House Intelligence Committee Releases Discussion Draft of CISPA

This afternoon, the House Permanent Select Committee on Intelligence released a revised discussion draft version (text here) of the Cyber Intelligence Sharing and Protection Act, or CISPA — a piece of important cybersecurity legislation. We in the startup community raised concerns about the bill’s broadly defined terms, which posed a potential threat to innovation. Others even drew comparisons with SOPA and PIPA. In this draft, substantive changes have been made which, in our eyes, have significantly improved the bill.

We raised concerns — specifically around the inclusion of intellectual property, definitions around private and government information, and regulatory burdens for small business — directly with the Committee and with the office of Chairman Mike Rogers (R-MI). The Committee has taken into consideration our concerns as well as others from the community and has released a revised version of the bill. The new version preserves CISPA’s stated purpose of protecting networks and systems and preventing theft of information from these networks, while enhancing clarity around the focus of the bill.

The willingness of the Committee to work with those in our community was heartening. We were able to craft legislation that protects sensitive data — such as Research and Development and financial records — without including provisions that are harmful to technology startups.

Engine is committed to acting in the best interests of our community, and that includes protection of the critical infrastructure and networks upon which our companies are built. With these changes in place, Engine no longer opposes the legislation. We will continue to monitor CISPA through the amendment process to ensure that these changes stick so that our community is protected and innovation can thrive.

Changing Immigration, One Step at a Time

Luis Arbulu is a Founder and Partner at Hattery, and an Entrepreneur in Residence with USCIS.

I am a foreign-born entrepreneur. Originally from Peru, I studied engineering in Lima and was awarded a Fulbright scholarship to study in the US: first engineering at the University of Kansas and then business at the Wharton School at UPenn. I followed the immigration process - from J-1 student visa to OPT to H1B to F-1 to green card and finally in 2008 I was naturalized and became a U.S. citizen. I worked at Google as finance lead, head of investments, and manager, working on advertising products, energy, and data platforms. Now, I am co-founder of a seed stage venture fund and consultancy, Hattery. Our team is growing by the day, and I have the extremely rewarding task of helping new startups grow and thrive.

Recently I was contacted by the U.S. Citizen and Immigration Services (USCIS)  and asked to be part of their Entrepreneur in Residence Program — a really great initiative to get entrepreneurs, USCIS staff, and other experts together to collaborate on issues surrounding skilled immigration and entrepreneurship. The program embeds a small group of investors and entrepreneurs into the USCIS for 90 days, with clear objectives and deliverables. [Read our post about EIR here - Engine].

As an Entrepreneur in Residence, I’m invited to share my own knowledge based on my experience as a foreign-born entrepreneur in order to better pave the way for future innovation and economic growth spurred by immigrant entrepreneurship. This country’s success is largely based on the hard work and determination of immigrants throughout its history — a legacy I’m very much proud to be part of. Startups are almost the sole driver of new job growth in this country, and foreign born entrepreneurs are responsible for starting some of the country’s most successful and job-creating companies, like Google. This is something that hits close to home for me — since it was only after eleven years in the US that I was able to start my first company.

What I and the other participants of the program have found is that the current immigration system for skilled foreign-born workers does not encourage harnessing the talent and drive of foreign-born entrepreneurs to grow the U.S. economy.

Immigration is an issue at a legislative stand-still. While there are some measures on the agenda, the issue of undocumented workers easily gets conflated with skilled immigration and stalls proposed legislation. While it’s important to pursue legislative change, another avenue to explore is optimizing the current system: making it as user friendly as possible, and giving foreign-born skilled workers the tools and resources to use the visas that are currently available. This includes working with the USCIS to train adjudicators on how startups and tech companies have evolved (funding levels, SaaS, incubators and accelerators, etc.), in order to clarify and potentially innovate in the processes for foreign-born entrepreneurs starting companies across the US.

Another way to optimize the current system is to work with the USCIS to change the rules and policies on the current visas — a measure that doesn’t require going through any legislative branch — in order to help foreign born entrepreneurs to start their own companies. At the moment, workers here under an H1B visa can’t fulfill the requirements of the visa unless there is an employer-employee relationship, and that’s something we will be looking into in the program.

