Safe Harbors

A person we are working with on Net Neutrality policy wrote this email to me recently and I answered it as follows:

The Email Question:

Many people in D.C. understand that start-ups without significant outside funding won’t be able to pay those fees and won’t be competitive. However, most people think that if a company is able to get venture capital, then it can use the VC funds to pay these fees.

Fred’s post suggests that VCs won’t invest if they fear that the start-up will have to compete with established companies that can pay these fees. Can you help me understand what exactly the problem is? In other words, why can’t VCs simply pay for the access fees and thereby make the application competitive with established companies that can pay? Why would they choose not to invest instead?


My Reply:

the problem, in a nutshell, has to do with how much capital you have to invest upfront to find out if the product or service the startup has created is going to work as a business

on today’s internet, there are no gatekeepers to pay so you can put something on the web or in the app stores for almost nothing and then see if they can get to a million users or more
if they can do that, then you can invest the tens of millions you need to build a real business
this process of trial and error happens over and over again and is the essence of the internet and mobile startup and VC business
one of the reasons, for example, you see so few music startups is that those startups have to negotiate huge upfront payments to the music industry in order to even launch a service. no entrepreneur or investor would invest millions up front when the likelihood is 90% or greater that it will be a failure. so the entrepreneurs either launch without licenses and risk getting sued or they don’t even try
that is what will happen in high bandwidth content apps if this FCC rulemaking goes in the direction we fear it will go
The answer to this quandry is “safe harbors”. I argue for them all over the place. In content licensing. In telecom policy. In banking policy. If we had a general bias in our society to let early stage startups try things and see if they work before we worry about compliance we would see a lot more innovation.

Comments (Archived):

  1. jason wright

    regarding fees, only pay if the start up reaches a set threshold of success. not easy to calculate, but in principle it offsets the investment risk. it would be a framework to innovate from within.

  2. JimHirshfield

    Big corps and big money don’t want to make it easy for competitors to each their lunch. Obviously you know this. The challenge is overcoming the forces in play.

    1. jason wright

      isn’t Clayton Christensen’s thesis that companies failing to innovate fail? it seems that incumbents make use of their political power to corrupt this ‘natural’ (Darwinian?) economic dynamic.

      1. JimHirshfield

        For sure.

        1. pointsnfigures

          “regulated oligarchy” or “regulated monopsony” ought to become a term people are familiar with.

      2. SubstrateUndertow

        But many “almost too-big-to-fail” entities can do a lot of very messy foot dragging in the process!

      3. LE

        Companies also don’t innovate because it’s quite dangerous to try and fix something that isn’t broken and working.From an academics point of view though, I can definitely see how it would appear from the outside to be a case of failing to innovate. And there are example of this that can be given in books and lectures. (Remembering also when Tom Peters was the toast of the town with his theories and best selling books).But in the real world in business (which I assume Clayton has never operated in, he has only observed, in all due respect as they say) it’s not an easy thing or a safe thing to do in many cases. This is separate from people being lazy and complacent of course.Anyway, not being an expert on the current academia surrounding this I wonder if a rigorous study has ever been done on companies that actually tried to innovate but ended up failing and going out of business. My guess is that it doesn’t exist.

      4. ShanaC

        yes, but it isn’t a 100% proven thesis. And it is natural to using this political power in a darwinian sense(filling and adapting to an ecological niche)

  3. Julien

    The question also probably misunderstand how the VC model works. VCs don’t finance *any* company (do they?) they finance the ones which have tractions… and how could they get traction if the cost of building anything is so high that it’e harder and harder to reach traction?Not enforcing net neutrality is, in practice adding a toll on innovation.

    1. jason wright

      maybe the funding round distinguishes one company from another in this regard.

    2. Richard

      We name the web the information “highway” and expect not to pay tolls? If only we named it an information “Freeway”.

      1. kidmercury

        no worries. google maps shows us a toll free route; google servers will pay the toll for us, and thus also show us a toll free route.

    3. kidmercury

      build on AWS or google, and they’ll foot the bill for the fast lane for you. half the companies were going to build on AWS or google anyway. this issue is way overblown.

      1. Julien

        And we make *their* monopolies even stronger? Monoculture on the web is the real problem. It’s already very very problematic (check Heartbleed). Abandoning net neutrality will make things even worse and the web-diversity which is as important as bio-diversity will shrink even more.I still don’t understand *what problem* these fees would solve? (and no, AT&T or Verizon’s profits is not a problem). These companies have FAILED to innovate or even build a decent infrastructure in the US.

        1. kidmercury

          then perhaps we should create app neutrality, so that google, amazon, and fb cannot create apps in every niche and conquer them all. or OS neutrality, so that operating systems cannot open up app stores. ultimately, though, consumers choose an integrated experience time and time again. the more control companies get over the entire data transmission process, the better experience they can provide. just like how it is every marketer’s dream to close the loop as much as possible, because it enables them to create the best and most efficient experience utilizing a data-driven approach.the real problem is regulation by governments instead of by technology platforms.

          1. JLM

            .Nice to see you back on Earth. Earthlings everywhere have missed the Kid. How was Mars?JLM.

          2. kidmercury

            i’ve been chilling largely on unfortunately there aren’t too many comments there. fredland is overpopulated, is underpopulated. hopefully we can find a home that is just right!

      2. LE

        build on AWS or googleFuck that. You’re only joking, right?That’s exactly what we don’t need to happen. To have more things like this.

        1. kidmercury

          not joking at all. i see no significant problem with it.

  4. Robert Heiblim

    You are right Fred, innovation needs some air to breath (and to see if it really will work out). There is a path to do this while still offering protection to incumbents but what a fight. Aereo anyone?

