Musings of a VC in NYC

The Startup Visa

The President announced yesterday that he was in favor of a Startup Visa. Hallelujah.

That led me to go back in time.

The first time I posted about #startupvisa on AVC was September 23, 2009.

The first time Brad Feld posted about #startupvisa was September 10, 2009.

The first time Paul Graham posted about #startupvisa was April 2009.

It's a shame that it takes almost four years before a good idea gets the President's support. And its a greater shame that there are many in Congress who will still vote against this idea.

Video Of The Week: Aaron Swartz on SOPA

I didn't know Aaron but I certainly read and followed him. It's a sad day and a big loss. Here's his Freedom To Connect keynote on stopping SOPA:

Outsourcing Reversal

I do believe we may have reached peak employment, as discussed in the comments here recently, and as my partner Albert has been discussing on his blog over the past several months. Any serious and intellectually honest jobs agenda must deal with that reality.

But I also believe stagnating wages here in the US vs escalating wages around the world presents an opportunity for the US that we are not, as yet, doing much with. This was in the WSJ today (or maybe yesterday):

While wage costs in the U.S. have been about flat in recent years, they have been rising 20% a year in China, a trend Mr. McNamara expects to continue for at least five years. He said labor costs for Flextronics rose about 30% last year in Malaysia and 40% in Indonesia.

The WSJ post was about high tech manufacturing but I think the same is true of outsourcing of back office, customer support, and programming jobs to India and elsewhere.

There are parts of the industrialized midwest, like Detroit, Cleveland, and Buffalo, where you have well educated workforces stuck in regions where housing prices have declined for more than a decade and wages have declined as well, where jobless rates are at catastrophic levels. A house that would cost $500,000 in the NY metro area can be had for less than $100,000 in these regions.

This is both a problem and an opportunity. It is time to bring these jobs back that we have moved elsewhere. Although I have not done any sort of analysis here, I would be shocked if one could not make a strong cost based economic argument to do so.

I am certain that there are plenty of reasons why it is not happening, or happening at scale. Clearly there are a bunch of one time costs, for facilities, for job training, for other stuff. And then there are the regulatory burdens that we in the US throw at our job creators. Again, from the WSJ post:

The difference in labor costs is narrowing and local officials in America have been giving more financial incentives to companies setting up plants in the U.S., Mike McNamara, chief executive of Flextronics, said in an interview Friday. Mr. McNamara said he could even imagine some smartphones being made in the U.S. eventually. But he cautioned that the return of manufacturing to the U.S. is likely to be a "slow and evolving process" rather than a flood. Many obstacles remain, including relatively high U.S. taxes, health-care expenses and regulatory costs, he said.

If jobs is our number one economic issue in the US (I believe it is), then policy makers at the federal, state, and local levels need to be all over this stuff. We can reverse the outsourcing & offshoring trends of the past thirty years. The era of gloabal wage arbitrage is over or will soon be over. But we need to make a bunch of smart investments and we need to make them now.

The Fiscal Mess: Death By A Thousand Cuts

Whomever came up with the term fiscal cliff to describe the expiration of the Bush tax cuts and the simultaneous sequester of across the board spending cuts did not do us any favors. I honestly had hoped we would get both. But that was never going to happen once it was framed as driving over a cliff. Who wants to do that?

Instead we got some small deal that essentially raises taxes on the highest earners and a kick the can approach on everything else. We are going to address our ridiculously high deficit in a series of crisis driven deadlines instead of the rational way, which is to sit down and hammer out a "grand bargain."

I do agree that cutting spending in some sort of brain dead across the board sequester is not ideal. And I also believe that phasing in our bad tasting but necessary fiscal medicine is better for the ecomony and so therefore a more prudent policy.

But here is the deal. We are spending way too much money in our federal goverment and we aren't bringing in enough revenue. The original grand bargain between Boehner and Obama which would have cut spending by $4.5 trillion over ten years and raised about half of that in new revenues over the same time period was the right idea. That would have gotten our annual deficit down to sub $500bn which still seems like a huge amount to me.

