Thursday, March 26, 2015

Almost Anyone Can Now Invest in Private Companies: SEC Finalizes CrowdFunding Rules

It's been a long time, you and I. We'll try this again for this special news. 

Yesterday, the SEC announced its final guidance for fundraising under the JOBS Act, and the news is overall very good for startups and any private companies that want to raise capital. 

Here's the full 250+-page SEC document (and I expect you to read it all. Quiz on Friday). 

At least two parts are worth paying attention to: 

1) you can invest up to 10% of your net worth if you're not an accredited investor (acc investor has at least $1 million net worth or $200k annually of income)', which means if you're net worth is $10,000, you can invest up to $1,000 in private companies, and

2) up to 30% of a stock offering can come from existing shareholders; the rest comes from the company issuing new stock. It's a built-in path to liquidity for investors, employees, and founders, with a rational limit that should attenuate attempts to dump stock on the unsuspecting general public. 

That 30% rule gives companies a great answer to the "when will I see this money again" question. Until now, the only answers have been IPO, sale of the company, dividends, and stock buyback. 

Dividends require profitability. Stock buybacks require cash on hand, which really should be used to grow the company. IPOs are difficult and unlikely for most companies, and a sale of the company is an awfully radical step just to put cash in investors' pockets. 

I'm not a financial expert by any means, but I'm thrilled by the new rules and look forward to great companies raising capital more easily. That said, I do not look forward to the inevitable absolute and soft fraud that will happen. 

"Soft fraud" is when the company is legitimate, but it oversells its prospects to unwitting investors; the company misleads them in a breach of ethics, but doesn't quite cross the line of legal fraud. 

I'm looking forward to reading the entire document. Ok not really, but I probably will soon. Because, you know, geeks. 

Friday, October 17, 2014

Jobs vs Job training: Meet People Where They Are

I remember President Clinton giving one of his incredibly convincing speeches about boosting the economy, world trade, and transitioning screwed middle class workers from good jobs to theoretically better jobs if we just had this one thing: training.

So we funded a lot of training, largely focused on tech. Tech was gonna save everything. And then the market collapsed in 2000 and we hit the recession, and no amount of training would create new jobs for everyone getting training.

Training is important. Some people really thrive with it--they hit the classroom, hit the books, get first-hand exposure to new equipment, machinery, and technology, and companies hire them right after completion of the course or degree.

Yet manufacturers around here complain that they can't get enough skilled workers. And this is for "good" jobs, with pay starting at $18/hr and higher.

Yet we have relatively high unemployment, and the city sports a high poverty rate and a higher near-poverty rate, making up 75% of its residents.

So how is this possible? Training is available, the jobs are available, so why the high unemployment, poverty, and unfilled jobs?

It's because both the training and the jobs require an existing platform of skills and education, and that's where the gap is. If someone hasn't finished high school, or finished but isn't literate (how is it possible that SDOL graduates 82% of seniors, yet 50% aren't proficient at reading and math?), they won't get through the training if they're even admitted to the program.

If the goal is to employ people, you have to meet them where they are. We definitely have a lot of talented people getting solid jobs in local manufacturing; something like a gagillion percent of Stevens College graduates land jobs before they even graduate, with high starting pay.

But we have a significant number of neighbors who don't have that basic foundation of education and skill. And it's unlikely--not impossible, but unlikely--that they'll get there.

So what to do?

You have to meet them where they are. We need to create demand for products and services that require little skill or education, but that also pay well. That's what we're trying hard to do at The Lancaster Food Company. We have a relatively high entry wage & benefits, and anyone who can lift 50 lbs and learn parts of the production can apply.

What other businesses could create demand for low-skilled labor? Or where skills could be developed? It could be service work, furniture production, bookbinding, composting--many, many types. The key is not to chase cheap labor overseas and keep these types of jobs here.

But what's missing are the businesses--new ones and existing--focused on creating demand for those kinds of jobs. We're hoping to see more businesses that build their model around ethical wages and unskilled or low-skilled labor.

That's how we'll end poverty in the city as we know it, and that's how we'll get the unemployment rate down. It will reduce crime, improve housing, and improve education. It will take 15 to 20 years for the full effect, but the immediate effect will be felt in the families of those that get the jobs, the place they live, and the places they shop.

Clinton was right, but he was wrong about the universal impact of training; it's good for some people, but for others, you have to meet them where they are.

Monday, October 13, 2014

Market Wages are not Ethical Wages

The daily post (if days are measured in months).

I've been thinking a lot about what "fair" means when it comes to fair wages. What's a fair wage? Market rate? The market will pay the lowest it can--it seeks efficiencies. It doesn't seek humanity, dignity, fairness, justice, equity--just the lowest price for the commodity.

So market wages are not ethical wages. To me, anything under a living wage is unethical. You ask someone to come work for you for 8 or 9 hours, and pay them lower than what it takes to pay for housing, utilities food, transportation, and healthcare. They aren't able to save, and are still underwater when it comes to the bills. Yet you're profiting from their labor. To me, that's unethical.

Paying higher than a living wage gives the person a chance to save, and to hand their time over to you without needing a second job to make ends meet. Second jobs aren't the worst thing in the world, but if someone is working 16 hours to make ends meet, someone's not paying them a living wage.

People who pay market wages do so because they can, and they rationalize it by saying that others are nuts if they pay any more than they have to.

