU member states, allow for EU to U.S. data transfers outside of the safe harbor. But, since crafting such policies and getting member state approval is an arduous, time-consuming process, only large, well-funded companies can afford to explore these alternate data transfer protocols, leaving startups functionally unable to comply with data transfer rules.

Local data storage

If a company can’t legally transfer data from the EU to the U.S., the other option is to simply keep the data in Europe by building or leasing new data storage facilities overseas. Some companies, like Box and Pick1 are taking this approach, but this strategy comes at significant financial and time costs for companies, and startups operating on tight budgets may not have the resources to relocate servers or the time to develop new ways to handle foreign data.

Do nothing?

If a startup can’t find alternate legal mechanisms to import data or European data centers to handle EU data, it’s left with a difficult choice: stop handling EU customer data or continue to do so and face legal risk. The former tactic has obvious drawbacks. For one, it can be challenging to determine whether or not particular data belong to an EU-based user, rendering compliance nearly impossible. And, even if it is possible to altogether stop handling EU data, losing such a huge market will likely doom a great number of companies.

Startups could (and many probably will) simply continue business as usual and hope that they don’t get sued. A company that struggles to find the resources to establish alternative data importation frameworks or overseas servers may be too small for regulators and plaintiffs to worry about. Obviously, this isn’t a particularly comforting option for a company that wants to follow the rules. But, with such a sudden and dramatic shift in the rules, it may be the only course forward for some companies.

How long will this problem persist?

While the decision came as a surprise to many, policymakers in the EU and U.S. have been trying to shore up the safe harbor framework for a while. The ECJ’s ruling will add some urgency to their work, and U.S. and EU officials have given assurances that alternative data export pathways will soon become available. Of course, “soon” means something very different to bureaucrats than it does to entrepreneurs. And, even if the EU and U.S. can craft a new safe harbor framework, it’s unclear how these new rules will avoid the same fate as the prior safe harbor. That is, if the ECJ’s decision was predicated largely on the U.S.’s NSA-enabling legislation, any new safe harbor framework will similarly run afoul of the Data Protection Directive unless and until the U.S. passes significant surveillance reform legislation that limits the NSA’s reach. But, since a new ECJ ruling throwing out this replacement safe harbor could take several years, it may buy enough time for the U.S. or EU to craft other sensible data transfer rules.

Broader Lessons

The ECJ’s elimination of the safe harbor could pose an existential threat to some companies or it may simply end up being a temporary distraction, but it has helped crystalize a few issues facing the Internet economy. First, the notion of enforcing territorial data restrictions makes little sense in a globally interconnected digital world. Sure, national governments have an interest in making sure that their users’ data are protected, but trying to restrict the flow of information across national boundaries creates more problems than it solves, particularly for the startups that are responsible for building the global Internet. Creating insurmountable bureaucratic hurdles for companies that want to comply with their international obligations serves no one.

Second, the ruling highlights the need for surveillance reform in the U.S. Simply put, if users do not feel that their data are adequately protected, they will be less inclined to use online services—services often provided by fledgling startups. While the logic of the ECJ’s decision itself seems peculiar (if the U.S. fails to adequately protect user data because it allows the NSA to obtain authorization from FISA courts to secretly collect data, why are countries like France, Germany, and the U.K.—which do not require intelligence agencies to get court approval before collecting data for national security purposes—exempt from scrutiny? Is consumer data really any safer from NSA collection if it’s stored in the EU rather than in the U.S.?), the notion that consumer data should be protected from government surveillance is difficult to dispute.

Finally, the safe harbor fiasco is a prime example of how policy struggles to keep up with technological realities and the problems that arise when regulatory compliance becomes too complicated for otherwise upstanding companies to easily navigate. Many companies simply have no idea what they’re supposed to do while national governments try to hammer out an interim fix to data transfer rules, and even this temporary uncertainty can cause companies to go under altogether. As the Internet economy becomes ever more global, policymakers should strive to make the rules governing global commerce as frictionless as possible.

