Startup America -- Dead on Arrival(steveblank.com)
steveblank.com
Startup America -- Dead on Arrival
http://steveblank.com/2011/02/08/startup-america-dead-on-arrival/
13 comments
The White House spent the whole first two years of political capital on a massive new health reform program, losing significant popularity and the House as a result. They've been roundly criticized for focusing too much on health care and not anything else.
So I don't see how you can make the statement "the government doesn't understand that affordable health care is the main priority for startups" - health care was clearly their highest priority to an unprecedented degree, whether or not you agree on the approach they took.
So I don't see how you can make the statement "the government doesn't understand that affordable health care is the main priority for startups" - health care was clearly their highest priority to an unprecedented degree, whether or not you agree on the approach they took.
What's the point of this comment? Since the first two years of Obama's administration, has health insurance become less of an issue for startups? Is health insurance not on the table right now as an issue in the House? What does it matter how much "political capital" was spent?
The point is the assertion that the government "doesn't understand the challenges facing startups", based on the example that health care should be higher priority than something else, is incorrect, if taken to mean that the "government doesn't understand that access to affordable health care is a key challenge facing startups". Maybe that's not what it means but it sure seems that way.
The government placed access to affordable health care at the top of its priority list from day one of the administration. The notion that a $75 a month plan ten years ago might now be $1000 a month is specifically targeted as a primary issue. Again, you can say the legislation is awful and won't work at all (I've no idea myself and I'm in the "something is better than nothing" camp), but they certainly understand the problem.
Edit: And I APOLOGIZE for quoting a paraphrase, I am no longer able to edit the comment else I would remove the quotes and fully explain what appears to be what you are saying. I sincerely hope that I am correctly understanding your assertion, which again appears to say, "the government doesn't understand that health care is a huge problem for startups", and if I am not, then I withdraw my comment fully.
The government placed access to affordable health care at the top of its priority list from day one of the administration. The notion that a $75 a month plan ten years ago might now be $1000 a month is specifically targeted as a primary issue. Again, you can say the legislation is awful and won't work at all (I've no idea myself and I'm in the "something is better than nothing" camp), but they certainly understand the problem.
Edit: And I APOLOGIZE for quoting a paraphrase, I am no longer able to edit the comment else I would remove the quotes and fully explain what appears to be what you are saying. I sincerely hope that I am correctly understanding your assertion, which again appears to say, "the government doesn't understand that health care is a huge problem for startups", and if I am not, then I withdraw my comment fully.
Don't worry about the paraphrase, my original comment was probably too ambiguous.
Yes, I do believe that the government probably understands that health care is a huge problem for startups. What I don't believe (and this is the point of the Steve Blank blog post) is that the government can effectively prioritize what the biggest problems for startups are.
Now, lets talk about Startup America specifically. Going off the information available online ( e.g. http://www.whitehouse.gov/issues/startup-america ), this program is more focused on things like access to capital, mentorship and education, partnerships with big business, federally funded grants and research.
I think these are all really great things to work on, but health care, #1 on my list, is not even mentioned on their list at all. Again, I believe they know it's a huge issue, but they may be shying away from it now because "we did that already and it's done" or "we'll lose elections in 2012 if we keep talking about it".
Yes, I do believe that the government probably understands that health care is a huge problem for startups. What I don't believe (and this is the point of the Steve Blank blog post) is that the government can effectively prioritize what the biggest problems for startups are.
Now, lets talk about Startup America specifically. Going off the information available online ( e.g. http://www.whitehouse.gov/issues/startup-america ), this program is more focused on things like access to capital, mentorship and education, partnerships with big business, federally funded grants and research.
I think these are all really great things to work on, but health care, #1 on my list, is not even mentioned on their list at all. Again, I believe they know it's a huge issue, but they may be shying away from it now because "we did that already and it's done" or "we'll lose elections in 2012 if we keep talking about it".
Now that the bill passed I think all they can do is defend the thing from getting overturned. There's probably nothing else they're willing to take on until the bill goes into effect and makes it through the supreme court (which it very likely won't).
Looks like partisan raging. It's not like the administration or congress only did one thing. The House passed over 400 bills (most didn't make it to the Senate), and the Senate still got quite a few things done.
"But the President tried his best" is not a valid answer to "health care may be a bigger issue than access to capital".
The thing in the first set of quotes is not something I said.
Nope, not directly.
Then be direct and say what you mean since I don't know what you're trying to say.
Is health care not a problem for startups? If it in fact is, then answer this question: what does it matter how many other things the administration got done? How does that make it less of a problem?
I guess it depends on what you thought of the health care reform bill. In my mind it's already taken care of, and things will improve as the provisions take effect.
I would prefer it all come in to effect immediately, but I understand there are business and regulatory systems that need to be developed in advance of implementation.
I would prefer it all come in to effect immediately, but I understand there are business and regulatory systems that need to be developed in advance of implementation.
So I don't see how you can make the statement "the government doesn't understand that affordable health care is the main priority for startups"
Haha, I didn't make that statement.. But you put quotes around it anyway? I was just speaking about my own situation and why I agree that Startup America is DOA.
Edit: Ok, forget about the quotes -- they're irrelevant. I do feel that you are misparaphrasing me, but I don't care. If you want to know what I really believe:
* Of course the current government has made health care reform a priority for everyone, not just startups. Nobody would say otherwise.
* I agree with the goals of the recent health care reform law. I think health insurance reform would have been a better way to approach the problem.
* It's a shame that the democrats lost the PR battle and as a result half the country wants the law repealed. Overall I think the law could be a good thing.
* I agree with the goals of Startup America, to use government influence to remove barriers to entrepreneurship
* Affordable health care for small business owners is a huge barrier. You can't hire most people unless you can afford to pay for their health care or a group plan.