  5. pointsnfigures

    Agree, but what would the lobbying be like to get into a safe harbor-and how big would a business have to be to get kicked out? Or, as a business, do I stay in the safe harbor because my costs of operation make the business unsustainable out of it? I like the unrealistic idea of scrapping the whole damn regulatory apparatus and letting the market figure it out.Think about how the future will be “networks not hierarchy”. Maybe there is something in that that will blow the regulators and big corps out of the water.

    1. JimHirshfield

      “…blow the regulators…”Now there’s a proposition I hadn’t thought of.

      1. pointsnfigures

        ha. they already have plenty of that.

      2. JLM

        .I’m going to report you to Disqus when it starts working.JLM.

        1. Fixqus

          “when it starts working.” Aahahaha! A man can dream, I guess.

    2. SubstrateUndertow

      “Think about how the future will be “networks not hierarchy”The future does not always embrace its possibilities !Just because modern networks offer up unbounded possibilities for new social/commercial topographies does not exclude the possibility that they will be politically dominated by hierarchical corporate structures.With respect, we have long standing traditions to defend here!

      1. pointsnfigures

        haha. And, in some cases vertical silos are most efficient. But, let us have the market decide who’s efficient and who’s not instead of regulators. Givt. picks winners and losers in almost every category.

        1. SubstrateUndertow

          Well of course , in the long run I agree with you !just saying that large deep pocketed corporate incumbents can also act as market regulators in the medium run.

  6. Sebastian Wain

    But the logic of the question is faulty. It assumes that every company should assign part of its resources to net neutrality and receive enough funding. This reduces the number of startups in the market. I can also imagine “net neutrality inflation” because of fierce competition for bandwidth.

  7. Lucky

    Fred,You talked about ease of entry with most internet start ups as they lacked a “gate keeper” do you foresee the government ever mandating that any data collected for a location based app as they becoming more and more prevalent to be forced to turn in all their data.

  8. Andrew Kennedy

    you did a great job articulating this at the BTC hearings in NYC. We need an onboard ramp to regulation. Just makes perfect sense.

    1. Richard

      Did you see the reaction from the regulator who chaired the meeting? He seemed that saying “dead on arrival”.

      1. Andrew Kennedy

        “I’d rather shut down 1,000 startups than let one money launderer get away. Do you know how horrible money laundering is?” or some such

  9. mark

    Safe harbours really don’t work that well. As an example of how safe harbours fail, consider the film industry. It is legal to use an amount of copyright material in films, however the rules on how much are grey simply because making them specific is next to impossible. Because of that, films that use copy right material often face difficulties obtaining funding because of the risk that they may be taken to court, even though they would likely win any action against them. This inability to define the safe harbour would equally effect startups. VC would be worried that their companies could be tied up in legal battles. The solution is to fight the regulation. It’s just wrong.

  10. Abdallah Al-Hakim

    I think the music example you provided Fred is a great one. I think everyone will agree that we don’t want the music model replicated for other internet based startups

  11. Marty Gottesman

    But does it make sense to transfer the risk to the content owners? The music industry’s response would be that you can’t steal a box of candy, give it away to people, and then only pay for it if enough people thought your new way of doing it was fun. The risk is better suited for the reward structure of vcs and entrepreneurs.Do you think there could be some restrictions or guarantees built into a safe harbor?

    1. Richard

      I never understood why the music industry just didn’t negotiate warrants in the startup in exchange for music rights?

      1. Salt Shaker

        The music industry would say “hit me” if dealt 21. They had this all sewn up and naively defaulted to others. Warrants certainly would have worked or even a Hulu type structure w/ multiple industry stakeholders.

  12. Mike

    Let’s say you are on a heart monitor at home that the hospital (or some latter day health monitoring service) is monitoring in real time. Your vital signs spike. You are having a heart attack. Seconds count. Should the health monitoring service be able to buy fast lane service? Should the responsibility be yours and your Affordable Care Act insurance company? Should you just hope there is no congestion in the last mile from your neighbor’s grandson playing a 3D video game online because all bits are created equal?

    1. pointsnfigures

      great point as we go to all kinds of in home monitoring. What about home safety devices while you are away? Water sensors in a basement?

      1. LE

        I think you are confusing no access with slow access for heavy data dependent things like, for example, movie streaming.All the examples given in the parent comment (and your comment) could be handled most certainly by a nominal connection.We are not talking about high frequency trading here.For the parent to say “Seconds count” shows a basic lack of understanding of what is being sent over the network and exactly the amount of bandwidth that it takes.When I first got into “this thing” back in the mid 90’s I had only a 256k line and did plenty of business and made money. With hardware that would be quite slow by today’s standards.Another thing I did was monitor those systems by fax (because at the start there was no broadband at home that came iirc about 1998.)Separately, burglar and fire alarms typically still run over POTS lines. The scramble time for the first responders is the bottleneck if you want to call it that.

        1. pointsnfigures

          not confusing anything. if they decide to restrict bandwidth, entrepreneurs will have to come up with another way. I was articulating what happened in HFT. They have a need for speed, and they keep investing in it. Perhaps the same will happen with broadband. What happens if someone decides to come up with a hyper fast private network using tech we can only imagine today? And they are able to charge for it-putting the ISP’s out of business.

          1. LE

            What happens if someone decides to come up with a hyper fast private network using tech we can only imagine today?There are two parts here.One is someone consuming content.The other is someone with content that needs to be delivered.Getting either of these parties on a “hyper fast private network” would require getting both parties on the same “hyper fast private network”. Not just one party or the other.This is a common misconception when someone buys high speed internet access.It doesn’t matter if you are JLM with 1 gig service in Austin Tx if the server you are getting something from on another part of the network is overtaxed either hardware wise or on their connection. You can only be as fast as the weakest link. (And in fact JLM was experiencing this on his own equipment in comments yesterday).As a niche what you are saying is possible. And they have that now you can buy a private line between your office in NYC and another office in SF and avoid the internet (and that could always be done but the cost has decreased).