This country was built on immigration, and I am proud to be here continuing that tradition, with partners like Engine and others in the space who understand the importance of entrepreneurship to growing the US economy. And I’m looking forward to working with the USCIS to find new pathways to success for immigrant entrepreneurs. Read more about the program here.

We’ve been looking into skilled immigration and its benefits to the American economy. Click here or anywhere on the image above to view our infographic.

We’ve been looking into skilled immigration and its benefits to the American economy. Click here or anywhere on the image above to view our infographic.

Joining the Conversation

Marci Harris is cofounder and CEO of PopVox.

As a former Congressional staffer-turned-startup-entrepreneur, I am excited to see the discussion on the Engine blog address what it means to join the policymaking “conversation” in Washington.

That conversation doesn’t have a very good reputation right now.  Congressional Job Approval (according to Gallup ) is at a flat 12%.  In an April 2011 poll, Americans said 71% of lobbyists had “too much power”, ranking them on this scale above “major corporations” (67%), “banks and financial institutions” (67%), and “the federal government in Washington” (58%). The legacy networks of grassroots  organizations have been examining their own “Tragedy of Political Advocacy”. This was the case even before “The Internet” pulled off the epic blackout of January 18 in opposition to the SOPA.

The Silicon Valley culture, which until recently served as a proxy for all “startups”, historically has been happy to be detached from the conversation. Nigel Cameron describes (as only he can) the Silicon Valley/DC divide as “the Continental Divide,” in which it can seem that the two most distant points in the universe are the Rayburn cafeteria and the Starbucks on Sand Hill Road.

Civic engagement, powered by game-changing technology, provides a vehicle for increasing trust and broadening the Conversation. Here are some things to keep in mind for all groups — including those in the startup community — that wish to engage and participate:

  1. Relationships. Bridging the Continental coffee shop divide is an important first step. Invite a staffer for coffee and get to know them. (They will have to pay for their own coffee.) Which leads to the next point:
  2. Staff are people too. A meeting with a staffer is frequently just as good (and sometimes better) than a meeting with a Member. You will probably get more time and speak with someone who can dig into the minutiae with you in a way that a busy Member of Congress just can’t.  Yes, that is still true if they look eighteen, happen to be answering the office phone, and even sometimes if their title is “intern.”
  3. Congress really wants to hear from constituents (but not everyone else). Unless a Member of Congress represents your district, they don’t technically work for you. If you want to convince them of something, convince their constituents.
  4. Big change (usually) takes a while. There is no hard and fast rule - BUT, you will usually have better luck with incremental steps over several years than attempting to push through a large proposal.
  5. Small things matter. There is value in baby legislative steps to demonstrate support — Naming a “day”, commissioning a study, “recognizing the goals of…” are all opportunities to explain your position and have a legitimate “ask” (i.e.“co-sponsor this bill”), to produce a list of allies on the record for your cause.
  6. Capitol Hill is the ultimate “Just In Time” fulfillment. Staff are busy and issues come quickly; if information is not available when needed, they will probably not go looking for you. It’s helpful to keep tabs on the agenda, and (shameless plug) make sure your positions on bills are easy to find on a platform like POPVOX, which is designed to answer a staffer’s “need information about this bill NOW” need.
  7. Don’t assume they know the details. Your letter or one-pager should summarize and re-explain the issue, even if you think that EVERYONE should know the background and what the acronyms mean. (Really, a ONE-pager is important.)
  8. Seasons change, people change. While your relationship building might seem best focused on leadership and committee chairs, keep in mind that the pieces are rearranged after every election.
Where We Are On Skilled Immigration

Despite being championed by President Obama in this year’s State of the Union and quickly seconded by all candidates in the Republican primary debates — we wrote about it here — proposed reforms of the immigration process for skilled individuals have been stalled in the lawmaking process. Skilled immigration is touted as a no-brainer: it has — supposed — bipartisan support, and there is plenty of evidence to show that bringing in skilled workers from other countries actually creates American jobs by complementing our existing skill-sets and creating more opportunities in fields like computer science and high-tech engineering. Growing demand for visas only highlights the inefficiency of the current system, with H1B applications in the first week of the visa round more than double last year’s. Sadly, for all the rousing rhetoric of bringing in the best and brightest to keep this country great and at the front of the pack, there has been limited advancement on the legislative front.

