Posts from Politics

Changing Public Perception

Nuclear power (both fission and fusion) has the potential to provide much of the energy the world needs without the damaging effects of carbon emissions which are warming our planet.

And yet nuclear power is politically unpopular in many parts of the world and that has led to a massive underinvestment in nuclear power over the last fifty years. It will take a much different attitude about nuclear power among the public before nuclear power can remerge as a major source of energy for the world.

That is but one example of very promising technologies that suffer from negative public opinion.

Web3, which will usher in a different way of engaging with web services also suffers from a negative public perception. And yet a web3 that allows users to control their data with web services that will need our permission to use it offers a radically better model for the web as we know it.

Vaccines, which are one of the most important public health innovations of the last hundred years also suffer from negative public perception. Way too many people don’t trust vaccines and don’t avail themselves of them.

So what can those of us in the business of creating and bringing these important technologies to market do to reverse these negative opinions?

I believe that getting these technologies into market and showing people their benefits is the very best thing we can do.

For nuclear, that means smaller, safer, and more “personal” nuclear power. There are pacemakers that have nuclear batteries in them. Why not put way more nuclear powered devices into our lives and show that the benefits massively outweigh the risks?

For web3, that means shipping applications that mainstream users will use and see the benefits of controlling and provisioning their data. I think gaming and social applications are likely to be the first mainstream web3 applications because not everyone is a trader or investor. Mainstream means our parents and our children.

For vaccines, it means better and more effective vaccines. It means easier delivery (like nasal sprays). And it means less side effects. It’s hard to be enthusiastic about a wellness benefit that makes you feel like shit for a day or two.

All of these industries have large public policy organizations and spend lots of money on changing public perception. I’m absolutely in favor of that.

But there is nothing better than putting amazing technology in the hands of ordinary people and changing their lives for the better. That moves public perception more powerfully than anything else.

#climate crisis#crypto#health care#Politics

The Gillibrand Lummis Bill

New York Senator Gillibrand and Wyoming Senator Lummis have teamed up to propose a bi-partisan bill that would shift much of the regulatory oversight of crypto assets from the SEC to the CFTC, acknowledging that these tokens are much more like commodities than securities.

The details of the bill will be made public today and then there will be a lot of feedback from elected officials, regulators, and industry. It is not certain that this bill will become law and if it does, it is not certain that it will look anything like the initial bill.

But even so, I am very encouraged by this development. Crypto tokens are a foundational element of web3, a technology architecture that allows for decentralized applications which lessen the control of big tech monopolies on our lives and our data, and that allows for users to own their data and a share of the networks that the applications are built on. Constraining these user tokens as securities is not only incorrect but also would inhibit much of their utility and therefore the potential for web3 to remake the technology industry as is so desperately needed.

So I applaud the work of Senators Gillibrand and Lummis and their staffs. They are making an important statement with this bill and I believe that this is a big step in the right direction.

#crypto#policy#Politics#Web3

New Leadership At Tech:NYC

Six years ago this month Julie Samuels got together with a group of technology leaders in NYC and we decided to form an industry group for the growing tech sector in NYC. I agreed to co-chair the organization and have been in the chair role since then. We called it Tech:NYC and I first wrote about it here at AVC in March of 2016.

Last year, after more than five years at the helm, Julie decided it was time to pass the baton to a new leader and she and I and a group of board members spent the fall talking to lots of people and we found a fantastic new leader named Jason Clark. Jason starts as the Executive Director of Tech:NYC next week.

Jason takes over an organization of 800+ member companies, from the largest names in tech to the three-person startup you have yet to hear of. Tech:NYC has succeeded in getting tech “at the table” in Albany and City Hall and helping to make the tech sector more civic-minded and more integrated into the city and state. Julie and her team have done a tremendous job of taking an idea and making it a reality and I am incredibly grateful for her leadership.

The tech sector finds itself at an interesting moment in NYC. It is quickly becoming the largest employer in NYC and is bringing much-needed innovation to the city, state, and world. We have new leaders in Eric Adams and Kathy Hochul who are eager to work closely with the tech sector to do new things and move the region forward. But with great success comes great responsibility and the tech sector needs to employ a broader and more diverse group of NYers, it needs to be more civic-minded, it needs to be more philanthropic, and it needs to think beyond Manhattan out to the five boroughs and on to New York State and the NY Metropolitan region.

And Jason is the perfect leader to take Tech:NYC in those directions. Jason is a born and bred NYer, from southern Queens, a product of the NYC public schools, a lawyer who has started a law firm and worked in the Attorney General’s office in Harlem, and a former candidate for public office for the City Council seat in his home neighborhood in southeast Queens. Jason has the relationships, the lived experiences, and the mindset to lead NYC’s tech sector in the directions it must go as it becomes the leading industry and employer in the city and state.

