Thursday, October 22, 2020

Farmers Are the Ultimate Entrepreneurs

Fall is here (although it looks like winter outside at the moment!). This time of year always makes me think of farmers across the upper Midwest harvesting their crops. I consider farmers to be the ultimate entrepreneurs and, generally, some of the smartest and most determined people I have ever met.

Like many entrepreneurs, 2020 has presented a lot of challenges for farmers who, even before this year, were already battling declining profit margins, low commodity pricing and increasingly unpredictable and extreme weather patterns. Farmers are constantly innovating, growing businesses by themselves and taking full responsibility for the success of their products, from seed to harvest. I think entrepreneurs can learn a lot from America’s farmers.

Here are three things entrepreneurs can learn from farmers: 

  • Use your mission as motivation. For an entrepreneur to be successful, the entrepreneur better have a mission that matters and motivates them. A farmer’s mission is to produce the world’s food and other essential agricultural products. Farming is essential and fundamental to society. An entrepreneur’s mission should be equally as critical.
  • Employ data analytics. Farmers rely on sophisticated data analytics to aid their decision-making, such as what crops to plant and when to plant them, whether to contract in commodity futures and when to sell products. Data allows farmers to evolve and to avoid relying solely on historical practices to dictate future actions. Entrepreneurs should use data to help them innovate with knowledge and confidence, particularly when you’re operating in a high technology environment where things can change rapidly.
  • You are only as good as you word. Farming communities are typically small and a farmer’s word means everything.
    Trustworthiness matters and can be a key driver in establishing a positive business reputation, business longevity and key business relationships. Of course, written agreements are relevant and can be important (how could a lawyer like me say anything different). Like farmers, entrepreneurs should value their verbal commitments at least as much as written legal agreements. 

There exists a misconception that farmers and farming are behind the times. Those of us who work with or have been exposed to farmers feel the opposite way. Just like high tech startup entrepreneurs, farmers frequently embrace innovation, work tirelessly and are among the first to take on risk and innovate if there is a potential return. 


Monday, October 12, 2020

Hot off the Press: SEC Proposes Conditional Exemption for Finders


It has been over three years since the SEC’s Advisory Committee on Small and Emerging Companies recommended (by a split vote) that the SEC should propose a conditional exemption for finders from the broker registration requirements of Section 15(a) of the Exchange Act for certain capital raising activities involving accredited investors. Last week, the SEC finally issued such a proposal

This is potentially big news! I’ve spent countless hours advising emerging companies about issues related to the retention of “finders” to assist with fundraising. For almost 30 years, these “finders” have been pointing to the Paul Anka no action letter* (from 1991) as evidence that they can be compensated for helping raise capital without being registered as brokers. 

The problem with the Paul Anka precedent is twofold. First, it is based on a very narrow situation that rarely matches the actual circumstances faced by people who regularly work to help emerging companies find capital. Mr. Anka only did it once in his life, and he never had any contact with the potential accredited investors about the investment. Second, given the SEC’s stance on the need for broker registration for anyone receiving transaction-based compensation in these situations, the SEC had essentially stated in recent times that, if it had a “do over,” even on the limited Anka facts, it likely wouldn’t have provided no action relief in the current regulatory climate. 

Tuesday, October 6, 2020

LET THE LAWSUITS BEGIN. ARE YOU READY FOR CCPA 2.0?


My last post discussed the California Consumer Privacy Act (CCPA), the importance of getting ready
for enforcement by the California Attorney General beginning last July 1, and the likelihood of lawsuits under the CCPA’s “first of its kind” private right of action.

We have not yet seen any government enforcement actions by the California Attorney General’s Office, but warning notices have apparently been sent to businesses alleging violations of the CCPA. While the content of these notices is confidential, Stacey Schesser, California’s supervising deputy AG, shared some information at an International Association of Privacy Professionals event in July. According to Schesser, the letters mainly targeted businesses that were missing key privacy disclosures (such as a “Do Not Sell” link) on their websites or weren’t properly responding to consumer rights requests, including those relating to the right of access or deletion. The CCPA allows a business 30 days to cure its violation before the AG takes any action.

While waiting for government enforcement actions, we have seen at least 34 class actions filed under the CCPA, including one against Walmart. The retail giant was allegedly hacked, resulting in credit card information of Walmart customers being sold on the dark web where criminals and fraudsters operate with relative impunity.

Thursday, October 1, 2020

MN Cup Winners in a Virtual Competition


 Last week was the 16th annual final awards ceremony for the Minnesota Cup, an annual state-wide, industry-agnostic competition for Minnesota’s entrepreneurs. Over 1,000 entrepreneurs participated in this year’s Cup (collectively taking home around $500,000 in prize money) and hundreds of mentors, sponsors, partners and judges helped make the competition a success, even in the midst of the COVID-19 global pandemic.