  13. Joseph Zaccardi

    If these regulations were put in place, wouldn’t a firm be able to profit from acting as a middle-man to supply start-ups with fast lane access? Assuming there is some economies of scale, couldn’t middle-men essentially syndicate the purchase of fast lane access among a wide variety of start-ups, charge them less than they would pay on their own, and pay less for the access because of the aggregate size?I realize it is still inefficient and costly to society, but I know what kind of business I am starting if this becomes the norm.

    1. Richard

      Moreover, rates can vary depending on times of day. Bandwith is a lot like other perishable commodities.

    2. SubstrateUndertow

      Thus undermining the disruptive tour-de-force embodied by the internet revolution – disintermediation !A small price to pay for maintaining millennia of oligarchic tradition !

    3. scottythebody

      Gawd. Just what we need. More people selling stuff that is actually nothing 😉

    4. kidmercury

      google, amazon, apple, and fb will race to foot the bill.

  14. Richard

    I don’t see a safe harbor working. As a startup, with little traction, you are not likely to need it. If you are lucky enough to become viral, you probably do not qualify for it.

  15. JLM

    .DISQUS MISBEHAVING A BIT THIS MORNING.In many ways this is a discussion of “respect for innovation” as a job creator or other good outcome — one of which is also the creation of wealth.Ahh, the creation of wealth. A good thing. A very good thing. Nothing to be ashamed about. A truly radical idea these days but what the white men who created this country used to well…………..create the country.If you will indulge me for a second, let’s posit creating jobs is a good thing. No evidence of that at the White House as they have done absolutely nothing of a large governing philosophy manner to actually create jobs while every few months or years we hear: “Creating jobs is job #1.”The first ten or twenty times I heard that even I was excited — the “if you have an erection lasting for more than 4 hours” kind of excited. But, alas, I called my doctor and he told me to put an ice pack on it and voila, excitement gone. No jobs.The evidence for no jobs is pretty strong worse the actual job creation as it exists is more troubling than comforting — no Texas in the numbers, no net jobs. PERIODAs like to say in Texas: “If ya’ll like your job you can keep your job. PERIOD.” And, of course, we ain’t spoofing, ya’ll.We are apparently at a 30-50 year low in actual entrepreneurial activity. There is a report circulating saying just that.In that time frame, it speaks more to small business startups rather than tech startups but it is still entrepreneurs will to try to get past “no” in order to find their own way in the world. A man or woman who starts a landscape maintenance company is faced with the same regulatory burden as a tech startup. The same temptation to ignore it all and just do it.The same challenge to get to the pay window.And when they win, the same result — creation of a bit of wealth in the process with kids going to better schools and living a better life and a bit of “all right” thrown to the US economy, even a bit of trickle down affection for those who now pay obeisance to that new found wealth.On the other hand, not only no job creation, we are at all time high in increasing the regulatory burden on everything including sunlight. Regulate, tax sunlight before we all get burned and tanned.A pinch of regulation puts some order to things while a mountain of regulation buries us all in………………….regulation. The spice analogy — pinch of spice makes savory soup, handful makes crap.What we need to do is recognize that all of these policies are threads in a tapestry and when the regulatory threads are 3 inch ropes, the tapestry is not going to be soft, nimble and luxurious. It’s going to be heavy, rough, itchy and immovable.Know the current crop of gov’t anointed winners — those whose empires are literally protected by regulatory moats — are allies of the government. You can’t change them, so you HAVE to change the politicians.This is why when someone says a certain politician “has no practical or business experience” we need to listen and hire those guys for the outcomes.I am not a charter member of the BHO Fan Club but for reasons related to policy, outcomes and integrity. This is a perfect example of his needing a new set of advisers and water wings.Think big and advocate for the entire economy not just the latest scrape on YOUR knee. There is nothing wrong with thinking about jobs, the creation of wealth and the macro-economic outcomes while arguing for your favorite personal problem.We need to stop being ashamed of advocating for wealth, jobs and a strong economy.Thanks for listening.JLM.

    1. Guest

    2. sigmaalgebra

      This time I can make it shorter than you did: You’re talking about wealth creation, e.g., jobs. BHO, the chosen one, blessed be he, is talking about wealth ‘redistribution’. Proof: Remember what he said early in his first run for POTUS: “Spread the wealth around.”.You’re talking about the country. You seem to want the POTUS to be interested in the country. Maybe as if he were a patriot of the country. Okay, since we need to understand and don’t like to remember ugly things, I attach Exhibit 1:Is the situation more clear now?

      1. JLM

        .You look at this picture and you honestly wonder —where is this guy’s mind? It is particularly jarring given the stage prop behind him.JLM.

        1. sigmaalgebra

          > where is this guy’s mind?Such cautious objectivity. So discreet. Such refined decorum. Never before such circumlocution.> given the stage prop behind him.It was a political event. The Chosen One, Blessed Be He, Hillary, Richardson, were about to speak. The US National Anthem was being played.> where is this guy’s mind?He was (is?) one pissed off, angry … trying to embarrass, insult, humiliate the US.I’ve got three more JPGs where he is bowing down to the heads of each of Saudi Arabia, Japan, and France.But, apparently heavily due to the MSM, he got into office. Just why, and how, the MSM did that I don’t know. But, I now, essentially refuse to pay attention to the MSM.