House Passes the RAISE Act

Yesterday, the House of Representatives passed two bills supporting capital access for startups, H.R. 1525, the Disclosure Modernization and Simplification Act of 2015 and H.R. 1839, the Reforming Access for Investments in Startup Enterprises Act of 2015 or the RAISE Act. These new bills contain small measures that simplify and codify some of the regulations that govern how growing private companies raise capital. While their ultimate impact may be narrow, it’s encouraging to see members of Congress seek out ways to support capital formation for our country’s emerging companies. And we hope they’ll continue to, because there’s more work to be done.

Earlier this year we wrote a letter to House Financial Services Committee leadership, Chairman Joe Hensarling and Ranking Member Maxine Waters to express our support for the RAISE Act. The bill would codify an existing practice that allows startup employees with equity to resell their shares to accredited investors, thus enabling greater liquidity. The illiquidity of startup shares is an especially challenging aspect for startups in both raising capital and in hiring employees. Illiquid shares may discourage potential investors who are unwilling to tie up their capital in a high-risk asset class for an unknown or extended period of time. And for many potential employees, while stock options may be lucrative, they don’t offer the steady income stream that workers often rely on.

As the bills make their way to the other chamber, we hope our Senators will also recognize the value startups provide to our economy and similarly support measures that spur greater capital formation.

Startup News Digest 10/2/15

Our weekly take on some of the biggest stories in startup and tech policy.

Rise of the Rest Tour. Engine spent the week traveling with Steve Case on the Rise of the Rest road trip to celebrate entrepreneurship, in all its forms, across America. Check out our posts on our visits to Baltimore, Philadelphia, and Buffalo.

#Visagate2015. An unexpected, last-minute policy change by the Department of State blindsided thousands of highly skilled immigrants seeking green cards, leaving them ineligible to apply and frustrated by yet another delay in the unreasonably tedious application process towards permanent residence. So frustrated, in fact, that a number of them have sued the State Department. This is not the first time immigrants have had their green card hopes dashed by an agency about-face—there was a similar fiasco in July 2007.  And as Emma writes, this represents “yet another indication of how our broken immigration system is plaguing the entrepreneurial ecosystem.”

A Fireside Chat with CTO Megan Smith. On Thursday night, U.S. Chief Technology Officer Megan Smith sat down with Khan Academy founder Salman Khan at the Nourse Theater in San Francisco to talk about the intersection of technology and public policy. As a former Google executive and the founder of her own media company, Megan Smith has a unique understanding of how bringing TQ (or “technology intelligence,” as she has termed it) to the public sector can help build a better government. She touched on a number of issues, including the importance of connectivity, STEM education and even prison reform. We took special note when she called on the audience to work together to improve diversity in tech. “We should be bringing our neighbors’ kids to work,” she said, arguing that diversity should be in the top three priorities at a company, rather than the top 20.

Bringing the ‘Techies’ to Congress. CTO Megan Smith also touched on the need for the “techies in Silicon Valley” to do a “tour of duty” in the government. A new initiative led by the Open Technology Institute hopes to facilitate just that. Beginning in 2016, the Congressional Innovation Fellowship program will place technologists in Hill offices to help “inject greater technical expertise into the policymaking process.” This program represents just another way in which the federal government is trying to bridge the gap with tech and prove that policymakers can be innovators too.

T-Mobile Plans to Buy Enough Spectrum to Cover Entire U.S. T-Mobile CFO Braxton Carter reiterated some good news on Thursday—the company is aiming to purchase enough spectrum in next year’s incentive auction to cover the the entire U.S. We’ve talked before about why competition in the wireless market matters to startups, and we even wrote a letter to the FCC earlier this year advocating for safeguards that would improve the ability of competitive bidders like T-Mobile to play in this historic auction. With Sprint’s announcement last weekend that it plans to sit out the upcoming auction, we are thrilled that T-Mobile is still planning for robust participation.

