Tag Archives: entrepreneurship

Tesla, Local Regulations, and the New Normal for Innovators

14 Mar

Tesla’s latest spat on its direct-sales model with the state of New Jersey is dumb, but it’s nothing new for the company or other rising start-ups. The case is another piece in a growing trend of local regulations stifling innovative companies. As the sharing economy has grown and technological innovation has made products electric cars affordable and reliable, local governments and regulators have found ways to impede their ability to reach consumers. Some research has discounted the impact of local regulations on start-up companies and entrepreneurs, while others havehighlighted significant regulatory burdens facing small businesses.

You cannot discount the real world examples of cases where state and local governments issued regulations that impair business operations of growing companies. There are Uber’s feuds with city governments and taxicab monopolists in Chicago, DC, Denver, Miami, Nashville, and San Francisco. Airbnb is facing its share of problems in New York City. California’s Bureau for Private Postsecondary Education is leading a crack down on ‘learn to code’ bootcamps. Let’s not forget the culinary innovators in local food truck scenes that are constantly hopping over regulatory hurdles.

In the case of Tesla, auto dealers are worried that this case will set a strong precedent for automakers circumventing dealers to directly sell to consumers. This despite the fact that buying a car is one of the least enjoyable consumer experiences. Tesla has faced similar issues in Arizona, North Carolina, Texas, and other states. In fact, Cornell University’s Journal of Law and Public Policy notes, “the franchise laws of at least 48 states ban or limit Tesla sales—get this—to prevent unfair competition. Franchise lawsrequire automakers to sell their cars exclusively through dealership networks.” There will be plenty of more battles down the line. Overall, these restrictions will hurt Tesla’s long-term viability to offer an automobile that will be more affordable in the coming years due to economies of scale and product innovation.

The surprising nature of these regulatory battles is that the come at a time when state and local governments are devoting significant energy and resources to streamline regulations and promote technological advancements to aid the local permitting process. What’s even more startling is that nearly every major city is supporting entrepreneurial incubators and vying to attract important venture capital funding to foster vibrant start-up environments. Yet local governments are doing all they can to limit the ability of start-up companies to grow and provide citizens with access to new services. Isn’t that a pity?

Is Cavs Owner Dan Gilbert The Next Sports Tech Visionary?

20 Jun

DG

Dan Gilbert is the entrepreneurship messiah for the Rust Belt. His latest endeavor through the start-up accelerator, Bizdom, could become a game-changer for the future of sports technology. Gilbert, majority owner of the Cleveland Cavaliers and lover of comic sans, launched Bizdom, a non-profit start-up accelerator for tech firms, in Detroit in 2007 and opened doors on a Cleveland office in 2011. His venture capital firm, Detroit Venture Partners, has investments in 50 companies. Capping it all off, he is also leading Detroit’s effort to attract the 2014 X-Games. Gilbert’s energies and investments aim to reinvigorate the city centers of both cities and transform each into high-tech hubs.

The Bizdom program requires applicants propose an idea for a technology-based start-up with the goal of a prototype or sales to a first customer within 90 days. Bizdom provides an initial investment of up to $25,000 in seed funding in exchange for an 8% equity stake in the venture. Since Bizdom is a non-profit, the returns on seed funding are used to fund future businesses in the cities of Detroit and Cleveland. As part of the Bizdom program, the start-up is provided with office space, mentors, and introductions to outside investors for further funding down the road.

Of course, Gilbert is as qualified as any for this venture. Before he bought the Cavaliers, he founded Quicken Loans. The accelerator has acquired a portfolio of 35 companies between the two offices, including 15 in Cleveland. One company, MascotSecret, who joined Bizdom in August 2012, blends Gilbert’s two passions–entrepreneurship and sports. The company is yet another player in the very competitive field of seat upgrade apps such as ExpApp and LetsMoveDown.

MSMascotSecret has partnerships with Gilbert’s Cleveland Cavaliers, Lake Erie Monsters (Colorado Avalanche’s AHL affiliate), and the Cleveland Gladiators of the Arena Football League. MascotSecret’s spokesman, Jake Goodman, talked about working through the Bizdom program: “At Bizdom, we have an open workspace where it is amazing to work with other entrepreneurs, share ideas, while all working towards the same goal.” The company has plans to rollout some new partnerships towards the end of the summer.

