• Upstart, founded by a team of ex-Googlers, is an all-in-one loan agency, investment fund, mentoring network, and dream factory for up-and-comers in their early 20s. To find the most promising candidates, applicants are screened using sophisticated algorithms that can predict their likely future income based on GPA, educational background, past job offers, etc. Upstart helps them raise enough money to get their startups going, and in return, they pay their backers up to 7% of their future income each year for 10 years. [url]
• Check out these class notes from Peter Thiel's course on startups at Stanford, written in essay form. In 2010, venture capitalist and entrepreneur Peter Thiel created the Thiel Fellowship, which awards $100,000 to 20 students under 20 years old, with the goal of encouraging them to create their own startups instead of going to college. [url]
• Read the Upstart blog for founder Dave Girouard's account of how he came up with the idea for Upstart. The blog also has other personal accounts, information about Upstart, and interesting articles and perspectives on entrepreneurship. [url]

But what’s the point of having a great university among the palm trees if students feel like they have to treat their professors as potential investors, found companies before they can legally drink, and drop out in an effort to get rich fast? Shouldn't it be a place to drift, to think, to read, to meet new people, and to work at whatever inspires you? And Stanford has, in its day, produced a great variety of graduates: compost-flipping hippies, novelists, politicians, liberal firebrands, conservative firebrands, brilliant dropouts, and, of course, athletes.

Meanwhile the evidence of international patent filings is looking increasingly ominous. According to data compiled by the World Intellectual Property Organization, the world’s single most prolific filer of international patents as of 2011 was ZTE, a Chinese telecommunications corporation. Its filings were up an astounding fivefold from 2009. Another Chinese corporation, Huawei, moved up to third in the 2011 league table. The only United States corporation to make the Top 10 was Qualcomm.

All this is the more troubling because United States patent law has now been drastically weakened. Congress has made it much harder for small American inventors to protect their intellectual property from infringement and theft.

Pat Choate, the author of “Hot Property,” a book on the theft of intellectual property, maintains that if the new patent regimen had existed when corporations like Apple and Microsoft first got going, they might never have made it out of the little leagues. Their patents would have been quickly infringed by predatory larger corporations, and rather than engage in unequal litigation battles against deep-pocketed and ruthless opponents, they could have felt forced to share their technology on concessionary terms.

If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique. If we assume this company has no need of any of our patents then the have a 17-year right to take as much of our profits as they want.

"I have more lawyers than I have employees," said the entrepreneur, who asked to remain anonymous for fear he would be the target of even more lawsuits.

Young companies that are looking for venture capital are most likely to settle, so goes the conventional wisdom, because they have limited cash and worry that a lawsuit will scare off investors. It's cheap to bring a lawsuit, but expensive—$2.5 million on average—to defend against one. Not surprisingly, the majority of patent suits are settled out of court.

"The system is so stacked against me," said the e-commerce entrepreneur. "To prove I'm right, it will cost me more money than I have raised in my company's existence. If I win, I don't get the money back, and if I lose, I owe triple damages."

But in Europe, things still have a long way to go in terms of providing a digital perspective on legislation and treaties that can counterbalance the powerful lobbying machine of the old media industry there. That's what makes the following story about a revolt by French startups against a proposed tax rise, reported here by David Meyer on GigaOM, rather remarkable:

Arguing that there would be little point in being an entrepreneur in France anymore -- particularly with the UK offering a much better deal just across the Channel -- the startups organized themselves into a largely online movement called 'Les Pigeons', or 'the suckers'.

They were set for a street protest this weekend, but yesterday they met with finance minister Pierre Moscovici…and won.

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I find that although large companies tend to dominate patent headlines, most unique defendants to troll suits are small. Companies with less than $100M annual revenue represent at least 66% of unique defendants and 55% of unique defendants in PAE suits make under $10M per year. Suing small companies appears distinguish PAEs from operating companies, who sued companies with less than $10M per year of revenue only 16% of the time, based on unique defendants. Based on survey responses, the smaller the company, the more likely it was to report a significant operational impact. A large percentage of responders reported a “significant operational impact”: delayed hiring or achievement of another milestone, change in the product, a pivot in business strategy, shutting down a business line or the entire business, and/or lost valuation. To the extent patent demands tax innovation, then, they appear to do so regressively, with small companies targeted more as unique defendants , and paying more in time, money and operational impact, relative to their size, than large firms.