I welcome Jason to Tech:NYC and look forward to working closely with him and the city and state leaders to step up to the opportunity that is in front of us. It is an exciting time.

Also, Jason is already on the hunt for a strong policy director with lots of tech experience. If you would like to fill that role or know someone great, please visit this job spec with instructions on how to get into the process.

#NYC#policy#Politics

IRAs and Wealth Creation

A couple of years ago, I wrote about buying crypto in an IRA. I went and did that with an old unused IRA that was sitting in cash and I have 8x’d the value of that IRA in the last 18 months. While my family is fortunate that we don’t have to rely on our IRAs to generate wealth like this, many folks do.

Tens of millions of people in the US rely on IRAs to save money tax-free for their retirement. There is $13 Trillion invested in IRAs and only 30,000 of those accounts have more than $5mm in them. IRAs are the retirement accounts for main street, not wall street.

And yet, the House Ways and Means Committee is now suggesting eliminating the ability of these IRA holders to invest their IRAs in the highest returning assets available; VC funds, private equity, and private companies (page 689, section 138312). I am sure they are proposing this to prevent wealthy people like me from using the tax shield of the IRA to invest in private businesses. But there are better ways to do that than a blanket prohibition.

A blanket prohibition will hurt main street, not wall street. We already limit what folks who aren’t wealthy can invest in by virtue of a multitude of regulations. It upsets me to no end that this paternalistic approach keeps the wealthy making lots of money and everyone else on the sidelines. I have railed about this set of issues here at AVC since I started blogging almost twenty years ago now.

What we should do instead is limit the tax advantages of an IRA to a set amount of money, something like single-digit millions. That will limit their attractiveness as a tax shield for millionaires but maintain them as a wealth generator for everyone else.

Please tell your elected officials in Washington that Section 138312 of the Reconciliation Bill must go. It hurts main street, not wall street, and is bad policy.

#policy#Politics

Crypto and the Infrastructure Bill

I mentioned the infrastructure bill here last week. I continue to be impressed by the way Senators and the White House are working across the aisle to get a very big piece of legislation across the finish line. It is not done, but it sure looks like it will get done.

As I mentioned in the post last week, there is language in the initial draft of the bill requiring crypto “brokers” to report gains and losses to the IRS. The Treasury expects this provision to produce upwards of $30bn in new tax revenues over the next ten years.

I personally have no issue with crypto gains and losses being treated the same as stock gains and losses and we have been doing that at USV for quite a while now. But I do have concerns that the way “brokers” are defined in the context of crypto is very different than how it is defined in the traditional financial sector. The language in the initial draft is overly broad, infringing on privacy, and technically unworkable. Crypto industry participants like miners, wallets, smart contracts, and other kinds of hardware and software cannot carry the same obligations as “brokers” like Coinbase and Square Cash.

But here is the good news. The crypto sector has come together to get the language changed in a way that I have never seen before. Everyone in crypto is working together, staying on message, working all of the avenues, and creating the appropriate amount of pressure on the process. And while we do not yet have the language we need, we are getting there and I am hopeful that we will land in a good place.

It is also the case that when a government decides that a sector is an important producer of revenues, that is a sign that it has arrived. Many out there think these new regulations are bad for crypto but I think they are a bullish sign. Crypto is here to stay and is a mainstream industry now.

For these reasons, I think this is a watershed moment for crypto in the US. The industry has come together like never before and is acting in concert, professionally and productively. It is on message and effective. And the government is getting in business with the crypto sector to finance it’s own needs. That sounds like a win to me.

#blockchain#crypto#policy#Politics#Uncategorized

The Lost Art Of Compromise

I am heartened to see both sides of the political aisle in the US came together yesterday to agree to move forward on a $1 Trillion Infrastructure Bill.

There are parts of the bill that I don’t like (asking blockchain smart contracts to send 1099s to the IRS seems nuts to me) and parts that were taken out that I think are critical (like building a nationwide EV charging network).

But perfect is the enemy of the good. We have not had a functioning legislative branch at the federal level in the US in a long time. I am hopeful that a bipartisan victory on infrastructure will pave the way towards other bipartisan efforts and the right and left will start talking to each other, respecting each other, and governing again.

I have spent my adult career making deals with people. I have learned that you can never get exactly what you want when you make deals. You must compromise so that both sides can feel that they won. And when you do that, there are many times when both sides do win. If you choose to sit on the sidelines, you almost always lose.

I am happy to see that our elected officials in Washington have decided to get back into the game again.

#Current Affairs#policy#Politics

Taxing Airbnb Stays In NYS and NYC

I guess the theme of this week is taxes. But today’s post is about something completely different. A Company wants to collect and remit taxes to NYS and NYC and lawmakers don’t want the money. I’ve written about this sad tale before but the story continues.