In addition to the great mentors at Bizdom, Gilbert himself frequently offers direct advice, feedback over social media, and consults the start-ups in the accelerator. Goodman says, “Dan Gilbert has been a really fantastic advocate and an amazing mentor for us, he knows how important it is for fans to have a good time in his arena and is very excited about the ability for fans to pick the best seats.  He is a great resource for us.  When fans give him suggestions via Twitter, he loves forwarding the feedback to us; we are very fortunate to have him.”

MascotSecret and their fan-facing experience platform is just the beginning for what we hope will be a full-scale effort to develop sports tech start-ups through the Bizdom accelerator. Athlete performance seems to exceed our expectations yearly at combines, on the field, and the new crop of phenoms that emerge each year. The way we experience live sporting events and cheer on the teams we love is ripe for disruption. Innovative ways to enhance fan engagement, new payment platforms, digital ticketing, improved customer service efforts, and data analytics are all making their way into the marketplace. The market is still emerging and visionaries like Dan Gilbert can help shape that future.

Final Four of Seat Upgrade Apps Bring Fierce Competition Away From The Court

20 Jun

The wave of technological innovation that has washed over the economy and society in the past five years has been remarkable. The Internet and mobile broadband have enabled an unprecedented level of novel technologies, new companies, and service platforms. Sure enough, technology is slowly changing the sports landscape as well. The ticketing business may soon be entirely digital, innovative algorithms have redefined statistics, and media giants are shifting their content to online and mobile platforms. Among all this, fans now have the ability to upgrade their seats during a game or concert directly from their smartphones.

Competition in the seat-upgrade market is as fierce as the current crop of NBA and NHL playoff matchups. Four apps are currently vying for market share and attention of professional and collegiate organizations across the country. Not only do they provide an extraordinary service for fans, but also an enormous boon for organizations and management. The combinations of social media and apps that connect organizations to fan bases have enabled them to obtain fresh new data collection on consumer behavior. These technologies provide direct analytics that will improve the overall fan experience.

Teams will use the new data to focus on generating revenue per-fan during games, optimize customer service, improve pricing, and tailor marketing strategies directly to the individual. Each business is competing in a marketplace that’s fast-paced and quickly evolving.  We’ve done our own market research to present the advantages and disadvantages between the seat moving and in-game experience apps available to fans of their local teams.

ExperienceExperience (ExpApp)

Debut: December 2011

Hometown: Atlanta, GA

Roster: Arizona Diamondbacks, Atlanta Braves, Atlanta Falcons, Atlanta Hawks, Boston Celtics, Chicago Fire, Colorado Avalanche, Colorado Mammoth, Denver Nuggets, Georgia Tech, Kansas City Royals, L.A. Clippers, L.A. Galaxy, Miami Marlins, Minnesota Twins, Oakland Athletics, Phoenix Suns, Portland Trail Blazers, San Jose Earthquakes, University of Southern California, and University of Tennessee.

What’s to Love: The start-up was first to launch in this competitive marketplace and their roster of organizations is reflective of that advantage. The company boasts business relationships with organizations in five major professional leagues and collegiate athletics. Their product is also the official upgrade partner of Major League Baseball’s ‘At The Ballpark’. ExpApp integrated with the organization’s native app, and is very user-friendly. The start-up has a well-defined brand and very strong relationship with its customer base judging from its social media accounts. ExpApp has built a fantastic bullpen of organizations to work with and is clearly the leader in the marketplace.

Needs Some Work: Doing initial research into the company, it took quite awhile (in Internet time) to find the company. Some basic SEO work should help fix that. Not having a presence in the app store as a mobile platform company could end up being an issue. Lastly, their product fails to offer discounts on concessions and merchandise. Giving fans the incentive to spend more inside the stadium will make for a better partnership down the line.