* I predict that this won't be addressed at all by Startup America, because health care reform has become such a heated issue. People are losing elections because of it.
* By addressed I mean, where is it mentioned on their website? What experts do they have advising them? What insurers are they partnering with to provide breaks for small business owners?
I do welcome discussion about this stuff, but let's try not to misrepresent each other..
Haha, I didn't make that statement.. But you put quotes around it anyway? I was just speaking about my own situation and why I agree that Startup America is DOA.
Edit: Ok, forget about the quotes -- they're irrelevant. I do feel that you are misparaphrasing me, but I don't care. If you want to know what I really believe:
* Of course the current government has made health care reform a priority for everyone, not just startups. Nobody would say otherwise.
* I agree with the goals of the recent health care reform law. I think health insurance reform would have been a better way to approach the problem.
* It's a shame that the democrats lost the PR battle and as a result half the country wants the law repealed. Overall I think the law could be a good thing.
* I agree with the goals of Startup America, to use government influence to remove barriers to entrepreneurship
* Affordable health care for small business owners is a huge barrier. You can't hire most people unless you can afford to pay for their health care or a group plan.
* I predict that this won't be addressed at all by Startup America, because health care reform has become such a heated issue. People are losing elections because of it.
* By addressed I mean, where is it mentioned on their website? What experts do they have advising them? What insurers are they partnering with to provide breaks for small business owners?
I do welcome discussion about this stuff, but let's try not to misrepresent each other..
What is it with Hacker News and quotation marks? I got called out for doing it a couple years ago by some famous guy on the site, and as a result, being careful with punctuation is the one thing I do differently when writing here (I slipped upthread, as you can see).
But I don't get it. Your initial comment (which I totally agree with) is right there. It is plainly obvious what you wrote and plainly obvious that the response is a paraphrase. You clearly disagree with that paraphrase, but that to me seems like an essential issue in the discussion, not a pointless tangent: "do I correctly understand you to be saying...", "no!", "oh, then...".
But I don't get it. Your initial comment (which I totally agree with) is right there. It is plainly obvious what you wrote and plainly obvious that the response is a paraphrase. You clearly disagree with that paraphrase, but that to me seems like an essential issue in the discussion, not a pointless tangent: "do I correctly understand you to be saying...", "no!", "oh, then...".
Yeah, I agree that this place feels too formal at times, and I hate feeling like I have to be a master of rhetoric just to comment here.
In fact just yesterday I got sucked into another thread that went the same way. I've come to the conclusion that that some people take counter points and play Devil's Advocate just because the enjoy argument and debate. Personally it's not my thing. I'd rather dash off a quick comment and get back to work.
This thread has gone crazy, hasn't it?
In fact just yesterday I got sucked into another thread that went the same way. I've come to the conclusion that that some people take counter points and play Devil's Advocate just because the enjoy argument and debate. Personally it's not my thing. I'd rather dash off a quick comment and get back to work.
This thread has gone crazy, hasn't it?
Sometimes it's because you are encountering someone with a cognitive style that is oriented towards precision of expression. This is an admirable trait that can expose hidden assumptions and lead to valuable insights.
Unfortunately, attacking the form rather than the content of a position can also be an effective tactic for undermining an opposing view without having to risk justifying oneself. It consumes energy without contributing anything constructive. If there's a genuine ambiguity and a desire to work together to learn something, there are usually ways to clarify your opponent's position that help both people reach understanding.
Unfortunately, attacking the form rather than the content of a position can also be an effective tactic for undermining an opposing view without having to risk justifying oneself. It consumes energy without contributing anything constructive. If there's a genuine ambiguity and a desire to work together to learn something, there are usually ways to clarify your opponent's position that help both people reach understanding.
I've said it before - it's insane that more startups don't locate in Massachusetts in the early days. The Mass Connector can get you pretty decent coverage for around ~$250 a month. Live there, take the Megabus down to NYC for NYTM and funding, and come back. Sure, it's cold, but it's not the worst place to be otherwise.
Yeah, I have thought about that, Boston and Philadelphia aren't that far.
But stop for a minute and think - we are seriously talking about commuting 2 hours to save a few hundred dollars a month on health care. Why?? Why do we even need to have that conversation? That's how broken things are.
I'm a non-smoking 34 year old marathon runner.. I go to the doctor once a year, if that. Companies should be fighting over the opportunity to insure me. It shouldn't be the #1 reason I can't grow a business.
But stop for a minute and think - we are seriously talking about commuting 2 hours to save a few hundred dollars a month on health care. Why?? Why do we even need to have that conversation? That's how broken things are.
I'm a non-smoking 34 year old marathon runner.. I go to the doctor once a year, if that. Companies should be fighting over the opportunity to insure me. It shouldn't be the #1 reason I can't grow a business.
Parent poster wasn't saying to live in Mass. and work in NYC, just that NYC is a bus ride away for important things like meetups and funding trips. Live in Mass., work in Mass.
It's great that you're healthy but business growth is going to involve taking other people on and I for one am not taking a job without health care while I have two other people depending on me. A single major health issue could bankrupt me!
It's great that you're healthy but business growth is going to involve taking other people on and I for one am not taking a job without health care while I have two other people depending on me. A single major health issue could bankrupt me!
I'm a non-smoking 31 year old half-marathon runner, and I'm paying $110/month in PA.
I would assume you'd also save hundreds of dollars a month on rent and other living expenses in PA (or MA, though I can't speak directly for Boston). I don't think moving 2 hours away to save $1k or more per month is a bad move for a startup.
I would assume you'd also save hundreds of dollars a month on rent and other living expenses in PA (or MA, though I can't speak directly for Boston). I don't think moving 2 hours away to save $1k or more per month is a bad move for a startup.
Nitpick: Lots of things can happen to otherwise healthy people.
