“The public library system of the United States is worth preserving.”
---Henry Rollins (American Musician)
Up front, we want to make one thing perfectly clear: we are NOT in favor of nationalizing our primary schools nor our secondary educational institutions. Under our Constitution, these matters reside with our state and local governments; and we believe that it should remain that way. Nevertheless, it would be foolish or naive to ignore that the fabric of American education is changing dramatically during the digital revolution.
Take a look at the numbers. The education market in the United States has grown dramatically since the advent of the Internet and it's only expected to grow more over the next several years. In short: the ED hasn't kept pace with the changes; and it’s time we recognize the cultural shift that's occurring as a result. In other words, we ought to re-engineer and re-tool our educational systems; and we ought to act quickly!
THE STARTING POINT
The amount of information available today to the public over the world wide web is unprecedented in our history. Concurrently, the information age has spawned a number of innovations in the field of education. Among the most sweeping changes in primary and secondary research:
When you take a step back and look at the big picture, it's evident that how and where we learn in this era is much different than it was before. This led us to ask the following questions:
These are the fundamental questions we’ll address in this article. We’ll argue that Americans need to fully understand and quickly accept the fact that educational tools like Google, Wikipedia, and the Dictionary.com’s of the world all serve the public interest and ought to be nationalized to some degree. In other words, a complete re-tooling of our Department of Education is long overdue.
AS SIMPLE AS 1,2,3
Here’s where we’d start:
The proposed system would re-tool the Department of Education; and also support crucial National Security and Defense initiatives. We’ll explain what we mean as you read on:
MOST OF US NOW CARRY A “POCKET LIBRARY”
Like 77% of all Americans, I own a smartphone; and I often download and access useful apps for personal education, writing and research purposes. The apps on my device include a couple of different Search Engines (Google and Bing), a global encyclopedia (Wikipedia), a dictionary and a thesaurus (my preferred version is Merriam-Webster), as well as a multitude of other small reference tools (e.g. area code lookups and zip code lookups, etc.).
If you were born after 1989, these things probably seem natural. However, for those of us who are older, the Internet revolutionized access to libraries of information as well as primary and secondary research tools. Imagine: before the 1990's, people actually had to travel (by automobile or by foot) to a library to access a wide body of research materials if they weren’t fortunate enough to own them themselves. Furthermore, if their research requirements were extensive, they often had to travel to multiple locations to complete their research!
Research tools and materials are vital necessities for individuals with an entrepreneurial mindset: people who wish to invest time and energy in determining their own futures. Nearly every entrepreneur and investor will tell you that if you want to gain advantages over your competition, you need to excel in school and continuously strive for personal growth. In other words, you spend a great deal of time in library facilities.
Any way you look at it, a public library is about education, growth. and learning. It’s a core extension of our public education system. As Campbell Brown of Facebook notes, “It comes down to what your priorities are, and if public education is about children and learning. It’s a core extension of the public education system. As kids, then every decision we make should be focused on the question of 'Is this good for a child?' And that should be the driving focus and the priority when we decide what our policies should be and what our laws should be.”
(Keep in mind that we are all considered children in eyes of our Creator to a certain degree regardless of our age...)
Currently, we have libraries in our public school systems for our children from grades K-12; and reference materials are of course vital to those systems. Ask any teacher, and they’ll definitively tell you that high-caliber tools facilitate quality education. So then, why aren't the tools in our "pocket library" considered an extension of our public education system, if public libraries in fact are?
It boils down to this: some of the tools within our aggregate pocket library must be integrated into the ED in order to effectively manage public education in the United States today. Otherwise, we may put the American way of life at risk as things currently stand.
A CASE FOR NATIONALIZING OUR POCKET LIBRARY
Is it in our best interests to have all our digital research tools developed, managed and updated by private corporations and select non-profits? The answer is unequivocally NO!