I don't see it that way. If I'm going to ask you to change your life on my behalf, you're at least going to get a living wage, and closer to what we call a "thriving wage"--even for entry-level work. If you're on the team, we've got your back. We don't want you to be tired. We want you to be healthy. We want you to develop financial security. And we want you to work hard in service of the company's mission, its customers, and its people.

I haven't been writing for quite some time and have really felt the need to start again. Writing helps me clarify my thinking, and I haven't been doing that, so things sit there, clogging up my neural pathways (don't ya love science?).

So I'm pledging to go back to the daily post. I'm hoping you'll hold me to it, and that all three of you will chime in on the comments. Thanks for reading.

Wednesday, July 16, 2014

The Not Really Sharing Economy

Words have meaning, words matter.

Sharing is one of the great human attributes; you have something and your neighbor can benefit from it, you see the need, you offer to share it. There's no or little cost to you, and no cost to your neighbor.

In the lunchroom: "Would you like to share my table?"
On the playground: "Would you like to share my ball?"
At the picnic: "Please, have some of our chicken!".

That's sharing.

We share without the expectation of something in return. Sharing is not transactional. It's an act of generosity, an act of love, and sometimes an act of necessity.

So when the tech, investment, and startup media and bloggers came up with "The Sharing Economy", they weren't talking about you and I pooling our tools together, creating a tool library, and sharing it with others. They weren't talking about a couple sharing a milkshake.

They were talking about transactions involving excess capacity of stuff--a house, a car, an office.

Folks, when you charge me to stay at your house, that is not sharing. That's a great business model, and I love AirBnb, but that's not sharing. That's rent.

When you offer to drive me from one place to another for $15, that's not sharing. That's charging me for a transportation service.

Sharing is a beautiful thing. The media--and VCs, and etc, etc etc--got it wrong, and are sullying a great word with an otherwise stellar reputation.

Now that I've shared my thoughts with you, I'm going to go charge somebody for a loaf of bread.

Friday, July 11, 2014

Lancaster Food

So we're rolling--we landed on shelves this week with the first four products from The Lancaster Food Company: organic whole wheat, organic soft white, organic sandwich rye, and organic sprouted multigrain.

Lots to catch up on, so I plan to start posting a bit more soon. I've said that before, eh?

Thursday, May 1, 2014

The Lancaster Food Company

It's been quite a while, folks! I've had difficulty blogging over the past nice months, as you might have noticed by the complete absence of posts.

For the past six months I've been working on a new company--The Lancaster Food Company. We make a range of organic food products, including organic breads, spreads, sauces, and salsas. Our parallel missions are to create thriving-wage employment for vulnerable populations, make tasty organic foods, and support the local food ecosystem here in the metropolis of Lancaster.

Starting a food business ain't easy--it sure ain't software. Finding a space, converting the space to a commercial food-grade facility, meeting the organic standard (i. e., fill out lots of forms), finding suppliers, buying equipment. What--you mean I can't just provision services on Amazon Food Services? (Actually that's not a bad idea--we could use a food accelerator here in the hometown).

I've decided to start blogging again. This time it will be very light on tech, light on startups, heavy on food startups, the food ecosystem, building a social impact business, and whatever else develops.

In the meantime, sign up to learn more about The Lancaster Food Company. Lancaster foods, oh yes. We'll let you know of our launch--give us about five weeks to get our first batch out the door. Thanks for coming back!

Thursday, December 12, 2013

Capitalism & Community

Fred posted about capitalism today, noting the amazing wave of automation enabled by relatively recent advances in a broad range of technologies, and how that will displace millions of workers.

That is, of course, if we choose automation over people and communities. In some cases, the automation is welcome, innovative, and new in that it creates new business instead of disrupting existing ones (or simply solves a problem without creating a new business...not everything needs a dollar sign affixed to it).

But in most cases, the automation will be at the expense of people who held the same or similar jobs, to the benefit of people on the other end who want their widgets in 3 hours instead of 24. 

It's a choice. 

It's worth reading the blog, but even more worth reading the comments. The libertarians are of course always right and denouncing Fred's liberal tendency for actually caring about people, and the plutocrats, well, they'll let us eat what GMO-baed high-fructose corn syrup carbonated battery acid, unless we complain and then they'll shut down the Twinkie plants (yes, they shut down a profitable business at the expense of the workers but to the benefit or your coronary arteries). 
My comment is here, imperfect and off the cuff but it gets to the heart of the matter, obviously informed by people like Judy Wicks and

"Capitalism used to be the economic system in service of our democratic republic. The opposite is now true; we're a plutocracy.
But to the point: business owners will have to make the conscious choice to hire people instead of automating to squeeze every last bit of profit.
Communities are a mix of people (some employed, some not), businesses, professionals, etc. When businesses choose not to employ simply to make more profit instead of asking "how much is enough", we will see the end of our communities.
We already see this in communities around the country, whose jobs went overseas chasing profits through cheaper labor and now amazing but destructive automation.
I'm (we're) choosing not to automate (edit: as much as possible). I'm much more interested in people than profit. I love me some profit, but I'd rather live in a vibrant, strong community. To bolster that, our supply chain will be as local as possible, and together we'll build the antidote to unfettered capitalism: (maybe call it) responsible capitalism."