Now we are going to do the thing that every CEO tries to avoid, and that is death by a thousand cuts. It is demoralizing to everyone and painful to watch. And because our political system is so polarized and politicized, I can't imagine we will ever get to the $750bn in annual deficit reduction we will need to get our fiscal house in order.

I know that many in this community will point the finger at Obama and cite his ongoing lack of leadership (and his instinct to play politics) on this issue. I think that criticism is fair. But to some degree Obama is being driven to this place by an even worse behavior by the tea party wing of the Republican party who made a silly pledge to avoid raising taxes and now has to live up to it. The elder Bush (who I sure hope is feeling better) made a stupid pledge like that and lost out on a deserved second term as a result. When will the right wing of our government stop making taxes their third rail? And when will the left wing of our government understand that entitlements are a cancer growing inside this country that must be addressed now?

At times like this, I see the value in dictatorships (at least benevolent ones) and parliamentary systems. We need leadership that can address the issue head on and make the hard but necessary decisions to get our fiscal house in order. And we don't have that in this country. In either party. It sucks.

Related articles

What You Need to Know About the Fiscal Cliff Before You Go to Your New Year's Party

President Obama is Responsible for Our Fiscal Mess

Dems' Mystifying New Fiscal Cliff Strategy

What Is the "Fiscal Cliff"?

The Fiscal Cliff Losers: Conservatives, the Tea Party, and the GOP

The 'cliff' deal may not much cut the deficit. Does it matter?

Demand A Plan

Regular readers of this blog know of my great admiration and appreciation for the work of our NYC Mayor Mike Bloomberg. One of Bloomberg's signature issues has been gun safety. When you ask Mike about this issue, he tells you that after a few visits to the wives and children of NYC police officers who have been shot and killed on their job, you get pretty worked up about this issue. And worked up he is.

Bloomberg and many of the urban mayors around the country have created the Demand A Plan organization to fight for gun safety. It is currently the leading gun safety group in the US.

Many leaders in the Internet/tech industry have been working with Demand A Plan over the past few days to kick off a large and sustained social media and regular media campaign to pressure our leaders to do something about the gun safety problem in our country. I have been involved in this effort and I support its goals completely.

Here are a few things that are launching today:

1) A full page ad in the New York Times which I have signed personally

2) A viral social media campaign at the Demand A Plan website

3) Change your twitter avatar (I changed mine)

I will update this post with additional efforts that launch today. Like the PIPA/SOPA efforts last year, this effort is diverse, distributed, chaotic, and hopefully effective and powerful. I am not aware of everything that is going on right now. There is a lot of activity out there. But I will try to stay on top of it today and keep you all up to date as well.

In addition to our Mayor, I would like to thank Ken Lerer, Ron Conway, and Eric Hippeau for their excellent leadership of the tech sector's work on this issue in the past few days.

Support E-Hailing in NYC!

Last year, at about this time, USV met Jay Bregman and Ron Zeghibe, who are two of the cofounders of Hailo, a mobile app for hailing taxis, that had just launched in London. If anyone has been to London in the past year, you probably know that Hailo has taken London by fire with over half of all cabbies in London accepting rides on Hailo. Hailo has gone onto launch in Dublin, Toronto, Chicago, and Boston, and they hope to launch in NYC in 2013. Imagine being able to hail a yellow cab in NYC from your Android or iPhone? I cannot wait.

But before Hailo, Uber and other e-hailing apps can hail yellow cabs in NYC, we need changes to our taxi cab regulations. And that vote is TOMORROW. So I've asked Jay Bregman to pen a guest post explaining to all of you, and hopefully all of NYC (and especially five reluctant regulators), why we need e-hailing to be allowed in NYC.

-----------------------------------------------

Every ten seconds across the world a licensed taxi driver accepts a Hailo E-hail. And with each match, Hailo helps chip away at the millions of dollars lost by drivers and hours wasted by passengers due to inefficiency in the market. E-hailing apps help solve the line of sight problem – they are the natural evolution of the arm-flail, the doorman’s whistle, the light outside the hotel – and nowhere will our impact be greater than right here in New York City, my hometown.