Of course, Innovation, entrepreneurship and creativity are the driving factors behind the success of the corporations that maintain our "pocket library" (Google and Microsoft as well as the Wikimedia Foundation and others). For example, Google launched in 1996 as a research project by PhD students at Stanford University. Two years later, the company received a $100,000 angel investment; and away it went!
Nevertheless, Google has received a great deal of scrutiny and criticism recently from conservative & libertarian political pundits and conservative economists; as well as from radical leftist ideologues like Senator Bernie Sanders (I-VT) and Congresswoman Alexandria Ocasio-Cortez (D-NY).
on the right side of the political spectrum, Conservative and Libertarian political pundits accuse the tech monolith of down-ranking sites and pages that don’t align with corporate’s political positions, thereby suppressing free speech. The concerns of the conservative economists are largely geopolitical in nature. For example, Google has agreed to build a censored version of their search engine for communist China. Both sets of concerns suggest that Google deliberately stifles competition and suppresses the very principles that led to the company’s founding: entrepreneurship and innovation!
On the other hand, far-left zealots have seized upon these factors to push forth visions of an impossible socialist utopia. For example, Sanders (a self-proclaimed "Democratic Socialist” demagogue) contends: “You go to your public library, or you call your fire department or police department, what do you think you are calling? These are socialist institutions.”
To be blunt, Senator Sanders full of crap. The police, the fire department and the public library ARE NOT socialist institutions. Rather, they’re public resources; and there’s are HUGE differences between the two!
BERNIE SANDERS MAY BE MISGUIDED... BUT HE DOES HAVE A POINT
Several of the tools we've listed (i.e. search engines, dictionaries and encyclopedias) and are in-fact primary and secondary research staples used in libraries the world over. However, unlike brick and mortar libraries, the information available within our "Pocket Library" is decentralized, poorly curated and loosely maintained at the present time.
For example, a dictionary reference tool now often appears in Google's search results when you include the word “definition” with a search term. That said, the word inclusion criteria (and definitions) appear to be determined by Google itself!
This should concern anyone who believes in the American Dream. If you look under the surface, you'll find that terms like Fascism were completely omitted from Google's dictionary tool last year after the Daily Caller questioned the definition that Google supplied.
Perhaps even more disturbing, Google has now integrated a feedback tool to report “wrong and offensive” definitions; quite possibly modifying or altering definitions on a day-to-day basis in most extreme cases.
Google currently dominates the search industry. Coupling search with a dictionary and thesaurus in effect makes Google (and the semi-anonymous voting body that supplies feedback on word acceptance) the principle arbiters of English, Spanish and a multitude of other human languages!
We must question whether it’s reasonable and prudent to allow companies like Google and non-profits like Wikimedia such enormous sway over the literacy and education of the American public! It seems to us that leverage these monoliths have over our society could in-fact fuel Fascism; very word Google omitted from their dictionary back in 2017!
THIS IS A NO-BRAINER
Clearly, the "Pocket Library" we’ve discussed here is vital to our national interests. In-fact, you could say that it’s a national treasure of sorts: Young and old men and women of varying backgrounds and ethnic persuasions scour their "Pocket Libraries" daily seeking to educate themselves, better their lives and expand their horizons.
When it comes to the tools and resources in our "Pocket Library" we need to ensure there's a level playing field. We must ensure the accuracy and integrity of the information available to the public, preserve our national heritage and cultivate advancements that strengthen our society.
So, why not:
For the reasons we've described, both these ideas make clear sense to us.
Bernie Sanders and Alexandria Ocasio-Cortez's socialist ideals are in-fact Utopian fantasies. They're a means to an apocalyptic end for American free enterprise, free speech and free expression. We’re not proposing an end to the free market in the case we've presented. Instead, we’re talking about centralizing a core set of vital public services; just like the United States postal service does for mail and package delivery. Not the whole enchilada mind you; just the meaty part of it.
