Obama, taxes, investors, and capital: Why raising taxes hurts the startup industry

TL;DR: The startup industry largely supports Obama who wants to increase taxes on the wealthy. Raising taxes on the wealthy directly affects the amount of capital available to entrepreneurs because when investors pay more in taxes, they have less money to invest in new startups.

The internet startup "industry" is built off the fact that there are investors who are willing to write checks to entrepreneurs to create new businesses. Startup incubators like Y Combinator and TechStars have been able to fund a large number of businesses because investors have been willing to put their money at risk. In fact, the current total value of companies Y Combinator has funded is around $10 billion. In essence, the startup industry is the perfect example of how investing should work.

It's no secret that most people in the startup space support President Obama, and here's why I'm baffled by this: Obama wants to significantly raise taxes on everyone making over $250,000/year, and not just raise income tax but drastically increase taxes on investment returns. The problem with taking more money from this group is that it takes away money that would otherwise be invested in startups. Why does the startup community want to increase taxes on their own investors? What could have been used to fund a startup now goes to paying more taxes.

I don't think this correlation is made very often. When people in the startup space think about rich people paying more in taxes, I don't think it's associated with the very same people who are funding their startups and paying their salaries.

I'm thankful to the people who have invested in my startup. Because of the capital we've received, we are not only able to start a business, but actually hire people and create jobs! (Politicians says that the government can create jobs, but in reality, more available capital helps fund more startups who are able to create jobs.)

The shortsightedness of wanting to tax the rich to solve our problems needs to stop. Government is wildly inefficient at most of what it sets out to do, and it's not the answer to most of our problems today. I hope more people in the startup space will wake up to the fact that higher taxes on successful people (namely, our very own investors) is completely counterproductive and will do nothing but hurt our industry and future innovation in the long run.

Why I'm removing TechCrunch from my RSS reader

TechCrunch used to be the best place for tech news, but it has since turned into a place for personal vendettas and opinion pieces. I present to you three examples from the past week:

In the first example, writer Gregory Ferenstein goes on a personal attack of Chick-fil-a. Most of the first four paragraphs have nothing to do with technology, and are inserted simply to frame Chick-fil-a in a negative light. The tech angle to the story was apparently how Chick-fil-a marketing created a Facebook account as a marketing tool. But half of the article is about a "Same Day Kissing Protest" which has absolutely no relevancy to tech news, nor the story at hand. The writer uses this opportunity to promote an event for a cause in which he personally believes. This is far from objective news reporting that TechCrunch was built around.

Example #2: Writer Sarah Perez spends six paragraphs complaining about the speed of Gmail.

Gmail is unusable. The other day, I counted how long it took Gmail to perform basic functions: open an email, do search, and expand a thread. On a high-speed FiOS connection, on an Internet where clicks translate to immediate actions, it’s incredible to watch Gmail struggle to even function. 10 seconds to perform a search, 14 seconds to open an email message, 10 seconds to expand a conversation thread.

Unfortunately for Sarah, the problem she experiences is the complete opposite of 99% of people who use Gmail. I can't vouch for her problems because I don't have the same volume of email she talks about. And judging by the comments, no one else agrees with her either. Again, this is another solid example of a writer personally attacking a company based on her own experience rather than writing an objective story with any research or fact checking.

In example #3, Matt Burns posts a screenshot about a new format of the Google search results page in which the filtering options were moved above search results from the sidebar.

I’m honestly torn over the new design. On one hand I love the vertical layout. My mind never fully embraced the search tools being located on a sidebar. Now, with the tools positioned directly under the search field, I find it’s a bit more natural to change the parameters of the search. But at the same time, it feels very repetitive to have the category bar located a few lines under the black Google product bar. Plus, there is an awful amount of whitespace flanking either side of the search results.

This tech writer has somehow missed the memo (with reporting from his own site, mind you) that Google is killing the top black bar. The end goal is not to be repetitive, but to find a new alternative that performs as well as the existing top black bar. Regardless, I find it a complete waste of time to read an entire paragraph about his personal opinions of how Google's search results page should look.

How is any of this technology news? Under Arrington's watch, TechCrunch was the most credible, most interesting tech news read on the web. Today, it's the TMZ of tech.

If the new direction of TechCrunch is to become a place where tech news takes a back seat to opinion pieces and unresearched assumptions of writers who choose to rant about their own problems, then that's fine - I can go elsewhere for my tech news. I just hadn't seen the official memo.

Just focus and get it done (and some notes from @ValioCon)

Last weekend, I attended the 2nd annual ValioCon in San Diego. The first happened just over a year ago. When I introduced myself to fellow designers, I listed off the latest things I had built and some well-known sites or projects that people could associate with my name.

But as I introduced myself, I found myself giving the same introduction as I did last year. Why? Because I haven't "released" anything new that I've been working on in over a year. I'm ashamed.