In NY, health insurance coverage cannot decline anyone based on pre-existing conditions. So younger, healthy applicants have to pay more since there are a lot of people in the system who are a net loss. Thus, less healthy people are covered, and the system continues become worse... it's a very bad feedback loop.
I've said it before - it's insane that more startups don't locate in Massachusetts in the early days.
It's only insane if you believe that health insurance is a major barrier for startups. The fact that startups didn't relocate to MA en masse after Romneycare took effect suggests that perhaps access to capital/talent is far more important.
It's only insane if you believe that health insurance is a major barrier for startups. The fact that startups didn't relocate to MA en masse after Romneycare took effect suggests that perhaps access to capital/talent is far more important.
Facile. People in the professional class don't tend to move "en masse". Residency is sticky for reasons beyond health insurance. Health care clearly is a factor retarding professionals from moving into entrepeneurship; if I saw it repeatedly at my very small company, think how much larger the issue must be nationally.
So startups/entrepreneurs don't move to the valley in order to increase their odds of success? I agree that many paycheck seeking professionals might not do so, but that's a rather different question.
Health care clearly is a factor...
I wasn't disputing that it is a factor. I was disputing the idea that it is a larger factor than access to capital or talent. Look, we hear about people moving to the valley all the time. People move to NY as well, though it's less common. Are all of these entrepreneurs "insane" (to borrow sachinag's language) for chasing capital/talent rather than Romneycare?
Health care clearly is a factor...
I wasn't disputing that it is a factor. I was disputing the idea that it is a larger factor than access to capital or talent. Look, we hear about people moving to the valley all the time. People move to NY as well, though it's less common. Are all of these entrepreneurs "insane" (to borrow sachinag's language) for chasing capital/talent rather than Romneycare?
First, no: the entire "entrepreneurial class", whatever that may be, has not moved en masse to the valley. If you think the entire population of startup entrepreneurs that is seriously committed to tech has moved there, or at least enough of them to support your argument, then what are we talking about? You don't believe there's a latent vein of entrepreneurship that needs to be tapped anyways.
Second: yes. Most of the people who are moving to NYC and SFBA are irrational. Most of their companies fail. Everybody knows that going in. To the extent that they move entirely in support of their startups, they are crazy. (The fact is, most of the people moving aren't doing so entirely for their startup; they want to live there.)
Third, I doubt most entrepreneurs even know about "Romneycare". I'm only peripherally familiar with its specifics, and, as you can probably tell, health care is one of my issues.
Second: yes. Most of the people who are moving to NYC and SFBA are irrational. Most of their companies fail. Everybody knows that going in. To the extent that they move entirely in support of their startups, they are crazy. (The fact is, most of the people moving aren't doing so entirely for their startup; they want to live there.)
Third, I doubt most entrepreneurs even know about "Romneycare". I'm only peripherally familiar with its specifics, and, as you can probably tell, health care is one of my issues.
--~$250 a month is still an insane price for a single person. I live in Illinois of all places and have decent HMO coverage for less than $100. Granted, I am not currently in a start up, but in a business of about 15 employees. Various catastrophic-only plans (assuming your state offers them) can be had for significantly less if you're healthy.-- //this is clearly not right, being dumb today and forgot to add in the employer contribution (I believe it comes to about 200 to 250 in total for our particular plan, so it is comparable, but my point about catastrophic-only plans (which are often outlawed in states like Massachusetts, still stands //
The problem with MassCare (and ObamaCare) is that their mix of guaranteed issue, mandates, community rating, minimum creditable coverage guidelines, and subsidies still inflates the price of health insurance, and state subsidies can't keep up. This was evident in Massachusetts as early as 2007, right after MassCare began to be implemented (see this report for exmaple: http://www.ncpa.org/sub/dpd/index.php?Article_ID=14237)
I think the Startup America concept is admirable. Would that the federal government understood the real problem with starting a business in the United States right now isn't the lack of a couple billion in government programs, but the regulatory barriers and inflation in commodities and products like health insurance that prevent new firms from entering the market, inflation that the federal government has in many ways helped create.
The problem with MassCare (and ObamaCare) is that their mix of guaranteed issue, mandates, community rating, minimum creditable coverage guidelines, and subsidies still inflates the price of health insurance, and state subsidies can't keep up. This was evident in Massachusetts as early as 2007, right after MassCare began to be implemented (see this report for exmaple: http://www.ncpa.org/sub/dpd/index.php?Article_ID=14237)
I think the Startup America concept is admirable. Would that the federal government understood the real problem with starting a business in the United States right now isn't the lack of a couple billion in government programs, but the regulatory barriers and inflation in commodities and products like health insurance that prevent new firms from entering the market, inflation that the federal government has in many ways helped create.
Your share of the coverage is $100. The cost of that coverage is most certainly not $100. Odds are your employer is paying $400 (given the standard 80/20 split at smaller companies).
I upvoted you, thanks for the correction. I'm a little embarrassed I wrote that. Maybe I should drink my coffee first...
Yeah as soon as I wrote that I realized the fallacy in the first paragraph...oops!
In Bloomington, IN if your income is below a certain level, there is a whole office of volunteer doctors that will treat you. I've got a few friends that go there and love it. A friend of mine broke his foot over the summer and got a cast and crutches and everything for free.
If your uninsured appendix bursts, the volunteer doctors are unlikely to keep you from going bankrupt. The health care problem isn't "doctor visits are too expensive".
yep, it is the catastrophic that gets most people.
I really wish the administration had tried to take some baby steps instead of going for something they are giving waivers to avoid and really not explaining how their thing would be different from the VA or IHS.
A "flood"-style insurance to protect against the catastrophic, and changing the Health savings accounts to be easier and inheritable probably would have been good first steps.