The Federal Government Wants in on Crowdsourcing. In an op-ed published in Wired earlier this week, Senator Chris Coons (D-DE) revealed the Crowdsourcing and Citizen Science Act, which would give federal agencies the explicit authority to use crowdsourcing. According to Coons, the federal government is not prohibited from collaborating with the public to solve problems, but a lack of explicit authorization deters many agencies from taking full advantage of this option. He notes that “many of our nation’s challenging problems and questions can most effectively be solved and answered with the public’s help if they are given the chance.” We couldn’t agree more, and are happy to see legislation that would encourage these sorts of creative and inclusive approaches to policymaking.

Michael Petricone has “the best job in DC.” A Morning Consult write-up gave Engine Board Member and CEA’s SVP of Government Affairs, Michael Petricone, some much deserved recognition for his efforts to get Washington and tech companies on the same page. It’s a tough job, but somebody’s got to do it! And nobody tells tech’s story better than Michael.

Buffalo's Renaissance, Powered by Innovation

This week Engine is 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. For more updates follow #RiseofRest on Twitter.

As the Rise of the Rest tour rolled into Buffalo, New York, we celebrated the long history of innovation in the city—beyond the uniquely-spicy chicken wing. In fact, in 1950, Buffalo was the eighth largest city in America. Home of Cheerios (the first ready-to-eat cereal), architectural masterpieces (several by Frank Lloyd Wright), and the Erie Canal (the main track of America’s commercial development), Buffalo has a long history of disrupting the status quo in search of better efficiency and a more united America. It remained a booming center of industry until the Saint Lawrence Seaway was built in 1959 and dramatically decreased commercial traffic through Buffalo, marking the start of decades of decline. But as we saw, Buffalo is in the midst of a renaissance.

CEOs, local government organizations, academics, and creatives are coming together to restore Buffalo to its former status  as a hub for new business and strong community. These efforts are supported by private funds and Governor Andrew Cuomo’s Buffalo Billion initiative, which is funding leading industries and emerging startups to expand innovation and economic opportunity in Western New York.

Today, people are excited about Buffalo and this feeling resonated throughout the day. Native Buffalonians and Buffalo-educated innovators are returning to the affordable city, enticed by the growing number of available jobs or state incentives to start a new business.

In downtown Buffalo is the Innovation Center, which houses co-working space D!G, and incubators Z80 Labs and 43North. 43North boasts the world’s largest idea competition, which provides winners, (who hail from everywhere from New York City to Taipei,) with free space and mentoring in their Buffalo-based incubator. Steve Case spoke to the next wave of innovation that seems to be taking ahold of the city: inventions that reimagine health, education, and energy.

Several startups are reinventing the dominant trades from Buffalo’s past and bringing them into the 21st century. Bak USA, started by Danish immigrants early this year, is bringing tablet manufacturing from assembly lines in China to unique, made-to-order craftsmanship in Western New York. SolarCity’s efforts to expand their own solar panel construction has led to the acquisition of local startups and the development of a solar panel factory, taking the city from a steel town to a solar center. And the Rise of the Rest pitch competition winners are providing new solutions to energy harvesting (Energy Intelligence) and next-generation cancer treatment (POP Biotechnologies).

This boom in startups seems natural for the city that has long been a hub for American innovation. The scene is seeing vibrant growth alongside developments to enhance the city’s community spaces. There is no denying that Buffalo is on the rise, and back on the map. Reenergized manufacturing, design, and community is ensuring that products made in Buffalo are now finding their ways into homes across America.

Visagate 2015 - The Latest Example of America's Failed Immigration System

Today, thousands of foreign nationals who have been waiting for years to apply for green cards will finally be able to do so. However, a last-minute policy change by the Department of State last week rendered a large portion of these immigrants ineligible to apply—pulling the rug out from under them and forcing them to wait even longer before they can take the final steps towards becoming a permanent resident.

