The american dream

Today, 1 percent of Americans own roughly 40 percent of the total assets of the country.

Compared to other industrial nations, we are trailing behind — our country is starting to look eerily similar to developing nations, where true democracy struggles to thrive because the working class is disaffected and does not really have a sufficient economic interest.

Now, the United State’s middle class is showing the signs of being disaffected, and its members are directing their anger at anyone who looks remotely like the boogeyman. Major trade partners such as China and Mexico are portrayed as culpable, but this notion needs to be reined in for the middle class to prosper again.

Searching for the truth of why our middle class is unhappy is not really that important, though. What is important is finding real solutions to providing well paying jobs and participating in the equity of the country.

In the past, a middle-class family with the head of the household earning a blue-collar wage was able to afford a lifestyle that included home ownership, vacation, and leisure. Today, even with two incomes, that same family may still fall short of being in a comfortable lifestyle. So what is to be done?

Our country has not lost the American Dream, where anyone can become a millionaire. For proof, look at the number of U.S.-based startups valued at upwards of $1 billion that were started by immigrants. Take a look at Google, eBay, Facebook, PayPal, and others. Ten to 20 years ago, some of these companies were no-name startups, and today, they are employing hundreds of thousands of new jobs that are well paying and have an equity component. However, Silicon Valley and its “El Dorado” success is not enough to bring back our country to its post-World War II success.

If the past is indicative of the future, we need to bring back the entrepreneurial spirit and industrial innovation that has existed throughout the country over the past 100 years. America became a giant because it provided entrepreneurs the capital they needed to build their companies and achieve massive success.

Capital is the critical component for any business that uses innovation to drive its success. Bootstrapping a company is still possible for those who are prepared for the intense pain and time it takes, and this option exists and is available to anyone who dares. In reality, though, few businesses can be bootstrapped. So for most entrepreneurs, capital is necessary.

However, capital is biased by factors that are beyond hard-working entrepreneurs’ control. Typically, white men who are highly educated will have an unfair chance at receiving capital. In a study I conducted, I found that most of the VC was received by entrepreneurs who attended one of 24 universities. Yes, only 24 out of thousands of higher education institutions. Furthermore, Silicon Valley, Los Angeles, and New York alone represent a majority of the money raised.

In a country comprised of thousands of universities and a diverse population of people, it is not that hard to see why many entrepreneurs feel equally upset and discouraged as the middle class. It is those entrepreneurs who create nearly two-thirds of the jobs produced in the U.S. every year. These jobs are what keep this country a democracy and not a plutocracy — or, worse, a dictatorship. If we want to preserve our cherished values, we need to pay attention to who is participating in our economy.

While the American Dream is still alive for some, it’s definitely not for others. Getting new capital into the others’ wallets will create a new economic prosperity unseen since the post-WWII era.There is a solution that has quietly appeared with no fanfare or real press. In April 2012, President Obama signed the JOBS Act and announced that all Americans will be able to raise the capital they need to succeed with this new piece of legislation. The JOBS Act promised to go live in December 2012 with the oversight of the SEC. However, it took three years for one of the most important portions of the act, Title IV, (also known as Regulation A+) to become available to everyone.

So what is the big deal with Reg A+?

For the first time since the Securities Act of 1933, ordinary citizens can invest in startups and companies that need capital to grow. Given that existing capital sources are limited and biased, this new rule stands to eliminate these artificial constraints.

Still, this rule is not without costs to the entrepreneur, who will need to pay a certified accountant to prepare a two-year audit and a securities attorney to prepare the offering circular reviewed by the SEC. However, it will give the entrepreneur access to 250 million consumers who own IRA accounts, checking accounts, and saving accounts. This wealth is trillions of dollars large. It dwarfs the $120 billion in angel and venture capital invested every year.

On June 19, my company launched our equity crowdfunding platform the very first day the rule was promulgated by the SEC. A small startup called Elio Motors, founded by engineer Paul Elio in 2009, was on our platform.

Paul was on a mission to change the cost of transportation for the poor and the middle class with a car that would cost $6,800 and offer 84 miles to the gallon, but he needed the capital to build it. Unfortunately, VCs and private investors were not interested because it was not that fashionable to invest in a gas car company — especially given that Ford Motors, which was founded in 1903, was the last successful one. However, thousands of fans preordered the car with $1,000 deposits.

Our company launched Paul’s campaign, and within a few weeks, it was clear that the demand to purchase shares in his company was significant. On January 31, 2016, Elio Motors closed its offering with a total close to $17 million in money received by 6,600 investors. These investors are his fans, customers, and advocates. For many of them, it was the first time they had invested in a stock — period. For others, this was their first entry into the private capital club.

Paul wanted to offer some liquidity for his newly minted shareholders, so he listed his company on the OTCQX exchange. Very quickly, his stock price went from $12 to about $50, until it settled back to the mid-20s range. There is no way to predict how successful Elio Motors will become; however, it is now on the right track to creating thousands of jobs in America. The average investment was $2,500.

Elio Motors illustrates how ordinary people can power a new company without anyone investing a large sum of money. This is a first since 1933, and as of this writing, this is the largest equity crowdfunded company in America. Coincidentally, it was also the only company to go public in January 2016. There is some irony in this because StartEngine — being itself a tiny startup — has done what Wall Street was not able to do after the market went into a correction phase during the month of January.

Will Elio Motors announce to the market the beginning of the new American Dream? Will it start a new capital revolution? Will it become the icon of our new American economy? It is too early to tell; however, the JOBS Act is in its first inning and has already flexed its muscles to change how entrepreneurs get access to capital in an unbiased and democratic way.