I really wish the administration had tried to take some baby steps instead of going for something they are giving waivers to avoid and really not explaining how their thing would be different from the VA or IHS.
A "flood"-style insurance to protect against the catastrophic, and changing the Health savings accounts to be easier and inheritable probably would have been good first steps.
It's argued to be part of the problem, though. When doctor's visits are expensive, minor problems escalate because they aren't caught early enough to be cheap to deal with.
At least, that's the argument. I don't claim to be an expert in these things.
At least, that's the argument. I don't claim to be an expert in these things.
How much for a single founder?
~$250 a person. You can do group coverage through the Connector as well, but group plans are pretty easy to get through traditional brokers once you hit four enrollees. (You may have some employees covered through their spouse or school, but you need to have four enrollees with the same plan to get group rates.)
I'd recommend that startups in Mass/looking to move just have everyone pay their own health insurance through the Connector until you raise angel funding and scale up in people. (I set up the group health insurance when I led Operations at oneforty.)
I'd recommend that startups in Mass/looking to move just have everyone pay their own health insurance through the Connector until you raise angel funding and scale up in people. (I set up the group health insurance when I led Operations at oneforty.)
You can also get group coverage through the Mass Busineess Association. My HSA policy is $850 month and covers me, my wife and two kids. Pretty high deductible though.
Obama's aware of this. His major legislative achievement so far is a bill intended to promote access to health insurance (though most of the major provisions aren't yet in effect) --- on pretty much the same model as the Massachusetts law which others here have mentioned.
This is one of the things about Obamacare that I truly do not understand. I am a self-employed, type II diabetic. My health insurance premiums are massive. As I understand it, the law doesn't provide you free health care unless you are in the poverty range. For everyone else, it merely mandates that you buy insurance. How does adding a mandated expense on top of startup costs make entrepreneurship more feasible?
Could you explain why access to health insurance (note: this is a financial product, and is distinct from health care) is a bigger issue than access to a paycheck?
I have survived just fine without health insurance. I know plenty of people who do so. Surviving without a paycheck is a lot harder.
I have survived just fine without health insurance. I know plenty of people who do so. Surviving without a paycheck is a lot harder.
Paychecks, while impotant are incremental.
Insurance is "take the bank". And the way insurance tends to work is that everything is fine until you need. Then you're screwed. That's the nature of it.
Insurance is "take the bank". And the way insurance tends to work is that everything is fine until you need. Then you're screwed. That's the nature of it.
If you're launching a startup so that you can get a paycheck, something's wrong.
[edit] My point is: While health insurance may be a barrier, a paycheck should not be.
[edit2] I'll definitely explain; I apologize that it wasn't clear.
I'm not trying to argue that a paycheck couldn't be a barrier to launching a startup; I'm arguing that it shouldn't be one. Requiring a paycheck translates to requiring job security, and a startup is not necessarily the path to take if that's the case.
In contrast, health insurance cannot be helped as a barrier to launching as, paycheck or not, a lack of health insurance can completely ruin you in the event of an accident, which you cannot control.
People flock to the Valley where money is easier to come by not because they need a paycheck personally, but because it's easier to fund your startup. I'm not even saying that, at this point, you shouldn't cut yourself a small check to live off of. Being able to pay yourself is an awesome goal, and something that everyone should look forward to. However, if you require job security (which many do), then it would likely be to your benefit to get to a point in your life where that's not a barrier before launching.
And cosgroveb, if you're suggesting that I only believe those born into money can be successful founders, you're simply incorrect. Anyone from any socioeconomic background has the ultimate ability to launch a startup. No one is questioning that. The actual question, though, is when should you launch a startup?
[edit] My point is: While health insurance may be a barrier, a paycheck should not be.
[edit2] I'll definitely explain; I apologize that it wasn't clear.
I'm not trying to argue that a paycheck couldn't be a barrier to launching a startup; I'm arguing that it shouldn't be one. Requiring a paycheck translates to requiring job security, and a startup is not necessarily the path to take if that's the case.
In contrast, health insurance cannot be helped as a barrier to launching as, paycheck or not, a lack of health insurance can completely ruin you in the event of an accident, which you cannot control.
People flock to the Valley where money is easier to come by not because they need a paycheck personally, but because it's easier to fund your startup. I'm not even saying that, at this point, you shouldn't cut yourself a small check to live off of. Being able to pay yourself is an awesome goal, and something that everyone should look forward to. However, if you require job security (which many do), then it would likely be to your benefit to get to a point in your life where that's not a barrier before launching.
And cosgroveb, if you're suggesting that I only believe those born into money can be successful founders, you're simply incorrect. Anyone from any socioeconomic background has the ultimate ability to launch a startup. No one is questioning that. The actual question, though, is when should you launch a startup?
But launching a startup so that you can get health insurance is not doing something wrong?
[edit: my question is "why?" I.e., could you explain why health insurance is a barrier, but a paycheck is not?
Also useful would be explaining why startups flock to the valley and NYC, where access to capital/a paycheck is easier, rather than MA where access to health insurance is easier.]
[edit: my question is "why?" I.e., could you explain why health insurance is a barrier, but a paycheck is not?
Also useful would be explaining why startups flock to the valley and NYC, where access to capital/a paycheck is easier, rather than MA where access to health insurance is easier.]
We weren't all born into money.
Explain why access to health insurance is a bigger issue than access to a paycheck?
I can have access to a paycheck by selling stuff.
I can have access to affordable health care through some combination of public policy, state and federal programs, laws that may or may not end up being repealed or enforced, regulations on the insurance industry, reforms on the legal industry, pressure from consumer advocacy groups, happening to live in the right place, hoping that my insurance company doesn't raise rates too much, or possibly marrying someone with good health insurance, or being the right age to be on my parents' plan, if they have an affordable plan to begin with. Also I can choose not to smoke or have kids if I want to keep my costs down.
