Tag Archives: netflix

Funding Startup Companies Jumpstart Economy

Funding Startup Companies Can Help Get the Economy Moving Again

Wanted: More Jobs

I don’t have a fancy degree from an Ivy League school, and I’m not formally trained in economics. So you won’t see me on the President’s economic advisory team, or lecturing on the philosophical differences between the Keynesian and Austrian economic theories.

Instead, I grew up watching my father start a manufacturing firm and build it into a successful, multimillion-dollar business. I followed in those footsteps by helping two technology startups grow from infancy to a spot on the Inc. 500 list and eventually sell for more than $100 million.

What I’ve learned through these experiences is that innovative startups are the engine of the American economy. Startups breathe life into slow growth industries (think Starbucks, Crocs and Netflix). Startups create new products and new markets (think salesforce.com, Google and Twitter). And startups solve complex scientific and engineering challenges to create life-changing products (think Intel, Amgen and TiVo).

Naturally, as innovative startups grow they create jobs — and lots of them. An eye-opening study by the Kauffman Foundation brings that into sharp focus. The study showed that startups are responsible for all net job growth in the U.S. since 1977.

Think about that for a minute. In aggregate, older more established firms do not create jobs (at least not in the U.S.). Job growth at one company is matched or exceeded by a decline at another. In essence individual companies are trading market share, but the market itself is growing slowly or not at all. When you add in technological advances to improve employee productivity, outsourcing to offshore locations, or simply eliminating positions to meet a lower level of demand, it is not surprising that established firms do not drive job growth.

Not all startups are equal

Any entrepreneur with the guts to launch a new startup deserves enormous respect, but not all startups are created equal when it comes to job creation. Startups in slow-growth markets such as restaurants, retail and other consumer services suffer from the same challenges as more established firms. Namely, a new growth company takes market share from an established player, so any new jobs created are eventually met with job cuts at other companies.

Similarly, startups in cyclical industries such as transportation, hotels, construction, real estate, etc., will not create sustained job growth. In good economic times, these companies will boom — and just as quickly go bust when the economic winds change.

While there are exceptions to these broad generalizations (note Starbucks and Crocs), sustainable job growth usually comes from scalable, innovative startups. These are the startups that venture capitalists and angel investors target. And these are the startups that will create new markets and lead the U.S. out of this economic slowdown.

Angel and venture capital investing

The startups noted earlier all share one common trait: they were funded by angel and/or venture capital. It is safe to say that without that capital, these companies would not have reached their respective heights.

Venture capital (VC) as a distinct asset class has existed since the ’60s, reaching its high point during the dot-com boom of the late ’90s and early 20000s. With such a long history, venture capital remains a relatively small segment of the capital markets. According to a report by HIS Global Insight, in 2009, new venture investments totaled $18 billion. Since 1970, only $474 billion has been invested in 27,000-plus companies. By comparison:

    The U.S. Treasury Department will issue more than $1.1 trillion in debt this year to cover the budget deficit.

    The junk bond market is greater than $600 billion in size.

    The wars in Iraq and Afghanistan cost more than $170 billion in 2010 alone.

But venture-backed companies have an outsized impact on GDP and employment. VC-backed companies produced more than $2.9 trillion in revenue in 2009, representing more than 21 percent of total U.S. gross domestic product. More importantly, 12.1 million people are employed at venture-backed companies, representing more than 11 percent of total private sector employment.

These numbers clearly show that innovative startups create economic growth and sustainable employment.

An alternative plan

That’s why I get viscerally angry watching the economic ignorance of our federal and state governments. Politicians pay lip service to wanting to create jobs, then spend tax dollars on big corporate giveaways, old industry subsidies, and pet projects that have little impact on actual job growth.

And when our government finally recognizes the need to create jobs and support small businesses, they create programs that will do neither.

A simple (and most likely profitable) plan that will have a fast and tangible impact on jobs is to create a federal “matching fund” for any angel group or venture capital firm to access. The matching fund would automatically invest a matching amount in any innovative startup that receives investment from the VC/angel group. Funds should be made available only for seed and early-stage investments. Extra incentives should be given to promote investment in regions of the country with low levels of VC investment and/or high levels of unemployment.

Under this plan, capital will be invested in companies with the highest potential for job and economic growth, and the fund will most likely turn a profit when all is said and done.

But don’t hold your breath waiting for innovative economic solutions to materialize in Washington. Instead, allocate some of your portfolio to angel/venture investing, then find a local angel group and get involved. You will be rewarded by working with some of the best and brightest entrepreneurs, while helping get the American economy growing again. And with any luck, you will make some money along the way.

Provided By Flickr

Five Monopolies, Methods of Communication Losing Their Hold

1.

Landlines

According to CITA, an International Wireless nonprofit organization, 91% of Americans carry a cell phone as of 2009, and those numbers have continued to expand.  Now more than ever, with the growing popularity of the iPhone and Droid, cell phones have become both a necessity and an addiction.