That's not to say I haven't done anything. I've been busy all year. FolioHD is gaining traction like crazy. I redesigned Bandzoogle's site manager platform. I did some work for Zillow. I've sold lots of premium Posterous themes. I'm now doing some pretty exciting design work at Kelley Blue Book (on a contract basis). Most importantly of all (to me), I've worked on exciting new projects of my own like The Mux and Less Neglect. But neither of those have been released yet, simply because they aren't finished. And surprisingly, those are the projects I've wanted to finish most of all.

During the conference last year, there were other designers who teased upcoming releases of their own products. Fast forward to this year. They still haven't been released either.

I don't know what their reasoning is, but I know I don't have many excuses. I simply need to focus. It's quite honestly embarassing to me that I have so many unfinished projects on my plate. Itn fact, it's a big problem of mine. I will half-finish projects, then get excited about something new and move on.

At ValioCon this year, I jotted down something a speaker said relating to getting things done:

Treat side-projects like a real job. Have a product schedule, deadlines, and make sure you meet them and consequences if you don't.

This is something I plan to implement in all of my side projects.

I also think it's a time management issue. I make sure I have a healthy balance of work and personal time in my life. I think it's important to rest and have fun. But in order to finish things, it's sometimes important to make sacrifices. Another speaker at ValioCon gave this piece of advice:

There's an unhealthy point in any side business where you have to sacrifice something.

Things simply aren't going to get done on their own. It takes serious focus and sometimes sacrifice if you want to get where you want to go.

Setting reasonable goals and expectations is important. If you don't, there's a good chance you'll end up in a similar situation where you look back and realize you haven't made it any closer to your personal goals than you were a year ago.

So my new goal is to release a working version of The Mux, and a beta version of Less Neglect by the time I turn 25 next month. That leaves just over a month to release two half-finished products. I think it's doable. And if I stick to a written schedule, it definitely is.

But I could use your help, internet. Hold me accountable!

Joining a startup: high salary, no equity OR "startup salary" with equity?

TL;DR: Push for stock options from companies who don't want to give them, and always avoid them from those that offer.

As a potential employee, the negotiation for equity is a great way to gauge the future of a new company.

If you know the signs, it can help you from getting screwed in the long run, potentially saving years of regret while waiting out the vesting period in the hopes the company will make it big.

It generally goes like this:

  • If founders openly offer lots of equity, chances are the company will never make it big. If you settle for equity and a lower-than-market rate, you're probably in for years of hard work that will never reap the vision you were sold when you joined the company.
  • If founders would rather pay a high hourly rate and offer no equity, chances are the company will succeed. This is a sign that there are big things at stake, and for one reason or another, they're holding their options close to their chest.

The founders who promise lots of equity by joining early are usually unintentional scam artists. They offer the world, but these founders are taking a stab in the dark (even though their idea might be good and well-intentioned) and generally have no real plan for execution. They're usually great salespeople who help you buy into the vision, but since they don't have a plan or the connections they need to make the company successful, you should stay away at all costs.

The founders who know what they're doing, have industry connections, and know their ideas will turn into profitable businesses will do as much as they can to maintain their stake. They don't need to offer copious amounts of equity because their idea and vision is enough to sell the typical prospective employee. And they're usually willing to fork over extra cash up front (market rate) to keep you happy.

(Of course, there are exceptions to this rule. But this is generally what I've noticed from my experience in the startup space.)

If you're facing the opportunity to work for companies in both categories, work for the latter who will pay market rate - who doesn't sell you the vision by promising fame and fortune. Opt for the company who knows what you're worth and pays accordingly.

The dance for something worthwhile is never easy. It's sort of like dating. If you go for the easy catch, are they really a catch? When you are forced to relentlessly persue (and then end up achieving) what you want, it's usually worth it.

The fight for equity at a company where equity will be valuable won't be easy to get. But if you keep these principles in mind and are able to fight for a meaningful stake, it's worth so much more than the equity that is freely handed out by companies that have no real future.

Update: There's some great feedback on Hacker News.

Why more companies should model customer service after Newport Lexus

There are companies who seemingly couldn't care less about their customers, and then there are companies like Newport Lexus. I've serviced my car at Newport Lexus for four years now, but the service has never been better than it is today.

Yesterday it was time to take my car in for service. I called and let my service rep know I'd be arriving in about 20 minutes. When I showed up, the paperwork was already filled out and my preference in loaner vehicles was sitting there waiting for me. All I had to do was sign the paperwork. I literally walked inside, sat down, signed on the dotted line, and walked out to my loaner. I was in and out in less time than it takes to make a latte.

It's refreshing to know that some companies still care about treating their customers right. This is the kind of level I try to give people who use the things I build, and I appreciate receiving the same kind of treatment. It's why we built Less Neglect - an amazing support tool to help us support our users of FolioHD and The Mux.

When businesses go the extra mile to make their customers feel special, the loyalty they'll have is far greater than if you simply provide adequate service. And that's what makes customers for life.

Oh, and if you own a Lexus in Socal, go visit Joey Wilchek at Newport Lexus.