I can have access to a paycheck by selling stuff.
I can have access to affordable health care through some combination of public policy, state and federal programs, laws that may or may not end up being repealed or enforced, regulations on the insurance industry, reforms on the legal industry, pressure from consumer advocacy groups, happening to live in the right place, hoping that my insurance company doesn't raise rates too much, or possibly marrying someone with good health insurance, or being the right age to be on my parents' plan, if they have an affordable plan to begin with. Also I can choose not to smoke or have kids if I want to keep my costs down.
I've seen claims that the risk of death more or less double every seventh year you live. I assume the statistics are at least as bad for health problems.
If you live without health care you throw dice with high stakes. Point is, when you get older the dice get loaded.
My remaining hair is gray specked, this is something I considered carefully when I accepted to be outsourced to East Europe (-: love it so far, the city is almost called Kludge! :-).
Edit: Made a little bit clearer.
If you live without health care you throw dice with high stakes. Point is, when you get older the dice get loaded.
My remaining hair is gray specked, this is something I considered carefully when I accepted to be outsourced to East Europe (-: love it so far, the city is almost called Kludge! :-).
Edit: Made a little bit clearer.
First, the healthcare provisions intended to decrease cost have yet to go into effect. You're right about costs being too high and hope that this law has a positive impact. Here is the implementation timeline: http://www.mcclatchydc.com/2010/03/21/90794/when-health-care...
Second, this comment offers a valuable non-tech perspective on Startup America and thought it was worth pointing out: http://steveblank.com/2011/02/08/startup-america-dead-on-arr...
Second, this comment offers a valuable non-tech perspective on Startup America and thought it was worth pointing out: http://steveblank.com/2011/02/08/startup-america-dead-on-arr...
"a valuable non-tech perspective"
That comment was absolutely golden, and an idea that I've advocated for a long time now.
We can't rely on web/high/bio/green technology to save us. As a heterogeneous society with differing skin tones and accents and places of origin, we also have differing education levels. You can't say "hey there, person from a mining town with 5 generations of mining-town subsistence living, come join us over in good ol' Silly-Con valley and pull up a cubicle, work on some Erlang". But, is Mining Jane somehow less deserving of a shot at entrepreneurship than Aspie Joe who was raised with a keyboard under his fingers? When it boils down to it, they're both a big risk, and as we've seen our fair share of pizzerias and beauty supply shops go out business in our lifetime, we've also seen tech flameouts of the scale that makes the pizzeria one look like a rounding error. And, that's the _vast majority_ of *-tech venture. Only a few come out on top.
I think a refocus of the SBA and Startup America and all those other things should be to empower entrepreneurship at _every_ skill, education, and economic level. Look for opportunities like Champs. Set up a 1-2 million dollar fund for them to continue educating, maybe give out grants. So what if there's a barber shop or bodega or gun shop on every block. I'd much rather they toil and struggle away on a business than slog it out at the french frier for the big Clown McMachine. And, when they fail, hey they fail. But, they fail with a much better feel for how real business is supposed to run, and they might get better at it (or go work for someone else in a much higher position than one that requires bell-bottom uniforms and a paper hat).
That comment was absolutely golden, and an idea that I've advocated for a long time now.
We can't rely on web/high/bio/green technology to save us. As a heterogeneous society with differing skin tones and accents and places of origin, we also have differing education levels. You can't say "hey there, person from a mining town with 5 generations of mining-town subsistence living, come join us over in good ol' Silly-Con valley and pull up a cubicle, work on some Erlang". But, is Mining Jane somehow less deserving of a shot at entrepreneurship than Aspie Joe who was raised with a keyboard under his fingers? When it boils down to it, they're both a big risk, and as we've seen our fair share of pizzerias and beauty supply shops go out business in our lifetime, we've also seen tech flameouts of the scale that makes the pizzeria one look like a rounding error. And, that's the _vast majority_ of *-tech venture. Only a few come out on top.
I think a refocus of the SBA and Startup America and all those other things should be to empower entrepreneurship at _every_ skill, education, and economic level. Look for opportunities like Champs. Set up a 1-2 million dollar fund for them to continue educating, maybe give out grants. So what if there's a barber shop or bodega or gun shop on every block. I'd much rather they toil and struggle away on a business than slog it out at the french frier for the big Clown McMachine. And, when they fail, hey they fail. But, they fail with a much better feel for how real business is supposed to run, and they might get better at it (or go work for someone else in a much higher position than one that requires bell-bottom uniforms and a paper hat).
As a Londoner I'm curious, is it a legal requirement to offer employees health care or will developers just not consider positions that don't include health care cover?
Also, I forgot to mention. It is difficult to forego health insurance coverage because in most states, this can mean never having private insurance again. Suppose I'm healthy and decide to work at a startup that doesn't offer health insurance. I figure I'll pay for doctor visits out of pocket. But while I'm working there, I discover I have cancer -- I need lots of treatment and there's no way I can pay for that out of pocket. But I can't get private insurance now because I have a pre-existing condition. Insurers can (and will) simply refuse to sell me a policy. If my condition is manageable enough that I can switch to a regular job that has employer provided insurance, I'll be fine because employers generally arrange with insurers to not have any pre-existing condition limitations, but if I'm too sick to get a good job with insurance, then...
Well, you can see how this can spiral out of control until I end up blowing all my savings on health care bills and eventually have to declare bankruptcy. That's the kind of fear that keeps people in boring corporate jobs: the gnawing uncertainty that even if you're healthy now, you (and your family members) are one major medical crisis away from financial ruin and being forever locked out of the good insurance system.