In past decades, landlines were an essential part of the home, but with cell phone giants like Apple, wireless communication is quickly eliminating the need for both a home phone and cell.  Now, phones do much more than dial, and let’s be honest — landlines don’t have Angry Birds or Restaurant Finder Apps.

Landline Phones No More

2.

“Snail” Mail vs. Email

Once a monopoly on long-distance communication, mailing letters to friends or loved ones has been virtually phased out of everyday conversation and proven to be the least efficient means of interaction.  What was once a necessity for love notes, bank statements, and college acceptance letters, “snail” mail is quickly becoming replaced with the popularity of social media platforms and widespread use of email.

Since cell phone’s and the internet explosion in the early 1990’s, this generation’s lack of composition skills have been harshly scrutinized.  In 2009, The United States Postal Service stated that 177 billion pieces of mail were delivered in the US, compared to 14.4 trillion by email.  Now, young people rely heavily on a keyboard, 140 characters and auto-correct spelling.

"Snail" Mail Replaced by Email

3.

Newspapers

Electronic tablets, such as Apple’s iPad, Samsung’s Galaxy Pad, Amazon’s Kindle or the BlackBerry Playbook, have been 2010’s newest toy.  According to the Washington Post, “average daily circulation of all U.S. newspapers has been in decline since 1987″ and “has hit its lowest level in seven decades.”

Newspapers have been undoubtedly hit hard — as major stations are reporting record losses, cuts and even closures across the country.  Despite the change in the medium which news is delivered, there will always be a desire and need for the public to be informed and educated on current events.  It’s just that now news is viewed on a 9 x 5 LED screen — not paper.

Physical Newspapers Moving Online

4.

Video Rental Stores

Some of my fondest childhood memories include “Power Rangers:  The Movie” and the newest Nintendo 64 game — both of which were rented from the local Blockbuster.  Video rental stores, like Blockbuster, have been slowly declining in business over the past 6 years as online sites such as Netflix and RedBox have stolen much of the business which these stores once had.

Having closed over 600 stores in just the past three years and reported record losses in the hundreds of millions, it’s no wonder Blockbuster is struggling to stay afloat.  According to an article by MSNBC.com, “Blockbuster Inc. may close as many as 960 stores by the end of next year,” primarily in response to appeal and ease of online streaming — in a society glued to their computer screens.

Video Rentals Like Blockbuster Replaced by Nexflix, Flickr, Scott Clark

5.

In-Person Classrooms

As a current student at ASU, I recognize that most classes still meet in a physical room with a paper syllabus and wooden desks from the Jimmy Carter administration.  However, as technology of educational tools increases, so does the medium with which it is taught.

Arizona State University offered over 700 online classes this spring, which range from Managerial Economics to History of Hip Hop.  It’s not just ASU, but virtually all major universities across the country offer online classes and degrees, and sites like Blackboard allow professors to post assignments and readings for the week online.

Classrooms Moving Online
Mobile Phone From iPhone to Android

Mobile Phone News From iPhone to Android

Almost every American owns and uses a mobile phone. They’ve become such an integral part of our lives that we feel naked without them. People of my generation (I’m a recent college graduate) wake up to their phone’s alarm, then they text, tweet, call, chat, e-mail, or BBM until the moment their heads hit the pillow. Then they wake up and do it all again.

Since they’re as everyday as eating and sleeping, here’s an update on what’s happening in the mobile world.

Kik It Up A Notch

The newest app to take the world by storm is Kik

Kik is a free messaging system similar to Blackberry’s Blackberry Messenger (BBM) or AOL’s Instant Messenger. Kik works across several platforms, including Blackberry, iPhone and Andriod.

Last week this app hit two million users in only three weeks.

Kik’s goal is to bring instant messaging away from the computer and onto the phone so that you’ll never leave home without it.

Information from Mashable.com’s Kik article.

Netflix Holds Out On Android

iPhone, iPads and Windows 7 have a Netflix streaming app, but Android users will have to wait a bit longer.

According to a Wired.com article, the Android platform’s security issues made Hollywood take a step back. Piracy is a major issue with the film industry and most of the Android phones didn’t meet its standards.

However, since there are several Android models, some Android users will be able to get the Netflix app starting in early 2011.

And finally the old stand by question:

Will Apple Stop Teasing Verizon Users?

According to a Wall Street Journal article, the answer is, yes.

In October. an article detailing that Apple is making an iPhone for Verizon Wireless appeared on WSJ.com, whetting the appetite of all Apple-loving, Verizon-using, smartphone junkies.

There has yet to be any final word. However, another WSJ.com article claims many Verizon users are so sure the iPhone is coming their way that they’re waiting to update their phones until the magical day Apple stops teasing them.