  16. PhilipSugar

    You are debating the wrong item. People love to try and put the question so it is tough to answer.To me here is the question. I as a citizen through my elected officials have given the cable company, the phone company, the electric company, the water company, the gas company, the garbage company the right to serve me in a non competitive monopoly or duopoly.I agreed to this arrangement because it is not cost effective to have twenty people digging up my streets, putting in wiring, plumbing, etc.However, I demand for this right that I am served as a utility.I do not want to pay more for electricity because I am running super secret trading algorithms on my computer versus having my daughter leave the light on.I do not want to pay more for my water because I am crafting the best microbrew in the world versus my wife filling the claw foot tub.I refuse to pay more per bit because a cable or telco company views it as more profitable for the company that is serving me.Now if you want to cap my total bandwidth, limit my speed, etc, that is a discussion that we can have at the utility level. I don’t necessarily think every plan has to be “unlimited” because I don’t necessarily want to subsidize my bandwidth hogging neighbor

    1. JLM

      .I agree more with you than you do with yourself.Well played.JLM.

    2. Aaron Klein

      Impossible to put it any better.

    3. PhilipSugar

      I refine my answer a bit. The amount of gall that the ISP’s show in wanting to do this should cause complete outrage.Could you imagine if the water company installed meters and charged me more for the water that I used in my toilets because they deemed that as high value, and we all know toilets use a lot of water. I mean American Standard has a lot of money, why shouldn’t they be willing to pay so they can get their toilets filled up? We’re basing this on the ability of companies to pay.Frankly I think this also can be fought at the local level. If my internet provider wants to throttle different applications I think they should have their local utility license revoked.

      1. SubstrateUndertow

        Sweet answer !

      2. Cam MacRae

        The scenario you describe (and variants) is coming to an electrical distribution network near you — one area in which you can be glad the US is lagging behind.

      3. Salt Shaker

        Good point on local licensing. Surprised mayors and congressmen in NYC, SF, etc., have been so noticeably quiet, particularly since they’re allegedly small biz advocates that offer tax incentives for qualifying start-ups. NYC’s newly elected Mayor Bill De Blasio’s big policy initiative to date is about “saving the horses” and revoking horse and buggy licenses, an entirely different form of shit shoveling.

      4. ShanaC

        actually going place by place would be a mess. Hell, within a 10 mile radius of where I grew up, there are 2-3 different entities of local

        1. PhilipSugar

          That is my point.

    4. LE

      However, I demand for this right that I am served as a utility.There are other cases though where local government gives exclusive rights (after bidding) to one company. One is bus shelters which contain advertising.I don’t think that granting this right necessarily involves utility type regulation though.Besides having something as a utility and regulating actually can act as a rubber stamp because the utility shows up at the utility board and explains how they need money for something and to increase rates for the “something” and then they go back in forth and they get their rate increase. Because the guy who is dressed like the nutty professor trying to argue the other side is easily outmaneuvered. God I would love to game that system. It’s so easy with numbers to do what you want. It’s like your wife trying to argue with you that you don’t need to spend money on things in your restored house (Most wives would be, perhaps not yours but you get my point). It’s like me telling my wife that we need the Apple branded drive to do backup vs. the stock OEM seagate. I don’t even have to break a sweat. And I’m not lying to her either.Do you remember back before de-reg what all the Bell Company trucks looked like?I do.They were absolutely perfect. They must have had people employed in an entire department just to maintain those repair trucks in perfect condition. The detail (which I actually noticed) was enough to put JLM and his treasured Red Car to shame.They were always well painted, full tread, all these jigs hanging, washed every day etc. Because whatever the costs were they were just passed along. But as we all know you don’t have to wash trucks everyday. Get the point? Utility can also be a rubber stamp and approval as well.Reminds me of back in my first business where we’d rather quote a rush job than take a job with “just bill us”. By quoting (and quite frankly jacking up the price) it got rubber stamped. If the customer said “just bill us” we’d be afraid they would say “we didn’t know it would be that much!. Make sense?

    5. Brian Manning

      Absolutely phenomenal comment. But haven’t the cable utilities been doing this for years? I can’t just start a tv channel and have it be broadcast through my local cable provider. HBO pays cable providers lots of money and consumers pay cable providers lots of money to view HBO in their homes? I’m completely with you on your water analogy, but isn’t the cable analogy more appropriate here?

      1. PhilipSugar

        I can’t fix the world. Using Cable TV as an example for anything good is a poor analogy.Using it for why something is totally broken??? I’m with you.

        1. Brian Manning

          Ha, well said.

    6. ShanaC

      no, but i do think that if the pipes for delivering your bandwidth is the only pipe, then it either needs to be regulated like a utility or treated like phone lines are.

  17. aminTorres

    The last thing entrepreneurs need is yet another reason for VCs not to back them up.

  18. CJ

    “Many people in D.C. understand that start-ups without significant outside funding won’t be able to pay those fees and won’t be competitive. However, most people think that if a company is able to get venture capital, then it can use the VC funds to pay these fees.”If there were any doubt that the ISP’s are writing the net neutrality rules it all went out the window with those sentences.

  19. LE

    A person we are working with on Net Neutrality policy….Can you help me understand what exactly the problem is? In other words, why can’t VCs simply payTelltale signs of getting help, perhaps with lobbying and framing the issue.I think that this is exactly what you need and that I always advocate for. You need to get someone who is a fish out of water with this concept to be able to see the issue from an everyday person’s point of view and frame it correctly and sell it. Best person to do that is someone with no clue at all.You’d be surprised at how advanced you really are with things that leave normals in the dust. [1] I’m amazed at issues I discuss with my wife, who wasn’t raised in a business family, that I can’t use shorthand with. One word that we use fluently and to others they need analogies and winded explanations to get up to speed. (Like when she tries to discuss music with me and I have no clue..)This is great and you should do as much of this as you can. Even mock jurying it as well.[1] I remember many years ago when I first came into contact with the phrase “safe harbour”.