Now, this doesn't apply in MA today and as the new health care law goes into effect over the next few years, it won't apply anywhere in the US. Sorry to write so much, but in my experience, people in the UK just have no reference for how screwed up American health care is and how much fear it can inspire.
Well, you can see how this can spiral out of control until I end up blowing all my savings on health care bills and eventually have to declare bankruptcy. That's the kind of fear that keeps people in boring corporate jobs: the gnawing uncertainty that even if you're healthy now, you (and your family members) are one major medical crisis away from financial ruin and being forever locked out of the good insurance system.
Now, this doesn't apply in MA today and as the new health care law goes into effect over the next few years, it won't apply anywhere in the US. Sorry to write so much, but in my experience, people in the UK just have no reference for how screwed up American health care is and how much fear it can inspire.
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For odd historical reasons, when an employer purchases health insurance for an employee, they get a huge tax deduction. So having employees buy their own is significantly more expensive, even for the exact same coverage. In addition, in most states in the US, the individual insurance market is a disaster: prices are outrageous, there is no common market where you can look up prices so you have to find and contact individual carriers, you can be denied coverage for just about anything, coverage standards are non-existent so there's no way to compare plans based on price, etc.
The end result is that many developers aren't willing to take jobs where health insurance isn't included.
The end result is that many developers aren't willing to take jobs where health insurance isn't included.
You'd have to pay a hefty premium to get an experienced developer to take a no-health-care gig. I'm in an employment transition right now and my COBRA (transitional health care plan offering provided by law) costs add up to about 11% of my gross salary. This isn't even the top-tier plan.
Right now, it depends on state law --- required in at least Massachusetts and Hawaii, but many other states have no such requirement.
Is the amount you pay for health care because of specific issue that you have or is it a regional thing?
I've been paying ~$80/month for high-deductible (but 100% after the deductible) health care for a few years. My HSA account will now cover my deductible if I ever need it to.
I've been paying ~$80/month for high-deductible (but 100% after the deductible) health care for a few years. My HSA account will now cover my deductible if I ever need it to.
Now, yes, but before your HSA was that full, you could be on the hook for a large deductible if something went wrong. Regardless of whether "traditional" insurance is a sensible economic model, staring that deductible in the face before your HSA can cover it is a large incentive for some people to stay with coverage that's a little more comprehensive.
This is true, but this guy is paying $1000 month in health insurance. The savings would fully cover my deductible in 5 months (assuming such a plan is available in NY). There's no question it would be worth taking the risk, especially because if I truly couldn't afford to pay the deductible and something happened, most hospitals would let me enter into a payment plan and cut the payment.
I moved out of NYC to a more affordable state for this very reason. In 2009 my health care costs and rent were nearly all of my take-home pay. I had a kid on the way and it was going to be even worse, so I moved.
Now my healthcare costs, while still significant, fell by 50%. I also rent a 3-bedroom house for about half as much as I paid for rent on a 1-room apartment. With those savings, I can afford to fly back to NYC when I need to as often as I like.
(FWIW, I now live in Nashville. I also don't have to fool around with NY+NYC income taxes, which are also significant - plus their nice little 'unincorporated business tax' just for freelancers like myself.)
Move to San Francisco. While working on your startup you can be eligible for Health SF http://www.healthysanfrancisco.org/ -- basically free health insurance from the city.
It's not that good. Just for starters, coverage stops at the edge of the city. Break your leg skiing in Tahoe and you're out of luck.
Capital can solve the health care problem, along with many others.
Health insurance has become much less of an issue for startup founders, provided you are under 26 and your parents have healthcare.
That's one thing that will make it much easier for me to found.
That's one thing that will make it much easier for me to found.
$1000/month in nyc? This is for family right?
Could you tell what a new single startup founder should do to get health insurance in nyc? Thanks
Could you tell what a new single startup founder should do to get health insurance in nyc? Thanks
I'm paying for COBRA, and it's $540 a month. I could have opted to change providers when I quit my job to start up, but the other options I saw were only slightly cheaper and provided almost no coverage.
You should check out the Freelancers' Union, too (I wasn't eligible since they require that you haven't been employed full-time for the three months prior to joining.)
It's my understanding that part of why NY health insurance is so expensive is because we've had many of the regulations from the new health care bill (e.g., about discrimination based on preexisting conditions) here for many years and no individual mandate.
You should check out the Freelancers' Union, too (I wasn't eligible since they require that you haven't been employed full-time for the three months prior to joining.)
It's my understanding that part of why NY health insurance is so expensive is because we've had many of the regulations from the new health care bill (e.g., about discrimination based on preexisting conditions) here for many years and no individual mandate.
This is for myself and my spouse, both in our 30s, non smoking. We just switched from a plan that was $1100 a month and included everything to a plan that is $850/month but has higher copays, higher deductable, and does not cover her allergy medicine.
All I can suggest is to go to http://www.ehealthinsurance.com and shop around.
All I can suggest is to go to http://www.ehealthinsurance.com and shop around.
Well it looks like there's at last a place where Europe is ahead in the startup game.
What's your (and others') two cents on the following two provisions:
1. Small business tax credit (35% of healthcare premium is given as a tax credit) http://www.irs.gov/newsroom/article/0,,id=223666,00.html
2. Tax credit for individuals. http://www.healthcare.gov/foryou/healthy/index.html
I strongly suspect that neither of these will be available to any financially responsible adult, since my soundbite version of the healthcare bill was it was geared towards the poor (many other aid programs such as food stamps dont kick in until you deplete you assets to ridiculous levels like $2500 in TOTAL including your car).