LSLeapSeats

Debut: December 2012

Hometown: Miami, FL

Roster: Miami Dolphins, Miami Hurricanes

What’s to Love: LeapSeats launched in December 2012 for Miami Dolphins home games. The start-up is developed under the RSE Ventures umbrella, owned by Dolphins owner Stephen Ross. The company’s backers certainly provide for funding sources and network to help scale its business with new partnerships. The company has received great press coverage and PR for its app.

Needs Some Work: LeapSeats has put a lot of effort into public relations to gain good press from Forbes and other outlets, but it’s lacking on the partnership side. Given its roots, it’s surprising that ExpApp snapped up the Miami Marlins as a partner. That’s not good news for LeapSeats. The ticket integration and partnership process takes significant work on the front-end, so hopefully LeapSeats will have some surprises in store for the 2013-14 seasons.

LMDLetsMoveDown

Debut: November 2012

Hometown: Washington, D.C.

Roster: Memphis Grizzlies, Brooklyn Nets, University of Maryland

What’s to Love: Launching in November 2012, LetsMoveDown developed a native app with unique integrated features such as the use of a phone’s camera to scan tickets, push notifications, and a user-friendly experience. LetsMoveDown is unique in respect to its ability to not only sell unused inventory, but also the ability for season ticket holders to sell unusable tickets to other fans at the game by using the LetsMoveDown Season Ticket Holder Portal. Fans that have the LetsMoveDown app are given special offers and rewards from the organization and can use the autopilot feature to be automatically upgraded. The platform also allows teams to reward specific fans with offers and upgrade tickets during the game directly through the app.

Needs Some Work: LetsMoveDown offers a slightly differentiated product, which might allow them to be more competitive in the future. However, the company’s web presence and marketing efforts lags well-behind PogoSeat’s. And LetsMoveDown can’t quite hang with the impressive roster of clients that ExpApp has acquired.

PGPogoSeat

Debut: 2012

Hometown: Santa Monica, CA

Roster: Golden State Warriors, Detroit Pistons, Stanford University, San Diego Broadway, Comcast Theater, Darien Lake

What’s to Love: PogoSeat debuted in 2012 and offers seat upgrades through diverse offering of iPhone, Android, and mobile web applications for its  user-friendly app. PogoSeat’s app also allows the user to sign in through its social media accounts, which is an added bonus for its partner organizations. The company has a robust marketing effort and the strongest web presence among its competitors. PogoSeat boasts a roster of strong NBA franchises and Stanford University compliments the company’s brand. PogoSeat is also the only company to have a partnership with an entertainment venue. The start-up’s access to Silicon Valley also has important value.

Needs Some Work: There’s a lot to love about PogoSeat, but there are a few down-falls. The company doesn’t offer in-game rewards for fans on merchandise, concessions, and other inside purchases. PogoSeat doesn’t do a great job explaining the differentiation between its sports product and live entertainment product—maybe there isn’t much difference.

While each of the apps have unique qualities and characteristics that will allow them to build a successful company, ExpApp has a clear head-start in this market. Being the first-mover doesn’t necessarily guarantee long-term viability, but they have a longer track record of success in comparison to PogoSeat and LetsMoveDown. PogoSeat and LetsMoveDown are charging from behind, both offering fantastic, unique services. LeapSeats has the financial backing and network potential to surprise users. It’s fair to say that when the 2013-14 professional and collegiate leagues get going, these companies will be on a first name basis with many sports fans.

This article originally appeared on SportTechie on May 27.

More Thoughts on Patent Reform & Building a Pro-Innovation Economy

30 Apr

I wrote about the introduction of the SHIELD Act a few weeks ago and the pressing need for further reform of the U.S. patent system. The bill from Rep. Peter DeFazio (D-OR) and Rep. Jason Chaffetz (R-UT) won’t see the House take action with immigration reform and restructuring of the tax code coming down the pike, but support for the bill is gaining steam. Presently, the Federal Trade Commission (FTC) and Department of Justice (DOJ) are taking public comments on the issue of patent trolls. Groklaw highlights one of the more compelling briefs from Barnes & Noble that sheds light on just how abusive patent trolls are on companies:

The patent system is broken. Barnes & Noble alone has been sued by “non practicing entities”—a/k/a patent trolls—well over twenty-five times and received an additional twenty-plus patent claims in the last five years. The claimants do not have products and are not competitors. They assert claims for the sole purpose of extorting money. Companies like Barnes & Noble have to choose between paying extortionate ransoms and settling the claim, or fighting in a judicial system ill equipped to handle baseless patent claims at costs that frequently reach millions of dollars.