Lathrop GPM (and, prior to our combination early this year, Gray Plant Mooty) has been a sponsor of the Minnesota Cup dating all the way back to year two of the competition.  However, like everything else in this crazy year of 2020, this year’s competition was markedly different. Typically, the competitors have the opportunity to pitch their businesses to the judges in person and, for those fortunate enough to make it to the finals, also have the opportunity to give their final pitches to a crowded room full of judges, mentors, sponsors and members of the general public at a crowded McNamara Alumni Center at the University of Minnesota. In addition, throughout the competition, there are normally several in-person networking opportunities for its competitors and supporters. However, the challenges presented by COVID-19 caused the entire 6 month competition, related networking opportunities, and last week’s awards ceremony to be almost entirely virtual. 

Tuesday, September 22, 2020

My Top 5 Podcasts for Entrepreneurs


Podcasts. They are everywhere — covering any and all imaginable interests of the people who produce
them. With just a quick search of the ITunes podcast library, I can, at the push of a button, learn about the "curious lives of beekeepers" or listen to the hosts of MuggleCast, a weekl
y ride into the Wizarding World of Harry Potter, debate who is the best professor at Hogwarts. We joke that everyone and their mother has a podcast, but the amount of informative, curated content about whatever tickles your fancy accessible at our fingertips is a phenomenon not to be overlooked. 

Podcasts fit well into the busy lives of entrepreneurs, and as they build
their business(es), podcasts can provide incredible insights and advice about company expansion. Below is the definitive list (and by that I mean my own personal list which is by no means definitive) of the top 5 podcasts for entrepreneurs: 

Acquired. I will be honest, Acquired is far and away my favorite podcast on this list (which is why I list it first). While the others that follow are great sources of information and enjoyable listens, Acquired is truly a podcast to which I look forward. Acquired’s tagline is “Every company has a story.” And, the hosts, Ben and David, are incredible story tellers. Each episode is nearly two hours long and is packed full of history, personal anecdotes (both Ben and David are successful VC’s) and true insight into what makes some of the greatest tech companies and founders of our generation tick. Or, as my old college roommate, an early stage investor himself, so eloquently describes, “two dudes absolutely nerding-out about venture capital.” If you are looking for a great place to start, begin with the story of Uber, which, as told by the hosts, begins in the late 1800’s. A few teasers: the idea for Uber began with late nights partying and James Bond; Uber’s recent legal troubles stand in stark contrast to the early days of the company; and a certain VC, a lead investor in the company, had tried and failed to invest in the company many times prior. Just listen — you won’t regret it. 

Monday, September 14, 2020

Twin Cities Startup “Week” in a Pandemic

Last week marked the beginning of Twin Cities Startup Week 2020, our annual celebration of local startups, founders and everyone who supports the Twin Cities entrepreneurial ecosystem. Usually, attendees can expect a jam-packed week of lunches, happy hours and networking events, interspersed with panel discussions, workshops and other events. This year, of course, is proceeding somewhat differently, with events spread out between September 7 and September 25, and being hosted all online. I guess it’s appropriate that in our COVID-19 universe a week lasts 18 days (at least many weeks feel like they last 18 days).  Get your tickets here!

As always, however, there are far too many events for even the most dedicated scheduler to possibly attend, even on an expanded timeline. Below, I’ve curated events that I’d recommend to one of my clients. Note: I’ve stayed away from specific technology areas — if you are working in AI, Edtech, Food & Ag, Healthcare or VR, take a look at the TCSW schedule here, where there are plenty of exciting opportunities. Instead, I’ve tried to focus on areas where any entrepreneur has the chance to get something valuable.

Friday, September 4, 2020

Zoom Fatigue

As the seasons change, it’s hard to believe that we’ve been living in pandemic mode for the last six months. Remember all those early quarantine trends from March like baking bread, binge-watching Tiger King, making whipped coffee to keep up with the TikTokers, and attending Zoom happy hours every night of the week? 

By now we’re all familiar with Zoom fatigue. Julia Skylar, in her National Geographic article, “Zoom Fatigue is Taxing the Brain,” observes that “video calls seemed an elegant solution to remote work, but they wear on the psyche in complicated ways.” She describes how a typical video call lacks significant non-verbal communication cues and leave participants feeling exhausted.

In a New York Times article, “Why Zoom is Terrible,” Kate Murphy explains that “psychologists, computer scientists and neuroscientists say the distortions and delays inherent in video communication can end up making you feel isolated, anxious and disconnected (or more than you were already).” With so many drawbacks to video conferencing, Murphy actually prefers voice-only phone calls: “The absence of visual input might even heighten people’s sensitivity to what’s being said.” Despite all of the excitement of virtual happy hours, virtual business meetings, virtual classrooms, and virtual psychotherapy, she suggests “When it comes to developing intimacy remotely, sometimes it’s better to be heard and not seen.”