  20. Salt Shaker

    The only thing that moves the needle in Washington is money. K-Street rules and controls the puppet’s strings:Money spent on lobbying fees in 2013:Comcast–$18,810,000 (ranked #7 out of 4,152 companies)AT&T–$15,935,000 (ranked #11)Verizon–$13,703,000 (ranked #18)TWC–$8,290,000 (ranked #45)Hardly a level playing field when assessing regulatory and legislative issues.

    1. LE

      This is common rhetoric. That is that money buys power and influence.While it would seem to be the case, what money and power buys is the ability to educate the party that you are trying to sell on the issues so that they can then make a decision and have all the facts needed to agree with you. Strategy matters.Whining (not saying you are doing this) and stomping your feet (or a low hanging fruit online petition) is not the same as educating and selling someone. Neither is large protests. All that does it get some attention. Like getting a meeting with Fred. You still have to sell him on your idea.There is no doubt in my mind that if people were willing to get off their ass and actually use their brains to educate the various people out there (who make decisions) that they could have an impact. A fighting chance for sure.I have no clue why people always seem to think that this is all about wining and dining in Washington and/or bribes of some sort. I’m not saying that doesn’t take place as I”m sure it does. But it’s not the only thing that gets the legislators to make the decisions that they make.Lastly, as some who had a fairly easy time several years ago getting some meetings setup in DC (and I’m essentially a nobody) I was amazed at how often people don’t do this. Or aren’t prepared for the meeting if they do. Or know how to sell and the other sides argument that they are trying to beat. Or perhaps if they do, they simply aren’t very good at convincing the other side of their point of view in order to get agreement. In which case don’t expect to sink baskets if you don’t practice. So practice. Don’t want to put in the effort to do that? So ok you will lose then.I think that an organized crowd attempt to setup multiple meetings on different days (not all at once) with the combined brain power of a crowd sourced group would stand a fair chance of getting certain issues taken more seriously.But I’m not seeing anyone doing this because they are all to busy trying to carry on with their existing business. The large corporation doesn’t have this problem. Hence a big advantage.

      1. Salt Shaker

        I (sadly) don’t think it’s rhetoric. I believe that’s how Washington works these days. Less and less objective thinking, with “influence peddlers” increasingly playing a dominant role.One big reason I’m in favor of term limits; the longer the bread stays on the shelf the more moldy it likely will become. Even beer these days has an expiration date.

        1. LE

          I’m remembering a time when I had to buy a machine in the 80’s. I had already made up my mind and thought it didn’t make any sense to spend time with another salesman and consider yet another machine. For something that I was pretty stubborn and sure I already had all the answers (was in my 20’s at the time).But for some reason I took the meeting with the 5th salesman and decided to buy his machine. After taking the time to hear his pitch (which wasn’t even that good by the way oddly enough.)Washington is and will always be a “scratch my back I’ll scratch your back” town. I’m not sure that there is anything wrong with that actually. The way the world works. This idea that people will simply make the right decisions without personal gain simply doesn’t exist. Part of that personal gain is making it easy and less time consuming for the person making the decision to make the right decision.You know my wife (and her colleagues) are often given free meals at restaurants in order to expose them to new things they should consider for their patients. I don’t think she thinks she is doing anything wrong by being “spoon fed” helpful solutions as opposed to taking time out of patient care. In short, the way the world works. Best to just play the game if that is what the other side is doing is my attitude.Lastly, people who can game the system will always figure a way to game the system no matter what system you have in place. I’m not hopeful that much can be changed with this, best you can do is just try to keep in so it’s not that out of hand and super flagrant.

          1. Salt Shaker

            Elected officials need to be held to a higher standard. They’re not just representing their own interests, they’re representing yours, mine and all other constituents. They should be held beyond reproach, or as close to that as feasibly or realistically possible. Influence by lobbyists, PAC’s, campaign financing, etc., are just a few areas in dire need of reform. If your wife decides to take a “free meal” that’s certainly her prerogative and it likely has no, or a very limited, impact on others. It’s a very modest form of entertaining, particularly if one is somewhat ethical. When politicians can so easily be bought, with sizable monetary contributions (not a steak dinner at Morton’s), or take positions that serve no other purpose than insuring their own re-election, rather than what they believe in, that’s where I have a prob. I still have faith in the system, although it frankly does wane from day-to-day. Congressmen and their staff should be able to do the appropriate due diligence on legislative issues w/out meddling of industry lobbyists. That said, I do think there are a bunch of folk on the hill who are there for the right reasons…Chuck Schumer and Elizabeth Warren are two that come top-of-mind.

          2. LE

            It’s a very modest form of entertaining, particularly if one is somewhat ethical.Well just to address this one issue of “entertaining”.People are not saints. To expect that everyone is just going to spend their time at night, (and get a babysitter because I’m not going to watch the kids, right?) without getting some “entertainment” (food in this case) for the good of their patients doesn’t address the issue that most people aren’t saints and need to have some motivation beyond just “doing the right thing”.When you go to a wedding don’t they entertain you and feed you (sometimes to extreme) in order to get you to sit their and put up with their “party”? Nobody considers that a bribe of any type, right? If your wife decides to take a “free meal” that’s certainly her prerogative and it likely has no, or a very limited, impact on others.Well it actually does but unfortunately that’s a necessary evil.Are you aware of how many Physicians decide which medical conferences to go to? (Hint: They are all in nice places where there are beaches, skiing or something for the kids to do or are otherwise fun to be at. And the conference is typically not more than 3 or 4 hours..)Human nature. You’re not going to get away from that.or take positions that serve no other purpose than insuring their own re-election, rather than what they believe in, that’s where I have a probNo disagreement. Not sure of the solution though.Congressmen and their staff should be able to do the appropriate due diligence on legislative issues w/out meddling of industry lobbyists.Great. Then give them the budget in order to increase their staff so they can do so. (Are you aware of how they fight over office space though in the Capitol? Where to put these people.Chuck Schumer and Elizabeth Warren are two that come top-of-mind. Don’t agree there really. Both kind of annoy me oddly enough. Especially Schumer.Warren is becoming a true politician though. Take a look at the “single mother” narrative that is tossed around about her (true only in the weakest sense from my research).. And Schumer always seems to show up in an issue that will get him on camera and is a hot button.