We also argue that setting up such a service will lead to a much fairer competitive environment and open the door for a wide array of entrepreneurial business ventures within the affected industry categories. You only need look at the success of shipping companies like Federal Express, UPS and DHL to realize that opportunity will eventually open up in this space if the federal government steps in and asserts a degree of authority.
Jesus, I hope more Americans soon realize the strategic importance of the research tools that comprise our aggregate "Pocket Library" and demand immediate action from our lawmakers. Otherwise, we’re headed toward a world where George Orwell’s "Doublespeak" becomes a real possibility.
Author: Erik Gagnon - Managing Partner, Chi Rho Consulting
"It is business that generates the jobs, income and taxes that keep a country going."
---Mark Skousen (American economist)
If you keep up with current events, I'm sure you're aware that the Republican-controlled Congress passed a sweeping tax reform bill last week. We’re not going to address the full minutia of the 2017 Tax Cuts and Jobs Act in this article. However, here are a few of the salient highlights for American businesses:
The substantial cut in U.S. corporate tax rates is undoubtedly the single greatest change in our federal tax laws in the last 30 years. It also seems to be the most controversial portion of the new legislation. Indeed, left-wing politicians and left-leaning media outlets have been quick to condemn the new Tax Act as a gift to the wealthy at the expense of the middle-class.
Before and after the House and Senate votes were taken last week, the pollical hyperbole was in full effect. According to Senate minority leader Chuck Schumer (D, NY), the tax bill seemed to “stuff even more money into the pockets of the wealthy and the biggest corporations while raising taxes on millions in the middle class.” House Minority leader Nancy Pelosi (D, CA) went even further stating, “This GOP tax scam is simply theft, monumental, brazen theft from the American middle class and from every person who aspires to reach it. The GOP tax scam is not a vote for an investment in growth or jobs.”
It’s interesting to note that the final votes in both the House and Senate fell squarely along partisan lines. While a handful of Republicans opposed the bill in the House, not one single Democrat representative voted in favor of the legislation. The same was true in the Senate where all but one Republican (Bob Corker (R, TN)) voted yea and the entire Democrat Senate voted nay.
The apocalyptic reactions to the bill's passing from Democrat leadership and the left-wing media are deeply disturbing, particularly when you take into account that most nonpartisan economic think tanks project sizable economic gains under the new tax plan. For example, the Tax Foundation (a non-partisan Washington D.C.-based think tank) conservatively estimated in their preliminary analysis that the new Tax Act will generate:
Keep in mind that the Tax Foundation used very conservative assumptions for their forecast model and did not take into account any real compounding effects. In contrast, several other noted economists are predicting far, far greater returns over the long run. For example, Forbes contributor Bill Conerly recently remarked, “The biggest impact will be the gradual improvement in economic growth year after year. A small increment added to our recent growth rates would be inconsequential in any one year, but the increments will cumulate and even compound. Twenty years from now, the difference will be significant.” In other words, it's very feasible that the new Tax Act will create economic boon conditions and actually increase tax revenues over the long run.
While the true long-term economic impact of the new tax legislation remains open for debate, a sizable number of high-profile American corporations are already beginning to return immediate dividends to their workers. Several companies (including Boeing Comcast, Fifth Third Bankcorp and Wells Fargo) announced new investments, minimum wage hikes and employee bonuses the day after the tax reform bill was passed by Congress. More major companies are expected to quickly follow suit, thereby negating much of the original hyperbole surrounding the bill.
advantage of many of the loopholes and special deductions that major corporations could. Additionally, the draconian 35% corporate tax structure discouraged venture capitalists from taking sizable risks on startups in the U.S. market for years.
Smaller businesses are the backbone of the American economy. In 2017, over 60% of American private sector jobs are with companies with less than 1000 workers. For a good number of these companies, the new Tax Act dramatically changes their scalability dynamics. Although not every small to medium size business owner wants to grow the size of their enterprise, a good number in fact do. It doesn’t take a rocket scientist to realize that the newly enacted tax legislation frees up financial capital for growth, research and expansion that was previously earmarked for the coffers of the federal government.