B&N is asserting that the trolls’ litigation free-for-all is something akin to “death by a thousand cuts”. The company is spending tens of millions defending against a tidal wave of litigation and enduring a litany of claims that are without merit. While there are rules permitting groups to seek sanctions and recover attorneys’ fees, these awards are almost always limited to more extreme cases. These tens of millions spend on legal fees could be spent on developing new products, marketing, and other operating expenditures. Further, Mike Masnick at TechDirt highlights a key section of the brief stating that the abusive practice of the trolls directly violates the original intent of patents in the Constitution whose purpose is to promote the progress of useful arts.  B&N contends that since the legal rights afforded to the patent is not used in manner set forth by the Constitution, then it should be seen as unconstitutional:

The Patent and Copyright Clause grants Congress the power “[t]o…promote the Progress of Science and useful Arts,” not science fiction and litigious arts. (Article 1, Section 8, Clause 8 (emphasis added)). But the current system allows trolls to pursue fantastic allegations—claims that would be laughed out of the room in actual scientific or technical circles—in endless litigation that taxes and taxes true innovators while making no meaningful contribution to society.

The B&N filing is worth a read for anyone interested in fixing our innovation system over the long-haul. Further food for thought on the innovation front, the Mercatus Center’s Jerry Brito had George Mason University’s Professor Alex Tabarrok on his ‘Surprisingly Free’ podcast to talk about Tabarrok’s book, Launching the Innovation Renaissance: A New Path to Bring Smart Ideas to Market Fast, and his ideas on how to fix our innovation system.  Tabarrok discusses America’s declining growth rate in total factor productivity, what this means for the future of innovation, and what can be done to improve our long-term economic prospects:

According to Tabarrok, patents, which were designed to promote the progress of science and the useful arts, have instead become weapons in a war for competitive advantage with innovation as collateral damage. College, once a foundation for innovation, has been oversold. And regulations, passed with the best of intentions, have spread like kudzu and now impede progress to everyone’s detriment. Tabarrok outs forth simple reforms in each of these areas and also explains the role immigration plays in innovation and national productivity.

The future of the American innovative economy could be decided in 2013. Passing immigration reform, restructuring the tax code that encourages investment in innovation, the adoption of crowdfunding rules,  and stopping abusive lawsuits that tax our tech companies are four very huge steps towards that reality.

Immigration Reform 2013: A Huge Opportunity to Grow the Economy

30 Apr

The Senate plans to begin mark up on the overhauling the maze that is the American immigration system on May 9. Our immigration system is in dire need of modernization and the 844 page bill [PDF] introduced by the so-called “Gang of Eight” is not lacking in motivation (read a summary here). The Washington Post calls the bill “the most ambitious overhaul of the nation’s immigration system in three decades.” The Senate appears to have majority support for the bill, with some claiming the legislation will sail through the chamber with 70 votes.

All roads for the legislation lead to the uncertain fate when it meets the GOP-controlled House. However, the bill does have key support from Rep. Paul Ryan (R-Wisc.). Rep. Ryan, like many others, makes the argument that reforming immigration is pro-growth economic policy and for the betterment of our long-term prosperity. And he’s right. Modernizing the American system of immigration is as close to a “free lunch” as any public policy issue. The evidence and data supporting comprehensive immigration reform is overwhelmingly positive.

Economic Benefits of Reform:

Immigrant populations will increase the size of economic opportunity by creating new businesses and expanding the scope and quantity of economic production. These activities translate to positive affects on the broader economy. When reform was first introduced in 2007, the Congressional Budget Office analyzed President George W. Bush’s proposed immigration overhaul. The CBO, as Ezra Klein notes, found that modernizing the system would increase federal revenue by $48 billion while costing only $23 billion in increased public services — before even considering the broader economic benefits. There is general consensus across the ideological spectrum that the economic benefits to immigration reform will be a boon for the U.S. economy.