          3. Salt Shaker

            Regardless of what safeguards are in place, there will always be both sinners and saints among our elected officials. (Jeez, even Jimmy Carter had “lust in his heart,” or whatever the quote was attributed to him.) That said, I believe temptation can be minimized via reform and more stringent regulation.Yeah, Schumer is a bit of a media hound, but at least he’s visible. Can’t tell you how many times I’ve seen incumbents, particularly at the local level, pop up at bus stops or subway stations a week or two before an election, pamphlets at hand, pandering and glad-handing to the masses, when they were literally invisible the preceding 50 weeks. Too many politicians need a primer on how to manage perception and expectations. I believe today it’s as much about managing PR as it is policy.

    2. awaldstein

      Money is the currency of attention.See this list of people who are publicly on the Monsanto payroll. Truly an eyeopener.

      1. Salt Shaker

        That’s outrageous. Defies any form of logic or common sense.

  21. William Mougayar

    And you’ve made a similar argument in the hearings about regulating Bitcoin companies. Too much, too costly, too early will kill any startup idea.

  22. aminTorres

    “Many people in D.C. understand that start-ups without significant outside funding won’t be able to pay those fees and won’t be competitive” This line alone kills 99% of all startups. Facebook did not get significant outside funding till they were already a proven product with traction. Getting traction before you get any kind of funding will be much harder if not impossible with these lanes constructs.So VCs will never get to look at your project and by the time they may get to it you will have to pay a lot more cash to get your project to people even beyond hosting/storage feeds.If they cannot see this, we are screwed already.

  23. Dave W Baldwin


  24. scottythebody

    I wonder if anybody besides VCs and potential entrepreneurs even care. A lot of people work for companies who would stand to benefit from the implementation of “fast lanes” and further entrenching duopolies and even monopolies. And some might even see it as just another advantage for people who have the capital to be “accredited” to make money off of these things in the first place (most people don’t realize that they, too, gain advantage through innovation, investment, funds, etc.).Here’s an idea: let’s work this from both ends. Let’s get the FCC to allow innovation and the SEC to drop the “accredited investor” rules at the same time. More people might care then if they can participate in funding innovation and potentially benefiting from it more directly.

  25. Chris Phenner

    Factoid: Napster was incorporated 15 years ago, today.I worked at Napster during 2000 and 2001, during which we tried to defend ourselves by relying on Safe Harbors, but there was no ‘file-sharing’ safe harbor (shocker). We saw two preliminary injunctions handed down by the Ninth Circuit remanded — one in each of those years. In 2000 the team hit a KISS concert to celebrate our first remand.I never became a legal scholar on these topics, but I know Hank Barry (our then CEO) continues to speak and to write about them, and he is an expert. And I think Hank would say we need to re-think and re-wire the regime (not patch it with Safe Harbors).But I’ll take progress. The payroll tax holiday in SF for startups passed in 2012 is a great example, and I am sure there are others that give early-stage firms room to grow.But as I read what AVC writes about Bitcoin (and more importantly, Block Chain), I cannot help but hope that a different regime emerges, governed by cooperative, economic incentives that make transparent all contractual agreements.The ingredients for what I say above are here, and on Napster’s birthday, I am going to make that wish aloud here.

  26. Capitalistic

    Well, these are costs that startups should pay or consider, if they are attempting to compete with established companies.

  27. sigmaalgebra

    > when the likelihood is 90% or greater that it will be a failure.The figure of 90% for the “likelihood”, even if correct, should be next to irrelevant.The figure might be quite relevant if the entrepreneur and investor were throwing darts which, of course, we don’t want to do.Instead, what could be quite relevant is the ‘conditional probability’ conditioned on, that is, ‘given’, additional facts (‘events’ or ‘information’).It is possible for the probability to be low but the conditional probability, given additional information, to be quite high. It is the conditional probability that is relevant.Of course, it is up to the entrepreneur to present enough additional facts, events, information to make a strong case that the conditional probability of success is high.Yes, it follows from the 90% figure that fewer than 10% of all entrepreneurs will be able to present such a “strong case”. Still, the ‘strong case’ is much of that projects should try for; if won’t consider a strong case, then might as well f’get about projects at all.Typically such a strong case is particular to the project, e.g., not to the ‘market’ or ‘space’.If an entrepreneur can find a way around the high upfront licensing fees for a music startup, then good for the entrepreneur. And from just above we know and have to admit that the chances of an entrepreneur doing that are low. But big successes are exceptional so that they have to searched for; they take some effort from all concerned.History is awash in projects where the probability of success was low but the conditional probability was high.

  28. Peter Fleckenstein

    Fred, I applaud you for your intentions. Instead of safe harbors why don’t we do away with the stupid regulations? Why don’t we just allow startups the freedom to prove?