I am proud of Paul Elio and what he wants to do. I am waiting for the next Paul Elio to walk through our doors and slam down its mission to help build our nation back — one where every American has access to well paying jobs and a hand in the success or failure of the American Dream.

“Money is the seed of money, and the first guinea is sometimes more difficult to acquire than the second million.” – Rousseau

Small business growth in America has dropped significantly. Although small businesses account for 48.5 percent of all employment and more than 60 percent of all new jobs in this country, the Great Recession crippled entrepreneurs for five straight years and our economy is only just beginning to come back. The most recent data signals that our economy might have turned a corner in employer firm births, but the gains so far are negligible. The fact remains that our economy is giving rise to about 75,000 fewer businesses a year than before 2007.

In 2012, President Obama signed the JOBS Act to stimulate growth for American small businesses. His signature immediately put Titles I, V, and VI of the act into effect, laying the groundwork for the modern crowdfunding industries. Since then, Titles II, III, and IV have also been approved. Title II, in effect since 2013, allows companies to generally solicit investment interest from accredited investors. Title III, only recently approved, expands general solicitation and investment to unaccredited investors, and greatly expands the equity options for startups and entrepreneurs. Perhaps the most far-reaching of the titles, Title IV, also known as Regulation A+, was approved in June 2015; it does away with state-by-state securities laws and registrations (better known as blue-sky laws) and instead funnels offerings through the SEC. Additionally, it lets entrepreneurs and startups raise up to $50M through the sale of securities to both accredited and unaccredited investors, and gives investors access to exciting new opportunities.

These regulations regarding crowdfunding in its various forms give entrepreneurs a powerful alternate pathway to the capital they need to grow, and offer major economic reforms for investors seeking to invest in small business equity.

Internet use is becoming more and more widespread, and as a result, more and more businesses are becoming web-based in one way or another. More and more people are buying products and services via the web, and many restaurants even allow their guests the option of making reservations online. The increasing popularity of cloud-based technology has resulted in a rash of job creation, and as a result, new startup businesses are being founded along the San Francisco Peninsula, in the Santa Clara Valley, and lately in the greater Los Angeles metropolitan area.

Perhaps one major catalyst for the mass proliferation of successful startups owes to online social networking. In an article published in the San Jose Mercury News in May 2012, it was reported that many Bay Area-based startups are using Facebook’s network of 900 million users to launch and promote their own businesses. For example, Wildfire Interactive, based in Redwood City, California that specializes in growing, engaging and monetizing the client base of companies such as Sony, Virgin and Target, has doubled its customer base to 15,000 within the past year. Payvment, based in nearby Palo Alto, which enables Facebook users around the world to buy and sell merchandise through the social network, already accounts for eighty per cent of online shopping on Facebook.

Indeed, startups have become a hot commodity. Technology has become more efficient and its use more commonplace, and thus the cost of using a digital medium has dropped exponentially. Perhaps this is why investing in cloud-based internet startups, once only affordable for venture capital firms who pool investment funds, has become all the rage among affluent angel investors who provide their own funds in startup businesses in exchange for convertible debt or ownership equity. As a result, startups have become an asset class powerful enough to rival stocks,

Innovation is the driving force behind the success of any startup. However, because innovation means to break away from the pack, rebel against the status quo and follow the path that diverges to the road less traveled, does the idea of innovation fly in the face of management rules? In other words, is it possible to manage innovation?

Although founding and running a startup is an art, management is a science. The challenge that comes with managing innovation is that people with innovative minds are restless and don’t take well to being stifled in any way. In fact, many visionaries will scorn and revile authority figures who believe that change of any sort is subversive, run their operation with a hands-off attitude, turn a blind eye and a deaf ear to any new ideas, and reap all the benefits despite taking none of the risks.

On the other hand, for all their restless energy and relentless vision, truly innovative entrepreneurs are surprisingly modest, preferring to let their talents and their accomplishments do the talking for them. As such, they treat all intelligent people they encounter as equals, and have no problems communicating their ideas to anyone, for they believe that their role is not only to blaze new trails, but also to inspire others to follow their dreams with them. Although they strive for autonomy, they know that they cannot realize their dream alone, so another ambition they seek to achieve is to become the director of a successful team in which they foster co-leaderships.

One particular example of a successful co-leadership took place in 1949 when Soichiro Honda, an inventive mechanic who led a struggling motorcycle company partnered with Takeo Fujisawa, a businessman from Tokyo. “If you want your company to become successful,

What defines LA? Some might say sports. Some might say sprawl. Others might say entertainment. But I think all those are offshoots of what LA is really good at: monetization.

In a previous article, I wrote about the history of the tech industry in my fair and lovely city, Los Angeles. Common wisdom says that LA is still struggling to find our stride. Some say we need our first huge exit to help us define what our competitive advantage is as a tech hub. Truth is, the answer doesn’t lie in the future, but in the past. If you look carefully, you’ll see the debate, “what does LA do best?” is already settled.

Go back through the history of Los Angeles and you’ll find that LA has revolutionized many industries. Disney completely changed the face of animation by developing new techniques and building a sustainable, globally recognizable character and brand. Much of the modern movie industry was built in Los Angeles. Apart from early developments in camera work and technology, most of what we consider to be essential to modern movies has been conceptualized and created here in LA.

What makes Hollywood great is not that they have fancier cameras or better studios. The real secret sauce is is the content, which is then transformed into a finished product. Content is created by writers, directors, and actors – “talent.” These people’s creative instincts came along with fascinating personalities and character traits.

So while Los Angeles’ “talent” constantly created content, the press ran continuous stories about their antics. Media coverage informed and fueled our fascination with the class of people who made all the movie madness possible. Suddenly, people cared about the content creators, especially the ones they could see weekly on the big screen.