There are a couple of different avenues being discussed right now with regard to high skilled immigration:

  1. Awarding a green card to advanced graduates in STEM fields (science, technology, engineering, mathematics) from US universities — straight from the mouths of Republican presidential hopefuls Newt Gingrich and Mitt Romney. STAPLE Act  and Startup Act are the relevant bills for this one, and BRAIN Act follows the same principle but grants a five-year stay in the US to work in a STEM field instead of permanent residency.
  2. Creating a new visa for foreign-born entrepreneurs who want to start businesses in the U.S. Startup Visa would allow foreign-born entrepreneurs who receive funding for their businesses and employ non-family members to be granted an employment based visa.
  3. Eliminating the per-country cap on H1B visas; maintaining the same number of total visas but changing the distribution to solve the problem of excessively long wait times for high-skilled workers from countries like India and China. The Fairness for High Skilled Immigrants Act and AGREE Act deal with per-country caps.

So where are these bills? Let’s take a look at one of them — The Fairness for High Skilled Immigrants Act. Sponsored by Rep. Jason Chaffetz (R-UT), the bill received overwhelming bipartisan support and passed the House 389-15. Then Sen. Chuck Grassley (R-IA) effectively killed the bill in the Senate, citing a greater need for protections for American workers. Grassley is already critical of H1B, saying in 2009; “Employers need to be held accountable so that foreign workers are not flooding the market, depressing wages, and taking jobs from qualified Americans.”

Grassley’s statement is representative of the commonly cited misconceptions about skilled immigration, so let’s examine them in more detail. First off, with regard to the Chaffetz bill, changing the country caps wouldn’t increase the numbers of H1B visas, it would simply change the distribution process. So, under Grassley’s logic, the new legislation wouldn’t harm Americans any more than they are now. Furthermore, when the current mode of visa distribution was conceived, it was likely optimizing for a diversity of immigrants rather than for a specific skill set need. Altering this model just changes the optimization for our current needs — more skilled high-tech workers from STEM fields.

Then there’s STEM visas, which, according to Grassley, carry with them the danger of flooding the employment market and depressing wages. Actually, it’s pretty unlikely that the amount of visas granted through a program like this would have a big impact on the employment market or wages. The unfortunate truth is, extremely few Americans choose to pursue an advanced degree in STEM, and even fewer — only 8% of all STEM Bachelor’s graduates 10 years after receiving their degree — use that degree for occupations like programming or computer science. Studies show that most Americans currently prefer to pursue other, more creative or prominent fields that use STEM competencies, like healthcare. This is where skilled immigration can be a complement to the existing workforce; filling the unmet demand for workers in the jobs for which most workers born here are not trained. In order to stay competitive globally, we need to remain at the forefront of technological innovation, and that means encouraging those who are educated in the U.S. to stay here after receiving their degrees.

Skilled immigration should be the beginning of a larger conversation about education. In the long term, an increased focus on entrepreneurship and STEM education at a younger age for all American students will help to ensure we remain at the forefront of innovation and growth. Investment in K-12 will iterate in massive gains to American society in a few generations, and will help us grow a high-tech workforce alongside our continued ability to draw and keep overseas talent. In the meantime, we can’t afford to fall behind.

Skilled, foreign-born workers were how this country was made great in the first place, and can continue to drive the engine of economic growth, all while creating American jobs. We need to pay attention to the legislation being proposed, and when we see a bill like the one proposed by Rep. Chaffetz, we need to bypass the hornet’s nest of misconceptions and competing political interests to get it passed.