  29. sigmaalgebra

    The Internet? Music? Broadband?Okay! More fun, much more fun, more fun than should be legal, more than could be imagined!Right? With prom season, what else? Sure! Carl Maria von Weber, ‘Aufforderung zum Tanz’! Right, ‘Invitation to the Dance’!…Right, here with orchestration by Hector Berlioz.If can’t get the point just from the music, then watch the video — it’s good and leaves no doubt. Here’s a REAL ‘music video’! With actual, real music!Clearly civilization has gone way, way down hill in the last 200 years. Sad, ugly, sickening.Use the Internet and broadband, and YouTube, to rebuild some of the crown jewels of Western Civilization! Rescue the poor, suffering, neglected, disadvantaged, primitive teenagers hopelessly struggling to have a fun evening based on current ugly, empty ‘pop’ culture!Haven’t heard it in decades, but each note sounds as recent as this morning. It should stick with you for life!If you don’t like this, definitely check your pulse or just dial 911 ASAP. Be sure to have your ‘pre-planning’ in place!Hurray for music, broadband, YouTube, and Carl Maria von Weber, and a good cello player!I wish I’d had this available, and also known what to do with it, when I was 14 and had the prettiest girl in the country, sweet, darling, adorable, precious, 12, as my girlfriend. Youth doesn’t know how good they have it now and are missing out.Also, a solo piano version, likely the original Weber version, that is, before the Berlioz orchestration, by a total sweetheart:…At…is a slow and intricately phrased version by the Wiener Philharmoniker and Hans Knappertsbusch.Okay, boys, don’t be a total, slug-brain loser and try to romance her with anything in current ‘pop’ culture. Instead, wise up: Give her a good reason for having bought a nice prom dress! Upchucking on her dress is NOT a good reason.So, before you park with her, play this on your smartphone, let her see that you understand her ’emotions’, dance with her around the car where you parked, and only then get into the back seat with a blanket!There is the famous vodka ad, “Liquid panty remover”. Well, here we can say musical panty remover (assuming you, her, and your relationship are ready for that)! She will likely forget the color of your car but will remember this music for the rest of her life and, then, you for as long as you want!Anytime you want an encore, play the music again! It will become a ‘memory’ and, if you play the music several times, a ‘tradition’ she will like, won’t want to lose, can’t get anywhere else, and have her wanting to be your girl forever.Just why do you think 200 years ago they went to all the trouble to have those dances? They weren’t stupid, you know. Current ‘pop’ culture is. Don’t be stupid.Youth is such a wonderful time of life. Too bad it’s wasted on young people. Don’t waste your prom date or your youth; play this music!Draft for ‘Girls 101 for Dummies — Boys’!

  30. LE

    I built a plugin a while agoA while ago I got into the habit of doing cmd-a cmd-c before hitting the post button.

  31. LE

    Wow, first time I ever saw this message. Something new. Love the fact that it doesn’t just fail and hang.

  32. Matt A. Myers

    Ah, the importance of language. Easy to piss someone off when they’re not viewing the world from your scope – language meaning being generally relative to each one of us. :)We hopefully are trying to be kind with our intent though.Perhaps Fred can update the post to reflect this. It’s difficult in the moment when in full-speed free flow writing – we’re not generally taking in new information or deepening our compassion (deepening as in learning and changing our behaviour patterns, compassion being empathy turned into practical action, an example being selecting language that would be less harmful).[This is my 2nd time trying to post this comment][P.S. Thanks for the warning Charlie!]

  33. Guest

  34. JLM

    .I quit for today. Too freakin’………………………………………………………………………………………………………………………………………………………………………………………………………………………………… annoying.JLM.

  35. ShanaC

    ironic, since I think TW has sites that use disqus. And other stuff they want to stick in the slow lane (ad networks….)

  36. Matt A. Myers

  37. JLM

    .Gray water, it’s what’s for breakfast and irrigation.JLM.

  38. LE

    I would imagine that the energy cost (and labor) at scale means that it is more efficient to do this offsite and transport via pipes rather than onsite.Same with generating energy.Not to mention the fact that your point raises health issues.While there is a risk to centrally managing these things (sabotage) can you imagine getting a large group of people to actively maintain machinery that involves health and well being?So then you have the cost of a company to come and take care of that (and energy to drive them around in cars to do what the homeowner doesn’t do that they are supposed to).Of course this definitely sounds like the type of idea that, in a perfect world, might work (and it’s by no means a non starter) and more beneficial than another shitty photo sharing startup.

  39. William Mougayar

    For the shower/toilet, you’re making it softer and removing iron. Otherwise, your skin will be totally dry, the water won’t soap well, your pipes will need replacement every 3 years, your clothes will have iron stains in them and will be stiff, and you’ll need to replace every major appliance in the house every 3 years.Typically, the drinking water is filtered differently than the tap water. But the softer your tap water is, the better it is for your household.

  40. sigmaalgebra

    > Makes no sense.Not all city water is from the muddy Mississippi.In NYC, apparently nearly all the water is from reservoirs north of the city. As I recall, basically the city just filters the water, adds some chlorine, and pumps it. Not a biggie. And, don’t want to run two distribution systems.I have a well, and I just get a filter, about 2″ in diameter, 1′ foot long, with a 1/2″ hole down the middle, some kind of foam or yarn wound, and with ratings by micron size. Work’s great. Not a biggie.

  41. Salt Shaker

    Ha!…Careful what you wish for. If Apple could control an MSO’s entire ecosystem, and pass regulatory muster, perhaps they’d consider. Who knows, might even turn Apple TV into something meaningful.

  42. JLM

    .Knee jerk conservative, Charlie. It’s obviously Bush’s fault.Sometimes stuff happens and it’s nobody’s fault. Rarely, usually is Obama’s fault now that I think about it.I think maybe NSA was down for maintenance.[Well, Jim Hirshfield’s, of course. But he’s the Ambassador from Disqus, no?]JLM.