Back in February, NYS Governor Cuomo put a provision into the NYS budget that would allow/require Airbnb to collect NYS and NYC applicable taxes when Airbnb hosts collect revenues from their tenants.

If NYS and NYC were able to fully collect taxes on these Airbnb stays, it is estimated that a total of $130mm would be generated in new revenues; $75mm to NYC, $45mm to NYS, and about $10mm to various other counties in NYS.

Given that the NYS State Legislature wants to raise around $7bn in new tax revenues in this budget session, you would think tapping into this source of tax revenues would be a slam dunk.

But no. NYS legislators who are friends to the hotel industry and sworn enemies of Airbnb have pushed for the removal of this provision and it is likely to be out of the final budget.

It is time for everyone to grow up, recognize that Airbnb is never going away, treat them like the important service provider (to hosts and guests) that they are, and tax this process appropriately. I encourage NYS legislators to do that in this current session. The budget issues are too important to play silly politics anymore.

#NYC#policy#Politics

Capital Gains, Carried Interest, and Ordinary Income

Most of our family’s income comes in the form of capital gains. And most of that comes in the form of carried interest on capital gains. Carried interest means the share of the profits that the managers of VC funds get (and PE funds and Hedge funds too).

For many years, there have been attempts to tax carried interest as ordinary income and those efforts have been fought tenaciously and successfully by the VC, PE, and Hedge Fund industries.

As far back as 2007, before USV had paid any carried interest to me, I wrote on this blog that I did not believe that carried interest deserved capital gains treatment and that, in my view, it was a fee and should be taxed as ordinary income.

I re-asserted that view in 2010, just as USV started to pay carry to me and my partners. My partner Albert also stated his views on the topic that same year.

But after thinking long and hard about this topic over the years, I have come to a slightly different and simpler perspective, one that I wrote about on labor day last year.

I think it would be better policy to lower the income tax rate and raise the capital gains rate to something like 20% so that all income is taxed equally no matter how it is achieved and so they the net impact on revenues is neutral.

https://avc.com/2020/09/honoring-labor/

If we taxed all income at the same rate, regardless of how it was earned, then we would not need to worry about the carried interest loophole and all other loopholes. We would have a simpler and fairer tax code.

I have read that Yellen and Biden are thinking of making some changes to the tax code to increase capital gains rates. I am fine with that. But I think they ought to lower rates on ordinary income at the same time. Get everyone on the same rate. That’s the winning move in my view.

#policy#Politics

Funding Friday: The NYC Mayoral Race

In less than four months, the Democratic Primary will effectively choose the next mayor of NYC. For those of us who live here, this will be a very important choice. Though the race is partially funded by NYC through matching of small donations below $250, the candidates need more funds to get out their message, connect with voters, and help us make the best choice we can.

If there are candidates you like and want to support, here are some links to the donation pages of the most popular candidates. The Gotham Gal and I have financially supported most of these campaigns.

Andrew Yang

Maya Wiley

Eric Adams

Kathryn Garcia

Shaun Donovan

Ray McGuire

Scott Stringer

Dianne Morales

If you live in NYC and have the means to support the political process, I encourage you to do so and get behind some of these candidates.

#NYC#Politics

What Problem Are We Trying To Solve?

Pro-Publica has an excellent interview with Jeff Kosseff, the author of The Twenty-Six Words That Created the Internet, a book about Section 230 of the Communications Decency Act.

Those 26 words are:

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

In the Pro-Publica interview, Jeff makes a fantastic point:

I think it’s possible to reform Section 230. But there are a few barriers. First, we haven’t agreed on what the problem is. There are very different conceptions of what is wrong. Half of Washington thinks that there should be more moderation and that the platforms should be more restrictive. The other half thinks that the platforms need to be less restrictive, and in many cases say they shouldn’t do any moderation at all.

Also there’s this: If you’re saying that there should be more moderation and less harmful content, the big problem with that is that we still have the First Amendment.

With elected officials all clamoring to enact Section 230 reform, we are in for a mess if we don’t start with the problem we are trying to solve. I have not yet heard any elected official or staffer clearly articulate what exactly they want to achieve with Section 230 reform, except to earn political points with people who don’t actually understand the issue very well, like the New York Times.

This point, again made my Jeff, expresses my personal fears about Section 230 reform:

Both sides are to a certain extent under the illusion if you got rid of Section 230, that would magically fix all of their problems.

I worry that the compromise is going to be this jumbled-together mess of a bill that does not make any sense.

In my view Section 230 is sort of like what Winston Churchill said about democracy:

Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…

Section 230 is certainly problematic in many ways. But when you sit down and really think about alternatives, it becomes clear that it is better than any alternatives that have been suggested.

#policy#Politics