Twitter and idleness

In preparation for my trip to the East Coast next week (I'll be speaking at the Thomson Reuters Online Financial Services Symposium in New York City, and then at the 2014 Angel Capital Association Summit in Washington DC; details in this post from earlier this week), I'm reading Charles Simic's beautiful little volume about Joseph Cornell.

9781590174869_jpg_200x450_q85It's a series of prose poems, I guess you could say, about Cornell's art, but really about Cornell's daily habits, wandering around New York City. Reading Simic interpreting Cornell as an existential presence, you really track how living within the circumference of New York was more than sufficient for Cornell's artistic and reflective life. The outside world reached in through pictures, objects, references, stuff that travelled into the city - like minerals from other planets - and were lost there, for Cornell to find and curate.

Simic picks up on how a life of calculated idleness can engender emotions of the rawest authenticity and, through that meditation and suffering, art of the purest conceptual order.

And somehow all this makes me think of Twitter. (Twitter as proxy for social media, I think.)

My friend Joe Wallin joked some years back that exposing oneself on Twitter and/or social media generally was "a cry for help." I think he was joking, but I appreciate the point and it had a certain ring of accuracy back then.

Not now. Those who may have once been craving attention now want to slice through the noise to get you to buy something, or buy into them.

To use Twitter now other than to promote or advertise is to use it idly, for no real purpose.* Which raises the possibility: is there a Joseph Cornell-like art that can be tweeted to?

But is the idleness of using Twitter (not for PR, and thus, necessarily, by my measure anyway, to use it without direct purpose) analogous to the idleness of wandering around the streets and towers and theaters and basements of New York? Does it, might it, yield discovery, or nurture attitude that might pressure those discoveries into diamonds?

Or is Twitter more like watching cable TV?

It may depend on who you follow in your tweet stream.

*Maybe that's not true; maybe some people have relationships with others that are mediated at just the right equipoise of intimacy and distance through Twitter. I suppose I am necessarily talking about how Twitter seems to function or present possibilities to to me.

2014 ACA Summit Coming Up!

Next week, I will be joining more than 700 of my colleagues at the largest gathering of angel investors in the world. I have been invited to present at this conference session: The New SEC Regulations - Practical Interpretation and Guidance for Angel Group Management Activities.

2014 Summit MastheadThe session I'm participating in will be chaired by Mike Eckert, ACA Policy Chair and of the NO/LA Angel Network, and my fellow panelists will be Peter Rosenblum of Foley Hoag, and Robert Rosenblum of K&L Gates.

Here's a description, from the conference agenda, of what Mike, Peter, Rob and I will cover;

'Leaders of angel groups continue to deal with confusion, uncertainty and misunderstanding as related to the recently passed SEC regulations about General Solicitation. The questions ”what should my group be doing or not be doing?”, “which rule is effective and when did it become effective?”, “which is not effective?”, “what kind of guidance should my group be providing to entrepreneurs, startups, accelerators/incubators, colleges and universities about General Solicitation and Reg D/Form D?”, “what is and what is not General Solicitation?”, “has anything really changed?”, and “how do I protect my group, its members and the companies presenting to it?” are pervasive. The objective of this session is to provide further guidance and where possible clarity such that ACA members and member groups can make continued informed decisions about these issues in their day-to-day real-world activities, and be key sources of knowledge about these in their respective markets.'

If you’re not already attending the ACA Summit March 26-28th in Washington DC, I invite you to learn more about it at www.angelcapitalassociation.org/2014summit.

Further thoughts about the public disclosure requirements in the Washington State crowdfunding bill

As we mentioned last time, the Washington State crowdfunding bill (which seems to be making its way to the Governor for signing; looks like the House has signed off on the bill as amended by the Senate, so, both chambers have now approved the identical bill) has a requirement that companies relying on the exemption must make public disclosure of their executive and director compensation, and other financial information.