We all know our immigration system is broken. It is so backwards that hard-working, high-skilled foreign nationals who are in the U.S. on temporary visas have to file a petition just so they can hold their place in line to later submit another application for permanent residence. Sound complicated? It is. If you want to see for yourself, you can read the U.S. Citizenship and Immigration Service’s process for “adjustment of status” here (but unless your idea of fun is a trip to the DMV, you should probably skip it).

This insane bureaucracy is partly a result of the outdated Immigration Act, which placed limits on the number of visas and green cards that can be issued each year. The law was passed in 1990, long before anyone could have predicted the technological boom of the last 25 years or the resulting need for high-skilled employees. Today, demand far exceeds supply for both temporary visas and green cards. This has led to huge backlogs that force millions of immigrants, many of whom are already living and working in the U.S., to wait in line for years for a green card (in some cases, upwards of 20 years). During this wait time it is difficult, if not impossible, to switch jobs, start your own company, or even go back to school.

Since the number of available green cards is limited, each month the Department of State publishes a bulletin that outlines who can apply for one. Eligibility is determined by the date on which an immigrant filed their initial petition—basically, if you filed before the date listed in the bulletin, your time on the wait list is up and you can finally submit your green card application.

Last Friday, the Department of State published a revised visa bulletin for October that pushed up the eligibility cutoff dates—in some cases by more than two years. In other words, thousands of foreign nationals who thought they would be eligible to apply for green cards on October 1st found out just five days before the filing deadline that they will have to continue to wait.

This back-track by the Department of State is hugely frustrating for these individuals and their sponsoring employers, and is yet another indication of how our broken immigration system is plaguing the entrepreneurial ecosystem. Outdated, unreasonable limits on green card availability exacerbate the national talent shortage and threaten innovation and startup growth.

Legislators can fix this, and in fact, some have tried. Congress had the chance in 2013 when the Senate passed a comprehensive bipartisan reform bill, but efforts were stalled by partisan bickering and bogged down in election-year politics. However, there may be an opportunity to revive immigration reform through a somewhat unexpected channel—Speaker Boehner’s departure from House Leadership.

As the New York Times Editorial Board wrote last week, Mr. Boehner’s surprising retirement means he’s no longer beholden to the internal party politics that stymied any attempts to work on large-scale immigration reform legislation. While the prospects for sensible immigration reform remain a long shot as the 2016 election approaches, those of us that care about fixing our broken immigration system should seize any opportunity to push for legislators to take up the issue. Until Congress passes meaningful reform, talent-starved startups will continue to suffer while the brightest and best foreign nationals have their hopes of permanent residence dashed and delayed by a broken system.

The City of Startup Love

This week Engine is 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. For more updates follow #RiseofRest on Twitter.

The city of Philadelphia is steeped in American history. The first American flag was sewn here, the Constitution was written here, and Benjamin Franklin started some of the country’s most important institutions here, such as public libraries and universities. That history certainly isn’t lost on Philadelphia, but on our startup tour of this city, we saw a more modern side—a place where new technological innovations are emerging from the city’s many universities and where more young professionals than ever are calling it home.

Universities play a pivotal role in Philadelphia’s rise as a hub for startup development. We visited the ExCITe Center at Drexel University where students are actively building apps, robots, and wearable technologies. At the University of Pennsylvania, student entrepreneurs showcased a diverse range of ventures and the university’s business school, Wharton is considered one of the best in the nation. This student community—over 400,000 including area universities outside the city—also serves as a massive talent pool for area employers. We heard from Philadelphia’s mayor, Michael Nutter, that nearly 50 percent of graduates from Philly area universities are now staying local after graduation, a significant increase from previous years.

Mayor Nutter joined the travelling crew around his hometown for most of the day, and he explained the ways in which local government has supported new startup activity. Startup PHL, for instance, leverages public and private funding to seed early-stage Philadelphia based companies. The city’s “gateway” program incentivizes companies with headquarters in Philadelphia suburbs to open a satellite office downtown. And the city has always been welcoming to immigrants, Mayor Nutter explained, acknowledging the important role immigrants play in starting new businesses.