In parallel, it’s very likely that Venture Capitalists will begin to invest more and more in startup opportunities in relatively dormant American industries. Again, we're not going to get into Tax Act's minutia in this article (i.e. tax implications for VC investments). However, a basic understanding of economics leads to a realization that a sizable reduction in corporate tax rates makes American investments more attractive to VCs. Therefore, the likely influx of investment capital will undoubtedly lead to greater innovation. These investments will also increase demand for skilled American labor in a number of industrial sectors as competition increases. Consequently, real sustainable wage growth for American workers appears within reach for the first time in nearly two decades.
We'd be remiss if we didn't mention that an estimated 40-45% of all Americans pay no federal income taxes whatsoever today. There are many factors behind this astounding figure. However, an economic stimulus package of this magnitude will most certainly reduce welfare and unemployment figures in the years to come. In addition, the average American worker who pays taxes is expected to realize a sizable tax reduction under the new plan.
More important to our nation's future, American industry will once again have competitive advantages in the global arena. The truth of the matter is that our nation benefits wholly when job creators have more capital available to create, execute and innovate. Unleash the financial handcuffs from the John Galts of American enterprise and the free market will flourish. The positive effects will certainly ripple though society much as Mr. Conerly stated in his recent Forbes column.
In closing, a sad truth was revealed in the final Tax Cuts and Jobs Act debates and voting tallies last week. The leadership of the Democrat Party, as a whole, has now moved as far to the left on the political spectrum as the self-proclaimed “Democratic Socialist” Bernie Sanders (I, VT). They seem to have completely abandoned the virtuous, free market principles that have guided our Constitutional Republic for the last 241 years. Their "progressive" label appears to be a thinly veiled euphemism for neo-Marxist ideology. If John F. Kennedy were alive today, I imagine that he'd be aghast at what's become of his Democrat party.
Author: Erik Gagnon - Managing Partner, Chi Rho Consulting
"Companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time."
---Jamie Dimon (Chairman, JPMorgan Chase)
If you Google "biggest problems facing entrepreneurs today," you'll find 100's of different answers on the subject. There are dozens of laundry lists to choose from and most offer some very good suggestions on the pitfalls you should avoid. That said, you'll find little commentary regarding the impact or importance of each problem in these articles. Therefore, I thought we would add our opinions on the matter into the discussion. We'll start with what we believe the top challenge every entrepreneur will face at one point in their journey is, if they hope to gain traction. As you'll soon learn, it's a challenge that entrepreneurs have faced in free market economies for eons.
If We Knew Then What We Know Now
There's a good chance that you're a foundling entrepreneur or that you work for a startup if you're reading this. If that's the case, I'm sure you have big dreams for your products or services. At least, that was the case with me when I founded my first business back in 2008. It was a real-time valuation service catering to antiques / collectibles merchants and avid hobbyists. My vision was that CollectCentric would quickly become an invaluable resource within the industry. I dreamed we'd one day be the 800 lb. gorilla within the category.
We built a working prototype and began searching for suitable investors so we could bring our concept to market. To make a long story short, CollectCentric was beaten out by another Atlanta-based startup: WorthPoint. Their business plan was more agile than ours and they also had deeper pockets. It turned out that they were also better negotiators too. They locked the principal data supplier (eBay) into a long-term, exclusive agreement. Needless to say, we were no longer able to compete in the category once the deal was announced.
The truth of the matter was that we were blind to factors that our team hadn't ever worked through before. In retrospect, we should have taken time during our development cycle to brief analysts and industry press. They could've been used as eyes and ears to let us know how the competitive landscape was shaping up. If we had done this, we might have altered our strategy and avoided the mistake of launching an also-ran product.
The Universal Challenge: How To Scale?