Right now, cab drivers (and prospective passengers) are limited by their line of sight at any given time. A passenger can be very close by, but if a driver does not see them, they will not get picked up. As a result, the fare is lost, and the passenger misses out on a cab ride. Drivers currently spend up to half of their time cruising empty in NYC, desperately looking for passengers.

 

This does not make any sense.

E-hailing is now commonplace in cities across the globe - including London, Dublin, Boston, Toronto, Chicago, San Francisco and many others. In London, half of London’s 23,000 drivers safely use apps to get up to 30% more business every day. Hailo passengers on average wait only two minutes from tap to taxi.

This Thursday, the NYC Taxi and Limousine Commission’s nine-member board will vote on proposed rules which will allow E-Hailing in NYC, subject to a balanced and sensible licensing scheme similar to those already in place in cities such as Chicago and Toronto. If adopted, the rules would take effect in mid-February. But politics – in particular outcry from adjoining industries such as black car and livery companies seeking government protection against change – are currently threatening whether the rules will pass and therefore whether this technology will be allowed in NYC, where, like London, cabs provide a critical, cost efficient service.

Four commissioners have already expressed support for the rules - meaning New Yorkers are just one vote away from a substantial technology improvement to the iconic Yellow Cab. I am writing this post as the Founder & CEO of Hailo - one such E-Hailing provider - to explain why E-Hailing is important, why it is ready for NYC, and what you can do to help convince the commission if you agree. To be very clear, these rules do not select a single supplier or favor Hailo over anyone else; they merely establish an open marketplace in which E-Hail providers may compete for the hearts and minds of Yellow Cab drivers and the riding public.

 

There is overwhelming evidence that E-hailing works, it has been proven on New York style scale and sophistication, and it will do nothing but good for passengers and drivers - so why do TLC commissioners remain unconvinced?

 

The TLC must pick up the reins of innovation and competition and finish the task started when credit card machines were introduced in 2005, when the contracts with these providers first contemplated smartphone apps. We pledge our support to the drivers and people of New York, and the TLC, to make sure this time we get it right.

To make your voice heard, please email the TLC at [email protected] or contact the Chair here. The vote is Thursday, 13 December.

Further Information

Hailo’s testimony at a recent TLC Public Hearing on the E-Hailing regulations:

• Jay Bregman, Hailo Founder & CEO (fmr Founder of eCourier)

• Melissa Plaut, Hailo Driver Partner NYC

• Jahangir Khan, Hailo Driver Partner NYC

Fun Friday: Secretary Of State

Sorry for the delay in getting the fun friday post out. I thought we'd discuss some current events today. Specifically who the next Secretary Of State should be. Obama apparently wants Susan Rice and the GOP apparently wants John Kerry. I would nominate our very own JLM. Who do you like?

How Do You Take The Vote?

Kasi asked me this last night in the comments:

Fred. Now that... it is all over and done.

How do you take the result? Will that be the post for tom'row?

So I will take a shot at answering that question.

I take the result of yesterday's election as a sign that the demographics of the United States are changing and changing fast. The Latino vote in Florida, Colorado, New Mexico, and Nevada has changed those states from red to blue and maybe permanently.

I also agree with Nate Silver that the President's bailout of the auto industry in 2009 was a huge bet that paid off bigtime yesterday. The blue that ran from Pennsylvania to Wisconsin in the electoral map last night was a sign that the industrial midwest is more comfortable with the President than the private equity guy.

And finally, I think that the war on women that the GOP has been waging for years must stop if they want to be relevant again. It is not OK to include legitimate and rape in the same phrase and it never will be.

But where do we go from here?

The House is in full control of the Republicans and the Tea Party. They will continue the obstructionist politics that have been the dominant theme in Washington for the past four years. But Mitch McConnell's goal of using those obstructionist politics to deny the President another term did not work and probably cost his party a lot of goodwill in the end. He was the big loser last night as his chance at majority leader was slapped back hard. That was nice to see.