Factoring in broader economic benefits, research from the left-leaning Center for American Progress finds reform would add $109 billion additional tax revenue, create 121,000 jobs due to increased consumer spending, and add $832 billion in U.S. GDP over 10-years. Further, an analysis from the right-leaning American Action Forum illustrates that benchmark immigration reform would raise the pace of economic growth by nearly a percentage point over the near term, raise GDP per capita by over $1,500 and reduce the cumulative federal deficit by over $2.5 trillion. Think tanks compete with numbers and ideas. Finding two on as far on the opposite side of the spectrum as Center for American Progress and American Action Forum in agreement on an issue is a rare occurrence. The data and facts supporting immigration reform simply do not lie.

Contributions of High-Skilled Immigrants & Entrepreneurs:

Numerous studies on entrepreneurship among high-skilled immigrants compliment these findings as well. High-skilled immigrants have provided one of America’s greatest competitive advantages and a consistent source of innovative mojo for our economy. Immigrant entrepreneurs have brought us Chobani, Intel, Google, Yahoo, and others. An analysis of U.S. Fortune 500 companies shows that 40% were started by immigrants or the children of immigrants.

Immigrants have displayed entrepreneurship rates above that of the native born population. Vivek Wadhwa, et al. found that immigrants make up just 12% of the U.S. population yet have started 52% of Silicon Valley’s technology companies, while contributing more than 25% of U.S. global patents. Additional research shows that for every 100 additional foreign-born workers in STEM (science, technology, engineering, mathematics) jobs created 262 additional jobs for native U.S. workers. Nationwide, companies with at least one foreign-born founder employed roughly 560,000 workers and generated $63 billion in sales in 2012 [PDF].

Cost Claims Overstated:

Opponents of reform are leading with claims that costs of the system would be too prohibitive on government programs. The Heritage Foundation, who played a key role in derailing the 2007 effort, is close to releasing a reprise of its costs analysis of the reform. These numbers will certainly serve as the basis for the rallying cry against reform for the opposition. But here’s the problem: Heritage’s 2007 cost analysis relied on a severely flawed methodology producing grossly exaggerated costs to federal taxpayers and significantly undercounting economic contributions. The Cato Institute’s Alex Nowrasteh offers 11 reasons why the Heritage’s analysis is severely flawed. The release of the Heritage analysis is expected to be heavily scrutinized.

Embracing the Next American Economy:

The introduction of comprehensive immigration reform ensures that legacy will endure for our next American economy. The quantitative research and data supporting the case for overhaul is overwhelmingly positive. America has achieved greatness due to the diversity and talents of our population. The American legal system that encourages risk and a culture of innovation are what makes America great. We need the keep the door open to individuals to ensure that continues.

This article first appeared on PolicyMic.

JOBS Act One Year Later: Think Long-Game

4 Apr

Last year, Congress and the President worked together (collective gasp!) to pass the Jumpstart Our Business Startups Act (JOBS Act) with much fanfare. Lots of organizations were behind the push for the legislation including the Kauffman Foundation, AOL co-founder and Revolution CEO Steve Case, and the tech community. The goal of the law to was to drive support for startup funding by allowing individuals to become investors through crowdfunding platforms and foster small business growth by easing federal regulations for IPOs. Kudos to Congress and the White House for being somewhat up on the innovation and new ways of doing business in the tech space. However, the promises of the bill have failed to meet lofty expectations of many.

One-year later, the herd of IPOs from fresh, new startups have yet to appear, crowdfunding rules have failed to be finalized by the Securities and Exchange Commission (SEC), many funding platforms are jumping through regulatory hoops, and some are wondering what the hoopla was all about. Since enacting the law, IPOs of companies aided by the legislation are likely to fall 21%, from 80 to 63 in 2012, according to Jay Ritter, University of Florida professor who tracks IPOs. House Republicans have chastised the SEC for failing to move forward on quickly on rules. So, what gives? Continue reading