Patent demands can exact a personal toll: as responders remarked, demands have “invoked rage over the waste of time,” made a target “very very angry,” “ruined family friends” and caused “stress” and “ill-will generation [sic].” As several survey respondents put it,

“It was agonizing to hand over all the money we had earned from a product we had invented and created ourselves to a firm that invents nothing and creates nothing. Our founder has since lost his house, car [sic] all his assets.”

“They sued my startup for infringement on a group of insanely broad software patents. While many much larger companies are fighting we do not have the resources to do so. It is the single most frustrating experiences I've had professionally. Extortion, pure and simple. The troll even admitted his model was to sue everyone, get settlement dollars because fighting was too expensive.”

“We wasted about 50k of hard earned money on litigations :-/ [sic]”

As defense lawyers who work with a large number of large and small companies put it, some small companies are “much more likely to take it personally” and threats can “send them over the edge,” inflicting considerable emotional distress.

Among those who had not received a demand, some reported significant impacts from watching others receive them. Numerous respondents who had not received a demand said they used open source software in order to avoid liability. Others reported being very conscious of patent threats. Said one small software company, for example: “[w]e have limited ourselves to the UK & European markets, simply because the mere threat of Patent Litigation if we enter the US market, is a WHEN not IF question.” Another said “I used to develop software for retail and on spec for publishing by other companies. But we've quit that because the risk of patent litigation.”

First, it encourages inventors to file for lots of patents as early as possible to beat anyone else to the Patent Office, rather than making sure that the invention is actually worth patenting. It also seems to go against the basic principle of the patent system, if it's supposed to reward actual inventors.

The Schox method revolves around teaching startups to view intellectual property as a weapon. How might a rival get around those patents? What features might they think of? Schox often asks engineers who haven’t even built their first prototype to conceptualize unusual extensions of the technology, so that these ideas can be protected just in case. It’s well worth the trouble. Schox says the going rate for a hot patent now is about $1 million. “Decades ago a machine might have five or 10 patents,” says Schox. “Today, the phone in your pocket has about 5,000. It’s just a much different landscape to think about.”

Following Schox's advice, the company avoided looking for new investors even during the lean times out of fear that its ideas would be exposed. “We made a choice to go with the intellectual property,” Ciesla says. “Now that choice is paying off.”

"I try to bring a lean startup mentality to my work making government more efficient, open and participatory," he said.

"This technology-centered approach, however, is disruptive to the government bureaucracy and many in Congress because it demands experimentation, data-driven analysis and actually listening to our users -- the American people -- about how to make government work better for them. That's why social media and innovation are so central to my work: we in Congress do not have all the answers, but we can have a relentless drive to adapt technology to let taxpayers re-engage with government on their own terms. I firmly believe that just as new technologies are revolutionizing nearly every aspect of life in America, nascent tools like Madison show the transformative impact technology will have on government, and ultimately overcome the inertia of the bureaucracy."

MIPCube Lab is the only start-up competition to be tightly integrated into the TV industry and its future. It provides a global platform for start-ups to get feedback from the most powerful and innovative decision makers in the TV business and obtain funding from the finance community.

Today's sysadmin todo list:

0. Get corporate membership with EFF.

1. Identify all applications with user-generated content.

2. Move all associated domains to a non-US based registrar.

3. Migrate DNS, web serving and other critical services to non-US based servers.

4. Migrate yourself to a non-US controlled country.

I'm sorry for US sites and users. Your government is hell-bent on turning the internet into a read-only device like TV, easily regulated and controlled. The population will be required to sit quietly and keep their eyes glued on the screen so they don't miss the ads, with any infringers deemed terrorists and pedophiles and thus deserving of summary punishment by DHS squads.

Hopefully the internet will route around the damaged segment, and the rest of us can continue to enjoy the amazing interactivity it has brought our society.

• It will make permanent a capital gains tax exemption on the sale of certain kinds of small business stock that is held for at least five years. In other words, it will encourage long-term investment in startups, which is just the kind of investing we should be encouraging (rather than quick flip type investing, which is more about gambling on changes, rather than investing in economic growth).
• It decreases corporate taxes on new businesses during their first three years of profitability -- again making it easier for young companies to grow and to reinvest their own profits in jobs and growth.
• While it doesn't do away with crippling government regulations for small businesses, it does require a cost-benefit analysis of the economic impact of many of those regulations on startups.
• It implements a simplified form of the startup/founders visa -- which is about helping non-Americans start companies and create jobs in the US. We've talked about the startup visa in the past and why it's a good idea. No matter how you feel about other immigration issues, this one is pretty clearly about having immigrants create jobs in the US (rather than elsewhere).