JOBS Act Becomes Law

I was honored to represent the startup community across America this afternoon as a guest of President Obama in the White House Rose Garden as he signed JOBS Act into law. This bi-partisan bill will do great things for our community; through increased ability for companies to go public, raise money through crowdfunding or scale their products and businesses into the marketplace with greater ease. The President, along with House Republican Leader Eric Cantor who introduced the bill in February, Sens. Jeff Merkley and Scott Brown who worked tirelessly on the crowdfunding issues, and many others in both parties and both Houses of Congress are to be thanked for making sure this legislation passed with the support and speed that it did. With Engine, I look forward to helping many new startups benefit from this law, and continuing to work with the Congress and the President to pass further legislation aimed at helping startups continue to drive the Engine of the American economy.

-Michael McGeary, Co-Founder and Director

Alan Simpson Talks Tech Safety for Kids

Alan Simpson is a veteran of traditional media, having cut his teeth at C-SPAN and NPR, before moving on to advocacy in the tech space with a particular focus on opportunities for children and learning. He currently works at Common Sense Media, and lives with his wife and mutt in San Francisco.  This post represents his personal views, and not necessarily those of any organization.

I spend a lot of time with people working in technology, and even more time with parents and teachers who might be described as less than comfortable with technology.  It’s no surprise that conversations in the startup world focus on the many opportunities and improvements created by the Internet and technology.  On the other hand, when talking with parents, teachers, and policymakers, the conversation hinges not just on the upsides of technology, but also on the serious concerns many of this group have about potential downsides for children.

Many parents and educators are embracing the benefits of digital technology, and are hopeful about opportunities for personalized learning innovations that can be accessed in school, at home, and many places in between.  But there are also parents who worry about trouble their children may get into with technology.  The perceived problems are as varied as the parents – issues ranging from porn and piracy to child ID theft and the risk of jeopardizing college applications.

Some people might be tempted to dismiss the concerns of parents, but we should all recognize that worrying about children –- and weighing upsides and downsides -– is a big part of their jobs.
When I talk with parents and educators, I usually stress the importance of finding balance, and of engaging with new platforms and tools, so that they can make smart tech choices for their children, and perhaps more importantly, teach their children to make smart choices as they grow.  This works in many cases, but sometimes I encounter parents or teachers who are frustrated, and know that they understand tech less than children do.  They wish there was an off switch, or a time machine to make the Internet disappear.  As we’ve seen recently, some policymakers agree.

It’s important to remind them that there is no time machine, and that kids are going to embrace digital technology, just as they’ve always embraced innovation.  Parents, teachers and all adults can, and should, help teach kids to make smart choices about technology.  What we can’t do is tell a generation of kids to stay offline, because they’re going to live their lives online.  

This can be a challenging conversation, and it may be one most tech folks don’t want to have.  But it’s a crucial conversation, and startups need to be part of it.  Because in the end, the biggest potential digital downside for our nation’s children is that we may block them from technology innovations that can significantly improve their opportunities for learning, and help them prepare for the digital world where they will live, work, play, bank, vote, and more.

Child Protection in the Digital Age

This week, Engine is fortunate to have Alan Simpson (no, not the former senator of Wyoming) posting here about online child safety. We’ll be seeing that post later this week, but in the meantime, we want to share the scope of the existing debate around the pros and cons of new media for the under-13 set.

Here’s a little background: the main piece of legislation that has dealt with children’s safety online for the past decade is the Children’s Online Privacy Protection Act of 1998 (COPPA). COPPA mandates specific requirements that web operators must adhere to for children under that age of 13 — namely requiring parental permission before collecting any personal information from children and not distributing the information to third parties. Standard stuff.

The bill was written over ten years ago, though, and technology has changed markedly in that time — social media, smartphones, and tablets have made COPPA both restrictive in some areas and inadequate in others. Amendments were proposed last year by the FTC to ease the way for parental authorization and to institute additional protections for location based and facial recognition technologies.

The FTC amendments were lauded by the internet community, who had long seen COPPA as a thorn in its side. The legislation, for instance, prevents children under the age of 13 from signing up for Facebook, which CEO Mark Zuckerberg said impedes the educational potential of social networking. Zuckerberg may not be the most impartial commentator on the issue, but he is not alone; plenty of others advocate for the educational possibilities of new technology.