1. Small business tax credit (35% of healthcare premium is given as a tax credit) http://www.irs.gov/newsroom/article/0,,id=223666,00.html
2. Tax credit for individuals. http://www.healthcare.gov/foryou/healthy/index.html
I strongly suspect that neither of these will be available to any financially responsible adult, since my soundbite version of the healthcare bill was it was geared towards the poor (many other aid programs such as food stamps dont kick in until you deplete you assets to ridiculous levels like $2500 in TOTAL including your car).
my soundbite version of the healthcare bill was it was geared towards the poor
That doesn't make sense. Many of the ACA's biggest provisions (establishing exchanges, banning pre-existing condition limitations, allowing 26 year olds to stay on their parents' healthcare) are not at all limited to poor folks. They're primarily useful to middle class and up folks.
That doesn't make sense. Many of the ACA's biggest provisions (establishing exchanges, banning pre-existing condition limitations, allowing 26 year olds to stay on their parents' healthcare) are not at all limited to poor folks. They're primarily useful to middle class and up folks.
Exchanges and ban on pre-existing conditions don't kick in until 2014. That's why I left them out. But I agree, I should have been more precise.
Allowing 26-yr old "children" to stay on parents' healthcare only makes sense if the children are poor. Hence I counted it as geared towards poor. But I can see your point of view too.
Allowing 26-yr old "children" to stay on parents' healthcare only makes sense if the children are poor. Hence I counted it as geared towards poor. But I can see your point of view too.
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” -- F. A. Hayek
The best thing that the US government could do to help start-ups (and other American businesses, for that matter) is to stop trying to help and get out of the way.
Everyone is influenced by incentives. The primary incentive of politicians is to get re-elected and the primary incentive of government bureaucrats is to protect their jobs and increase their power. This is natural and does not make either group evil; they are simply trying to do what's best for them. However, there's very overlap between these incentives and those which promote wise economic policies.
Even if we assume a selfless government guided only by some desire to do what is best for the economy, there is no reason to believe that government can wisely guide the anarchic and Darwinian process of market competition, and much reason to think that they can not.
For a profound analysis of the underlying knowledge aggregation problem which dooms attempts to guide the economy, see Hayek's "The Use of Knowledge in Society" (http://www.econlib.org/library/Essays/hykKnw1.html).
The best thing that the US government could do to help start-ups (and other American businesses, for that matter) is to stop trying to help and get out of the way.
Everyone is influenced by incentives. The primary incentive of politicians is to get re-elected and the primary incentive of government bureaucrats is to protect their jobs and increase their power. This is natural and does not make either group evil; they are simply trying to do what's best for them. However, there's very overlap between these incentives and those which promote wise economic policies.
Even if we assume a selfless government guided only by some desire to do what is best for the economy, there is no reason to believe that government can wisely guide the anarchic and Darwinian process of market competition, and much reason to think that they can not.
For a profound analysis of the underlying knowledge aggregation problem which dooms attempts to guide the economy, see Hayek's "The Use of Knowledge in Society" (http://www.econlib.org/library/Essays/hykKnw1.html).
I look on government programs to help startups with cynicism for exactly this reason ... the guys who put things like that together often have little idea what the guy on the frontlines is dealing with.
Personally ... if Obama announced that Startups would only pay 10% in taxes (or something like that) for x amount of years and gave us access to (heavily discounted healthcare plans) ... I'd be content.
As it is currently structured, Startup America doesn't factor into my life one bit ... and I'm working on a startup.
Personally ... if Obama announced that Startups would only pay 10% in taxes (or something like that) for x amount of years and gave us access to (heavily discounted healthcare plans) ... I'd be content.
As it is currently structured, Startup America doesn't factor into my life one bit ... and I'm working on a startup.
SBJA pretty much does this -- accelerated expensing AND 0% capital gains if you hold for 5 years. I think they've done a bad job marketing it, but it's amazing.
All they need to do to encourage some kinds ("scalable") startup activity is to get out of the way. For supporting random small business startup, I think enhanced loan packages, education, etc. can help -- maybe partner with organizations like SCORE. I'd also like to see "start your own business" assistance for separated military personnel.
All they need to do to encourage some kinds ("scalable") startup activity is to get out of the way. For supporting random small business startup, I think enhanced loan packages, education, etc. can help -- maybe partner with organizations like SCORE. I'd also like to see "start your own business" assistance for separated military personnel.
I've read several articles about Startup America, and I still don't know exactly what it is or how I can use it.
I've searched their website high and low, and I can't find how either.
One example I ran into is "techstar network" hosted by techstar (http://www.techstars.org/network/) which is a partnership program of Startup America. It is still a little bit vague. But my understanding is that the startup America is a loosely connected network of orgs each working on its own ways to nuture entrepreneurship in US.
"public/private initiative" == "crony capitalism"
The biggest fear people should have is that in order to promote that they're doing a good job, funding will be made available to non-viable companies. You know the type, the kind that didn't pivot, poke, prod, or explore the marketplace in a way to ever become profitable.
What? A government program that encourages malinvestment?
Say it Isn't So!
Say it Isn't So!
Whilst Steve Blank's cynicism about this programme may well be very valid I don't understand why he wrote this post.
I can understand the frustration of a disempowering mandate but it's guaranteed that nothing will change if people like Blank do not inject their influence.
I feel he should have either accepted the role and made what difference he could or not done so and kept quiet. Rejecting the CEO role and badmouthing the project from his own soapbox seems churlish.
I can understand the frustration of a disempowering mandate but it's guaranteed that nothing will change if people like Blank do not inject their influence.
I feel he should have either accepted the role and made what difference he could or not done so and kept quiet. Rejecting the CEO role and badmouthing the project from his own soapbox seems churlish.
I disagree.
Criticizing the government when it is implementing a program poorly and wasting OUR money, is an important part of democracy. Blank is performing a valuable public service: telling the people that our money is being wasted, and giving the government a suggestion on how they can improve their efforts.
Steve Blank has done his part. If the government ignores this (as you suggest they almost certainly will), they are failing to do their part. Steve Blank doesn't owe the government his leadership.