Some of the city’s most promising young companies shared their business plans at the afternoon’s pitch competition held at Philadelphia’s National Constitution Center. One trend among the pitchers was clear: a commitment to social good, in addition to business opportunity. A number of health-oriented companies including Life.io and and SmartPlate combines technology, data and health sciences. Focus Food wants to bring urban aquaponics to the roofs of grocery stores in Philadelphia and across the country. The winning pitch, Scholly, helps students navigate and find scholarships to fund their educations.

We also witnessed how closely interconnected the entrepreneurial community is in Philadelphia. We met the support organizations bringing entrepreneurs together, such as Philly Startup Leaders, and the many local venture capitalists, such as Ben Franklin Technology Partners, dedicated to expanding early-stage funding in the region. Throughout the day we heard stories of how accessible the ecosystem is for mentorship and advice—perhaps that’s not so surprising in this city of Brotherly Love.

Entrepreneurs are Building a Better Baltimore

This week Engine is 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. For more updates follow #RiseofRest on Twitter.

This week marks the fourth Rise of the Rest road trip, and our first stop was Baltimore, Maryland. While we often hear about the challenges facing Baltimore, during our full day tour we saw another Baltimore story—a story about opportunity, innovation and economic development. Baltimore is one of the busiest ports in the United States and has a thriving healthcare sector, in large part driven by Johns Hopkins University’s hospitals and world class research facilities. Baltimore has 11 more universities and it’s just miles away from from major federal agencies like the National Institutes of Health and the National Security Agency which draws technology security talent to the region.

On our visit to Baltimore, we caught a glimpse of how entrepreneurs are capitalizing on the city’s leading industries. In the security space, we stopped by ZeroFox, a young, but fast-growing company with a cloud-based security platform that blocks malicious content from social applications. TechCrunch called its team “a who’s-who of some of the best and brightest security technologists.” We visited Fast Forward, an accelerator at Johns Hopkins that advances and commercializes technologies developed at the university. Many of the companies at yesterday’s culminating pitch competition also focused on new technologies in the health sector. ShapeU is a data-driven application digitizing the personal trainer, Sonavex offers a platform to detect blood clots, and Edessa is an automated hand washing system. The winner of the $100,000 investment from Steve Case was Sisu Global Health, a medical device company with an innovative blood transfusion product for healthcare providers in emerging markets.

We also saw some signs of entrepreneurial success in Baltimore, first and foremost at Under Armour headquarters. Under Armour has called Baltimore home since its inception. The company now has over over 1,000 employees, making it one of the city’s biggest employers. Their campus spans the Baltimore harbour and, unsurprisingly, includes a state-of-the-art fitness center complete with Under Armour’s newest wearable technology and health-tracking devices. Though Under Armour is no longer a startup, Baltimore entrepreneurs commented on how supportive the fitness-wear company has been of the ecosystem. The last startup tour of the day was at OrderUp, a food delivery platform acquired this summer by the Chicago-based Groupon—a sign to many of Baltimore’s competitive consumer technology sector.

We also sensed the broader commitment to fostering greater and more inclusive economic prosperity in Baltimore. The cries for justice after the killing of Freddie Gray this summer resonated deeply with the community and local leaders here, and many entrepreneurs are thinking about how to create new economic opportunity that’s accessible to more of Baltimore’s residents. One promising sign is the opening of Baltimore’s own Impact Hub—a local outpost for social business leaders that will open its doors within months. During a sneak peek of the space we heard from one young company making it easier for the formerly incarcerated to find jobs, as well as from a new local ice cream maker employing some of Baltimore’s youth.

Overall, we sensed great optimism in Baltimore about the potential to build on the city’s existing talent pool and create new solutions where challenges remain. From here, we’re traveling up the Northeast corridor to Philadelphia. Stay tuned for more dispatches from the road.