CollectCentic's tale mirrors similar stories dating back through the centuries (e.g. Nicola Tesla). Like Tesla and countless others, our principal challenge was scalability. A scalable company is one that can maintain or improve profit margins while sales volume increases. In other words, a startup cannot afford to lose revenue traction in order to produce more goods or services unless it has a well thought out strategy to secure a second round of funding (or your first round if you're bootstrapping).
Our revenue forecast was a different matter entirely. We didn't have deep supplier relationships, so we anticipated a rather lengthy ramp up time. This was a barrier for some potential investors and it put us in a difficult negotiating position with others. You have to understand that angel investors take a huge risk when they invest in a startup. Consequently, they generally seek a return of 10x or more on every investment they make. They also generally want to recoup their investment in a relatively short time period. To receive serious consideration from angel Investors your ROI should be 30-40% minimum. Additionally, the payback and dividend period should be no more than five to seven years out. As we found out, it's difficult to come to quick agreement on terms if your revenue streams don't meet these requirements.
What We Learned Along The Way
In hindsight, we made the mistake of underestimating the competition in an emerging market. WorthPoint had the more sustainable business strategy. They went after the suppliers aggressively while we concentrated on both branding and the development of our end user interface. We never saw Worthpoint's agreement with Terapeak (eBay's data aggregator) coming. Naturally, it was a hard pill for all of us to swallow when we learned of the agreement.
beaten into oblivion by experienced entrepreneurs and wiser businessmen just like we were. As an old adage goes, your only two choices as an entrepreneur are "get better or get beaten." In other words, you need to solve your company's scalability equation early or you'll probably be outflanked by your competition.
Author: Erik Gagnon - Managing Partner, Chi Rho Consulting
"Those who cannot remember the past are condemned to repeat it."
---George Santayana (1906)
Earlier today, President Trump held a press conference in New York City announcing his new infrastructure plan. One of the key tenants of the plan is an emphasis on leveraging private sector capital and expertise to rebuild our nation's crumbling buildings, roads, transportation and waste disposal systems. In his prepared remarks, President Trump asserted that the trillion dollar public / private spending plan will efficiently stimulate the economy - leading to at least one million news jobs, wage growth, and new business opportunities in a number of key industries.
When the President concluded his short speech, he opened the floor for questions from the press. Immediately, the line of questions turned to the violent events that occurred in Charlottesville, VA over the weekend. We watched the live press conference and only counted one legitimate question related to the President's infrastructure proposal. The rest of the questions the President fielded from the press pertained to race relations and placing culpability on the individuals and groups behind the violent incidents in Charlottesville. Needless to say, we were disappointed that the questions strayed away from economics.
Why the New Infrastructure Plan Isn't Today's Top Story
The fact that most of the mainstream news media outlets aren't focusing their spotlights on the new administration's policy initiative roll-out isn't at all surprising. Let's face it, they're in the ratings game. Sensationalism and emotionalism outdraw straight reporting. Couple that with the fact that more and more people are turning to online sources for their news (9 out 10 people according to Pew Research), and you begin to understand why partisan story lines are now superseding objective journalism en masse. News consumption is at an all-time high, attention spans are low and competition within the market has exploded exponentially.
Partisanship isn't a new phenomenon in American journalism. As James L. Baughman noted in a 2011 article, partisan reporting was a standard operating practice for newspapers in the years preceding the Civil War. He sites, "Editors... unabashedly shaped the news and their editorial comment to partisan purposes. They sought to convert the doubters, recover the wavering, and hold the committed."
So what has the renewed trend toward hyper-partisanship meant for entrepreneurs in recent years? While the financial viability of new news media startups remains in question, the shift has presented a number of opportunities for quick buck artists to reach niche markets online through targeted digital advertising. That said, news media hyper-partisanship should ring alarm bells for any entrepreneur with a long term vision in most any industry category. Free market venture capitalists should be concerned as well. Here's why:
News Media Partisanship Feeds Social Unrest
As we mentioned earlier, President Trump spent a good deal of his time during today's Q&A session fielding questions about the extremists behind the violence in Charlottesville. He defended his original statements that fringe elements on "both sides" [sic] shared blame for the inflaming the incident. The media picked this up and ran with it.