  43. CJ

    Apple would be just as bad as Comcast if not worse.

  44. William Mougayar

    I realize that. Same in Canada.Water hardness is really bad for your appliances, pipes, clothes, skin, etc. The processing has mainly to do with removing hardness and iron (in addition to removing bacteria, e-coli, etc. of course)I know about that because we have a water well, and process water all kinds of way, including having an Reverse Osmosis system + UV light + iron remover + softener, etc.. Life in the country. I even know how to shock a well if you care to know one day.

  45. JLM

    .Not trying to be funny but I think it’s already here.I get a kick out of folks looking at the NSA — you give them unlimited money, you make everything they do secret, you employ the smartest CS guys on the planet, they get Cray computers and THEN people are surprised to learn they are doing crazy frat boy shit?Where’s the common sense in all of this?There is stuff the NSA does which they legitimately prevent the President from knowing. They routinely lie to Congress.And we are surpised?This is ike your daugther showing up with a 30-year old boyfriend in an El Camino, a cold six pack, a box of condoms, scratching himself, watching him light up a joint and being surprised he’s not a seminarian.JLM.

  46. ShanaC

    I drink my tap water (things I love about NY – the tap water is tasty)

  47. JLM

    .CIA is OK, too many Ivy League guys, bit inbred. If you have too many Ivy League guys they spend all their time ordering Pimms Cups and not enough time getting rid of shitheads.Killing shit heads should be like killing coyotes in ranch country — $50/head no limits.The NSA is an altogether different breed of cat. They have way too many unsupervised assets and can do stuff and get way down the road before anybody yells “calf rope” and then they have wandered so far off the game board they can’t get back and start lying and covering up.Again, give CS guys a Cray computer and unlimited money and they will do crazy stuff.It is one thing to work in the shadows, it is something altogether different to make your own shade.JLM.

  48. Salt Shaker

    Yeah, NYC water is great, but the infrastructure isn’t. Pipes are all corroded, particularly if you live in an old pre-war bldg. I never drink from my tap and I use filtered water for cooking. Tons of sediment and lots of unhealthy residue.

  49. sigmaalgebra

    Hardness? My well water is saturated with calcium carbonate. To ‘soften’ it, the usual way is to wash some resins in sodium chloride, and then the hard water has sodium carbonate instead of calcium carbonate. Sodium carbonate works better with soap and doesn’t leave scale but adds sodium to your diet and is murder on the copper pipes and their soldered joints. So, I just leave the calcium carbonate.Once we had iron in the water, but there was a simple little system based on potassium permanganate that got rid of the iron. We bought the potassium permanganate about a gallon at a time. My understanding is that can make some big bang fireworks with potassium permanganate, but I want to keep all my fingers and eyes and never tried.In my house now, if I want to keep down the calcium I ingest, I just buy distilled water, about $0.77 a gallon, likely cheaper than I can make it with a table top electric distiller. Yes, later I could be talked into a reverse osmosis system.Yes, the calcium carbonate makes scale in the hot water pipes, at least where the water gets heated. Why? Because calcium carbonate has the strange property that it is more soluble in cold water than in hot water so that a cold, saturated solution from the well, heated, will cause calcium carbonate (limestone) to precipitate out as ‘scale’. But my hot water coil is lined with Teflon, and the scale does not easily stick. So the Teflon occasionally releases some little flakes of scale which do occasionally clog the valves on the faucets. So, just turn the faucet off and back on, and the scale gets crushed and flows through — I never see it.Yes, eventually the hot water coil gets plugged up with scale. So, get out an electric drill, a good ‘drill pump’, some lengths of garden hose, and a bucket and play with the various valves and faucets have installed before and after the hot water coil, have a bucket with fresh water that the pump draws from and the return flows to, turn on the pump, get the water flowing through the coil, and then add to the bucket about 6 ounces of muriatic acid, that is, about 20% HCl, let the solution circulate, be ready for bubbles of CO2 (oh what ever am I doing to the pure, pristine, precious, delicate, sensitive, fragile, 100% all-natural environment — clearly we need a regulation that I capture and sequester the CO2 since gumment is far too small already!), dump the bucket into the back yard, put fresh water into the bucket, flush with the fresh water with some baking soda, restore the valves, flush the system into the kitchen sink, and have rapidly running hot water again! About once each three months. Not a biggie. Get the muriatic acid in a gallon jug at a hardware store. Get the baking soda in a big bag at Sam’s Club. So, let’s see:CaCO3 + 2HCL –> CaCl2 + CO2 + H20Ah, high school/college chemistry!Great! Keep the city water police OUT of my house!For a few months after 9/11, the stores were reluctant to sell muriatic acid and ammonium nitrate fertilizer. Wonder what they did about the potassium permanganate? Gee, let’s outlaw matches, knives, box cutters, can openers, volt meters, soldering irons, hack saws, etc. and just shut the country down. 🙁

  50. William Mougayar

    You live in a rural or city dwelling? yep RO is a good thing, even if you have potable city water. if you did a TDS analysis on the water, you’ll find it’s full of minerals. Some people like their water with a low TDS.

  51. sigmaalgebra

    > You live in a rural or city dwelling?Rural.Low TDS and RO are fine with me, for when my startup makes more progress.For now, it’s clear that my well water is saturated with calcium carbonate with little or no iron or manganese.Mostly I drink distilled water or diet soda and not the well water. Yes, my ice for the soda pop comes from the well water. The only serious issue I have left with the well water is the hot water coil, and I covered how I handle that, about once a quarter, not a biggie.