Here's what the bill says:

"For as long as securities issued under the exemption provided by this section are outstanding, the issuer shall provide a quarterly report to the issuer's shareholders and the director by making such report publicly accessible, free of charge, at the issuer's internet web site address within forty-five days of the end of each fiscal quarter. The report must contain the following information: (a) Executive officer and director compensation, including specifically the cash compensation earned by the executive officers and directors since the previous report and on an annual basis, and any bonuses or other compensation, including stock options or other rights to receive equity securities of the issuer or any affiliate of the issuer, received by them; and (b) A brief analysis by management of the issuer of the business operations and financial condition of the issuer."

My initial reaction was, this disclosure requirement would make the exemption less useful for tech startups. The information to be disclosed would become increasingly sensitive over time, and public disclosure would hurt the companies competitively. Or, alternatively, the disclosure requirement would push companies to issue securities that would evaporate overtime (say, a revenue loan, or a series of stock with call rights in the company's favor).

Now I'm having another thought: maybe if the money is being raised from unsophisticated investors, or from a group of investors, no one of which has a big enough steak to lead (and negotiate a board position, protective covenants, etc.), maybe the very public disclosure requirement serves as a kind of rough proxy for investor accountability.

What board is going to vote itself excessive compensation, even if it is a group of insiders, when all the figures have to be posted publicly every quarter?

Much more to digest, for sure.

Joe Wallin, Jonny Sandlund and I intend to have a Spreecast this Friday about the Washington bill. Shooting for 11:30 AM Pacific time.

Further thoughts about the public disclosure requirements in the Washington State crowdfunding bill

Looking under the hood at the Washington State crowdfunding bill

A Washington State crowdfunding exemption is not yet a law, but substantially identical versions of a crowdfunding bill have now been passed by both houses of the Washington State legislature. So it's a good time to have a look at what the Washington State legislators have come up with.

6a01156e3d83cb970c017d3c5361f7970c-800wiWe're looking here at the bill as amended on the floor of the Senate and passed by that chamber on March 7. (I should say, we're looking as best as I can tell at the bill in its most active form. If 'm reading the official bill history report correctly, the bill as amended by the Senate should now return to the House for consideration.)

One great thing about it is that no portal is required. Portals are optional.

Now, don't misunderstand me; crowdfunding portals are good things, in the area of accredited crowdfunding, particularly, I think. But one of the main ways the federal crowdfunding bill lost its way - forfeited most of the strengths of the original Rep. Patrick McHenry bill that passed the US House of Representatives with such huge bipartisan support and had the support of the White House - was when the Senate added a requirement that a portal must be used.

The Washington bill otherwise copies key parameters of the federal statute:

  • $1,000,000 annual limit, per issuer;
  • same (confusing) per-investor limits (whatever; just say the limit is $2,000 and call it good);
  • escrow of proceeds until a stated target is hit.

But no requirement for audited financials, no new theories of personal liability for directors and officers, no (oxymoronic) ban on advertising, or any of the other show-stoppers in Title III of the JOBS Act.

All in all, I think the bill makes the grade and, if passed and signed by the Governor in its current form - and if not later undermined by administrative rulemaking - it will meet the criteria I set out last summer in testimony before a Washington State legislative committee.

Of course, the Washington crowdfunding exemption is boxed-in; it stops at the borders with Canada, Idaho, Oregon and the Pacific Ocean. Like all the other state crowdfunding exemptions, on the books or in the works, the potential viability of the Washington bill depends on the federal intrastate offering exemption.

The most surprising thing to me is that advocates for the Washington State crowdfunding exemption - indeed, more to the point, the state legislators themselves - doubled down on the utility of the exemption in helping tech startups. Here's a quote from the bill's preamble:

"Helping new businesses access equity crowdfunding within certain boundaries will democratize venture capital and facilitate investment by Washington residents in Washington start-ups while protecting consumers and investors."