I am hopeful we will get the grand bargain on deficit reduction that repeals the Bush tax cuts along with $4.5 trillion in spending cuts. We have to have that deal. Our deficits are killing us and our economy. I know this community is full of folks who think you can't tax your way out of ecoonomic problems. But our country enjoyed a great economic run in the Clinton years and repealing the Bush tax cuts will simply take us back to the tax regime that was in place in those years. I hope and pray we can get that grand bargain done now that the President has been given four more years.

The other thing that yesterday's election makes perfectly clear is the rising power of the Hispanic community in our country. Their signature issue is immigration reform. So hopefully we will get relief on that issue now. The idea that we can and should close our borders to those who want to work hard and make a better life for their families is abhorrent to me. It is downright unamerican. We need to open our borders to those who want to be hard working citizens of our country and we need to legalize those who have been working hard and acting like good citizens in this country for years.

The economy is on the mend. The recovery is the slowest we have had after a recession in many many years. My partner Albert is doing a series of posts on why that is. I highly recommend them. Our economy will continue to expand in the coming years if we take control of the deficit and stop piling debt on top of our economy. We can bring manufacturing jobs back to the US. We can bring service jobs back to the US. We can build on the entrepreneurial spirit of our country and we can compete on a global scale if we just put our heads down and work at it. And it would be best to do that together.

My favorite image of the entire campaign is the one of Gov Chris Christie and the President touring the ravaged Jersey shore together. That was dropping our differences and coming together in a time of need. We must have more of that in America. And after last night, I hope and pray that we will.

Election Day 2012

We've witnessed the most expensive presidential election contest in history. If you don't live in one of the eight to ten "swing states", it didn't feel like much of an election. I did not see one commercial for either side. But friends who have been in Ohio tell me they have been bombarded for months. Well that's the electoral college for you.

But regardless of whether you live in a swing state of not, I urge everyone to go out and vote. I plan to do that bright and early this morning on my way to work. I have no idea how crowded the polls will be so I am going to leave extra time.

Like much of America, I find it hard to be enthusiastic about either choice this morning. My vote will be a vote against Romney and the GOP more than anything else. I don't subscribe to the GOP's social views and I don't subscribe to the idea that you can fix the fiscal mess without asking those like me who have to the means to do more. I am hoping that once their legislative strategy of "keeping Obama to four years" fails, the GOP will meet the Democrats in the middle and find common ground to deal with the messes that all of our elected officials have been entrusted to solve.

I have thought a lot about the Kid's advice to pull the lever for Gary Johnson, but that doesn't work for me. It's a two horse race and placing the lever for anyone else is a waste of a vote. And I take the job of electing a President too seriously to waste a vote like that.

But regardless of how you feel about Romney, Obama, or Gary Johnson, I hope that all of you take the time today to go out and vote. Our system sucks in so many ways, but it is our system and as citizens we have a responsibility to engage in it. Today, that means voting.

The Far Center PAC

The NY Times has a good post up today about Mike Bloomberg and his new Independence USA PAC. Frequent readers of this blog know that I am a big fan of Mike Bloomberg and his politics. I do not think there is a major issue before this country that I don't agree with him on. There is nothing more that I would wish for than a centrist like him in the White House.

In the post, the Mayor has tough words for both Obama and Romney, as he should. But one wonders whether both men are hostage to their party orthodoxy and therefore can't and won't speak honestly and candidly the way the Mayor can and does.

Maybe the millions that the Mayor will dole out this year and in coming years will help give elected officials the courage to do what is right instead of what is expected of them. I am not optimistic, but I am hopeful.

Related articles

Bloomberg-funded super Pac to push gun control - Newsday

Michael Bloomberg Has Set Up His Own Super PAC, And Is Dumping $15 Million Into The 2012 Election

Mayor Bloomberg to Spend Millions Through New Super-PAC - Bloomberg

Bloomberg, Bob Dold And Gun Control

Bloomberg kicks in millions to launch super PAC

Mayor Bloomberg Now Has His Own PAC