Alan Simpson is one of those advocates. His argument? It doesn’t matter whether you think the internet is good or bad — It’s not going away. This is a world in which kids are growing up and media is a huge part of their lives. There are enormous positives that come out of that, and there are also things that you as a parent might decide are negative. The positives are pretty universal: the opportunities especially in education and learning that new media create for kids and adults are widespread. Giving people more tools to address the downsides — without dismissing the positives — allows parents to maintain the ability to be a filter without having to completely ban a technology which is an integral part of our lives now and will be even more so in 10, 20 years time when these kids are entering the workforce.

Look out for Simpson’s post here in the next couple days.

JOBS Act Passed, With Additional Investor Protections

Minutes ago, startup financing bill JOBS Act passed the Senate 73-26, with an amendment to further protect investors.

The bill, which we discussed here, seeks to ease the way for startups to access investment capital through provisions that address the transition between being a privately held company and a publicly traded one — eliminating the 500 shareholder cap, allowing general solicitation and crowdfunding,  creating an IPO onramp — and provides startups with more financial pathways to success.

Concerns that greater access to investments — especially through the crowdfunding provision in the bill — prompted fears from many quarters that investors would be opened up to fraud, or worse, that a “free-for-all” environment for investing in startups would create a reiteration of the dot-com bubble burst. An amendment offered by  Sens. Merkley (D-OR) and Brown (R-MA) passed along with the bill which addresses these concerns.

The amendment requires companies raising up to $1 million to be transparent with potential investors about certain financial information, and prevents investors with an income lower than $100,000 from investing more than 5% of their annual income.

JOBS Act always called for “reasonable protection” of investors against fraud, and now the Merkley/Brown amendment further distinguishes what safeguards will be extended on behalf of investors. Another amendment offered by Sen. Reed (D-RI) that changed the definition of the “emerging growth companies” that JOBS affects was rejected.

The Merkley/Brown amendment means the bill will go back to the House before being signed into law by the President. We’ll be tracking.

Policy Update: JOBS & Startup

Last night, we sent out the following email to our friends and members to inform them of current legislation aimed at easing the way for startups. We want to share the update with you now, as a resource for understanding key provisions of JOBS Act and Startup Act, and to hear your thoughts on these bills. If you want to sign up for email updates like this in the future, subscribe to our mailing list here.

Dear Friend,

Engine has been tracking recent legislative efforts to foster entrepreneurship and small business. Today, the Senate begins debate on the JOBS Act, which passed the House last week. Startup Act is next on the legislative agenda and responds to a number of key startup needs.

The JOBS Act is a legislative package designed to lower barriers to entry for entrepreneurs by reducing limitations on fundraising and decreasing crippling bureaucratic overhead currently required by existing regulatory legislation. While there’s good and bad contained within it, it is heartening to see Congress prioritizing legislative issues that affect startups. You can read about the provisions we like in the JOBS Act.

  • Ease of raising capital through crowdfunding and ease SEC regulations on offerings from $5 million to $50 million, making it easier for startups to raise capital.
  • Create IPO onramp for class of emerging growth companies with annual revenue of less than $1 Billion.
  • Emerging growth companies are subject to fewer SEC regulations when filing for IPO

But JOBS is just the beginning.

Startup Act
It’s time to move forward on Startup Act. We have only a few weeks left to effect change in Congress this session, and Startup Act represents another clear step toward passing legislation that benefits entrepreneurs and creates jobs — this year. We also took a look at some of the key provisions in Startup, here’s a quick summary, with more detail available on our blog.

  • Promote job growth by making the capital gains tax exemption for startups permanent.
  • Reform the process by which qualified STEM graduates and foreign born entrepreneurs are able to stay and start businesses in the United States
  • Spur innovation by providing incentives for universities to turn federally funded research into tangible jobs and businesses.

To take action on JOBS Act, sign the petition at AngelList here. And stay tuned, in the coming weeks we’ll ask you to take further action in support of Startup Act.

-The Engine Team