Emphasis added. This is more of a tech startup perspective than we've seen in connection with, say, the equity crowdfunding advocacy efforts in North Carolina or Wisconsin. It may speak in part to the widespread perception in Seattle that venture capital financing in the state is too hard to secure, the ranks of venture capital firms here too thin. (Personally, I believe there is plenty of seed financing available in the Seattle area, though agree that it is true that emerging companies typically have to go out of state for VC financing.)

I'm troubled, however, by the bill's requirement of potentially perpetual public disclosure of competitive business information. The following is from Section 3(3) of the bill:

"For as long as securities issued under the exemption provided by this section are outstanding, the issuer shall provide a quarterly report to the issuer's shareholders and the director by making such report publicly accessible, free of charge, at the issuer's internet web site address within forty-five days of the end of each fiscal quarter. The report must contain the following information: (a) Executive officer and director compensation, including specifically the cash compensation earned by the executive officers and directors since the previous report and on an annual basis, and any bonuses or other compensation, including stock options or other rights to receive equity securities of the issuer or any affiliate of the issuer, received by them; and (b) A brief analysis by management of the issuer of the business operations and financial condition of the issuer."

Emphasis added. That aspect of the bill, unless changed, will compel equity crowdfunders in Washington State to figure out how to sunset or buy-out their crowdfunding investors. You'll want to choose a revenue loan or other kind of security that can be bought out or redeemed. One of the benefits of being a private company is that you don't tell your competitors what you pay your management, don't tell them how much revenue you have, etc. It's a bit crazy to think you'll be putting such stuff on the open web every quarter. (Folks involved in the drafting of Section 6 of the bill: is there something there to narrow the scope of Section 3(3)?)

Photo: US National Archives / Flickr.

Crunch time for the Washington State crowdfunding bill

Got an urgent message this morning from my friend Joe Wallin, who is a leader in the effort to get a state crowdfunding exemption passed into law in Washington State. (As regular readers know, a few states already have legislative or regulatory crowdfunding exemptions, and other states are considering them).

WAflag

Here's Joes message:

#HB2023, the Washington Jobs Act, is on the Senate calendar, but it either gets put to a vote today, Friday, March 7th, or starts from scratch next year.

You can help. Today, please call the following four Senator’s offices, and ask them to please bring this bill to a vote today by 5 p.m. 

Joe Fain - (360) 786-7692

Andy Hill - (360) 786-7672

Steve Litzow - (360) 786-7641

Rodney Tom - (360) 786-7694

Friday is the last day when the Senate can vote on this bill. It passed unanimously out of the House committee, and again unanimously out of the Senate committee. It has bipartisan support.

We just need the bill brought to the Senate floor for a vote. Thank you.

Obviously this appeal is to those who live in Washington State, but I don't see why supporters of the state-by-state crowdfunding movement couldn't lob in calls as well, to impress upon the state legislators here that they could be part of a positive, national trend.

Fossils, science and commerce

Really good article in the Herald Business Journal of Everett this week about my friend Matt Heaton's passion for fossils and his business selling fossils through an online store.

CaptureThe article is by Jim Davis and gets into the tension that can exist between the scientific community and commercial fossil dealers.

Disclosure: I am in investor in FossilEra and a huge fan of Matt. Matt is not only a fossil hunter but he knows how to build online communities.

Support Washington State Crowdfunding

Guest Post from @joewallin

If you live in Washington State and want to support crowdfunding in Washington State, now is the time to email your Washington State Senator and ask that they support HB 2023. 

You can find all of the State Senators' emails at this web address

Please send your Senator an email urging them to pass HB 2023, which would authorize crowdfunding in Washington State.

An example email might be: 

Re: Please Pass HB 2032

Dear Senator, 

I am a member of Washington's entrepreneurial community. Please support HB 2032, which would authorize crowdfunding in Washington State. The bill is the product of over a year's work between the Washington Department of Financial Institutions, entrepreneurs, securities lawyers, and other stakeholders. It enjoys broad bipartisan support. It passed 89-9 out of the House, and unanimously out of the Senate policy committee.

Please vote yes and help entrepreneurs from all over Washington State. Thank you! 

Please help.