To me it seems pointless to even bring up the prospect of a subscription service, or even a pay-as-you-go model as a viable solution for a future sustainable industry model. This is because the internet, now the basis of content consumption, is like a huge river of information. A paywall is like a little pebble being thrown into it. The water in the river has no trouble getting around the pebble. Paywalls will never solve the piracy problem, and damming up the whole river, as we’ve seen with SOPA, will not be easy, and most likely will never happen.

Really though, I don’t think that the actual problem that the rights holders have with piracy is the copying, but rather it is the loss of revenue brought about by the copying that motivates the rights holders into action. They want to be rightly compensated for their work. Who wouldn’t? The problem is that the business model - the mechanism that they’ve chosen to help them receive compensation, is not only a little dated, but it has been proven ineffective in this new environment that is very different from the one we saw even 15 years ago.

The rights holders need a new mechanism for compensation. It’s that simple. Why they’re trying to preserve the one they have, I really don’t know. But the sooner they accept the fact that it is broken and it’s time to get a new one, the happier they will be.

A timely new McKinsey report entitled "Internet matters: The Net's sweeping impact on growth, jobs, and prosperity" provides us with some independent evidence on the topic. Here are the relevant findings:

The Internet is a critical element of growth. Both our macroeconomic approach and our statistical approach show that, in the mature countries we studied, the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent.

So what about the jobs? Here's McKinsey again:

The Internet is a powerful catalyst for job creation. Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of the French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed. This conclusion is supported by McKinsey’s global SME survey, which found 2.6 jobs were created for every one destroyed.

By contrast, in France, whose population is roughly a fifth of that of the US, the Internet created some 700,000 jobs net. That was from 1995, but in the early years it is likely that relatively few jobs were created by the then-new Internet, so most of those 700,000 would have been created later on - say 400,000 for the last eight years. In the US, we might expect at least a pro rata number – 2.4 million jobs. That's probably an underestimate, since the US is in the Net vanguard, but even if it's an overestimate, the figure is likely to be much better than the net loss of the core copyright industries.

If the backers of SOPA and PIPA were really as concerned about jobs as they profess to be, they would be doing everything in their power to defend the Internet so as to preserve this incredible engine of growth, not attack it. And they would be pushing the copyright industries to embrace the Internet as rapidly and completely as possible, since the McKinsey report also points out:

Although the Internet has resulted in significant value shifts between sectors in the global economy, our research demonstrates that all industries have benefited from the Web. Indeed, in McKinsey’s global SME survey, we found that 75 percent of the economic impact of the Internet arises from traditional companies that don’t define themselves as pure Internet players. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet.

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If SOPA passes in anything like it's current form, it would almost certainly mean the end of reddit. It may not happen overnight, but we have a very small staff (~11, mostly engineers), and even dealing with DMCA stuff is a big burden for us. SOPA would make running reddit near impossible. And we have access to great lawyers through our parent company. I can't imagine how smaller sites without those kind of resources could even attempt a go at it if SOPA passes.

Entrepreneurs are the engine for economic growth and jobs creation. Virtually all of the growth in U.S. jobs has been driven by companies that are less than 5 years old.

Now, it’s time to put some real numbers behind the conventional wisdom! If your company is less than 5 years old and is employing one or more people, stand up and be counted

"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone."

Things have definitely changed. I remember in 1999, 2000, I would sell a used server for $35,000 and I had a line of people wanting it. Today, a server is $5,000 and you can get an okay server for less than $2,000. [In the meantime], we’ve probably become one of the largest sellers of [intellectual property] in the country. We sell tons of IP, and as you know, the IP wars have started, so we play with the big guys, the little guys, and the in-between guys. During the last bubble, there weren’t as many patents. It was more ideas and URLs. So the business has matured.

Successful trolls have found ways to remove these traditional obstacles to suit. Most obviously, not making anything immunizes them against counter accusations of infringement. A liability in every other context, having nothing to sell is an asset for trolls. This is why patents are often worth more when a company is dead and has nothing to lose from patent counter suits, than when it is alive and does.