Criticizing the government when it is implementing a program poorly and wasting OUR money, is an important part of democracy. Blank is performing a valuable public service: telling the people that our money is being wasted, and giving the government a suggestion on how they can improve their efforts.
Steve Blank has done his part. If the government ignores this (as you suggest they almost certainly will), they are failing to do their part. Steve Blank doesn't owe the government his leadership.
Second this. Specifically he is pointing out that without the proper definition of a startup, this is merely lip-service that hits the right amount of buzz words for the media to regurgitate.
Why is he posting this? My guess, he genuinely cares to see entrepreneurship thrive in America and can't bare to see halfhearted attempts with hidden agendas.
My reaction was the opposite when I read his post. I thought it is pretty ballsy for someone like him to to go against the grain like this as he is likely speaking out against peers and colleagues. Status quo for Blank as he has written posts critical of VCs when deserved.
Why is he posting this? My guess, he genuinely cares to see entrepreneurship thrive in America and can't bare to see halfhearted attempts with hidden agendas.
My reaction was the opposite when I read his post. I thought it is pretty ballsy for someone like him to to go against the grain like this as he is likely speaking out against peers and colleagues. Status quo for Blank as he has written posts critical of VCs when deserved.
I think that's his point, though. The CEO of an organization that isn't even using the right terms to address a problem will have negligible influence on its outcome - he's arguing that the organization should be focused on smaller companies right from the get-go, and I agree with him.
...and as CEO he might have been able to do that
I get the impression that he didn't believe this to be the case, and as he actually knows a lot more about the organization and position from having been shown the opportunity, I guess I just trust his judgment that the approach is broken from the get-go.
Only Steve knows why he wrote this post so I can only speculate.
What I speculate is that he was trying to draw attention to the issue, for people who care about entrepreneurship, without actively going and trying to change it. He makes a very important point "there is no strategy" and in fact represents why many start-ups fail today. In a way I think he is saying "This start-up organization itself doesn't follow the guidelines that it's trying to promote". It's essentially like another model for a business school MBA, which arguably isn't always the absolute path to new company creation.
The only thing I think a government can do in this situation is to continue to provide a system for failure tolerance. This is America's greatest strength.
What I speculate is that he was trying to draw attention to the issue, for people who care about entrepreneurship, without actively going and trying to change it. He makes a very important point "there is no strategy" and in fact represents why many start-ups fail today. In a way I think he is saying "This start-up organization itself doesn't follow the guidelines that it's trying to promote". It's essentially like another model for a business school MBA, which arguably isn't always the absolute path to new company creation.
The only thing I think a government can do in this situation is to continue to provide a system for failure tolerance. This is America's greatest strength.
I disagree. I think he's right to be cynical and he has a right to speak out about it. I think the initiative has potential, but valid pushback at this stage is healthy.
Another big one that isn't getting attention: the tax hell that you find yourself in when you exercise your options.
It's absolutely insane that people must endure a tax bill based on paper gains that in many cases will not materialize.
It devalues options and therefore increases the cost of starting a company.
It's absolutely insane that people must endure a tax bill based on paper gains that in many cases will not materialize.
It devalues options and therefore increases the cost of starting a company.
I have trouble believing that anything that has Steve Case's leadership will be a failure.
The last thing startups need is help from the government.
Innovation is an iterative process involving understanding needs, what people will pay for and what technology can do.
It involves real risk for the innovator and ultimately the customer decides success.
Many things government does hide the true costs of some things and this leads to distortions and products and services that may work in the distorted environment, but won't sell abroad.
Truly successful products don't need "help" getting started, help that often stays in place for decades. All this sort of help does is bleed resources away from things that just might be viable if non-viable technologies had to compete on a level playing field.
For example, the electric car. Can't make it on its own without lots of subsidies. Its too early. Someday batteries will be there and it will win, but its a waste of resources now to put it on life support.
If government decides who gets investment, entrepreneurs will be replaced by lobbyists. I can't see how thats good for America.
Innovation is an iterative process involving understanding needs, what people will pay for and what technology can do.
It involves real risk for the innovator and ultimately the customer decides success.
Many things government does hide the true costs of some things and this leads to distortions and products and services that may work in the distorted environment, but won't sell abroad.
Truly successful products don't need "help" getting started, help that often stays in place for decades. All this sort of help does is bleed resources away from things that just might be viable if non-viable technologies had to compete on a level playing field.
For example, the electric car. Can't make it on its own without lots of subsidies. Its too early. Someday batteries will be there and it will win, but its a waste of resources now to put it on life support.
If government decides who gets investment, entrepreneurs will be replaced by lobbyists. I can't see how thats good for America.
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I love Steve Blank, because he is a sincere, no bullshit and no hype guy. There is anybody like him?
I don't like the general entrepreneurship mantra, feel like lemmings jumping from the mountain.
I don't like the general entrepreneurship mantra, feel like lemmings jumping from the mountain.
I am interested in hearing more about these four types of entrepreneurship and analysis on each.
Steve Blank has a lot of blog posts about entrepreneurship and the different types - searching through his old posts would turn up good info. I also recommend reading his blog from the beginning. It's a great read, not too long (a longish book, total), and covers a lot of ground about entrepreneurship.
he details all this stuff in his "4 steps to the epiphany" book. It's very popular around these parts.
For example, I'd put "access to affordable health care" above "access to capital" as a barrier to getting a small business or startup off the ground. 10 years ago I paid $75/month for comprehensive health care, today I pay about $1000/month for bare bones coverage. I can't even think about expanding with those costs. (For anyone wondering, this is in the NYC area).
I think it's time to stop talking startups being "Ramen profitable". My cofounder and I are stuck in our consulting day jobs until our startup becomes "health care" profitable.