We have an AP news feed in our office. The very first AP news report we received relating to the infrastructure announcement made little mention of the plan. The headline spoke only to the President's comments on the weekend's events in Charlottesville. The article was, in our opinion, a pseudo op-ed designed to further fuel a specific partisan political narrative.
Let's be clear here. The President didn't handle the onslaught of questions very well. That said, his defense was truthful. Multiple fringe groups were indeed in attendance at the rally in Charlottesville this past weekend. They included several white supremacist groups such as the KKK, Nationalist Front, and Rebel Yell. They also included a loose collective of leftists he termed the "Alt-Left" [sic]: presumably referring to Antifa members, Black Lives Matter, and others that stood in opposition of the rally organizers and participated in the violence.
If you're relatively familiar with 20th century European history, the scene that played out in the streets of Charlottesville were eerily reminiscent of events in Germany in the early 1930s. Take a look at raw film footage captured by independent journalists covering the event during the melees. You'll see armed, similarly clad combatants engaging in a battle over ideologies. There were indeed two fringe camps fueling violence at the rally on Saturday. However, we'd argue that they both represent the same side of the political spectrum: the far far left. Let us explain:
The Risk of History Repeating Itself
Fringe groups with disparate agendas but common core principles did indeed engage in battle on the streets of Chalottesville this past Saturday. Like most Americans, he fell into a trap and placed the fringe into two separate political camps labeled "left" and "right." By failing to point their similarities, we believe that President Trump missed a clear opportunity to rally consensus support for his message and unify the the nation.
If you visit the websites of the radical fringe groups that encouraged member participation at Saturday's rally, you'll find remarkable commonalities in their platforms. Better yet, follow their blogs and read their social media postings ("left" and "right") and you'll realize a similarity in their end objectives. They're both interested in dismantling many (if not all) of our founding principles including freedom of religion, speech, press, assembly, and markets — as well as limited government.
While we hear much ado about the neo-fascist "Alt Right", the media has given little or no scrutiny to the platforms of the egalitarian collective President Trump labeled the "Alt Left." The mainstream media has largely been sympathetic to the BLM and Occupy movements despite their overt hostility to core American principles. More disturbing perhaps, a handful of news outlets (including the Yahoo News and the Washington Post) have even run articles glorifying the anarchist activity of the the Antifa collective.
What we're witnessing today seems to be a nascent rise of Communist / Fascist ideology right here on American soil. Historians and political scientists like Vladimir Tismaneanu are quick to point out that the ideologies often go hand in hand and feed off one another. The cancerous ideologies spread across European continent during the early 20th century, most notably in the Soviet Union and Nazi Germany "where the final destination was the deplorable Gulags and the gas chambers of Auschwitz."
Communism and Fascism share some remarkable similarities:
The core difference between the two ideologies is their organizational structures. Fascism is a class-based system while Communism is egalitarian. What that means is that you get a Fascist dictatorship or a Communist oligarchy - both are oppressive / conformist forms of rule.
What This All Means For Entrepreneurs and VCs
We are definitely encouraged by the five tenants of the Trump Administration's infrastructure plan and their potential macroeconomic benefits. For entrepreneurs and free market venture capitalists there appears to be a lot of upside if this plan, or a similar plan with bi-partisan support, is passed through Congress.
As the president left the Press conference, he was asked by a reporter what it will take to begin to heal our nation's deep cultural divide? Mr. Trump offered a short response that emphasized two things lacking in this day and age: "jobs" and "wage growth." Given recent studies showing that being healthy and having a good job are two of the most important ingredients associated with subjective well-being, he may be on to something.
The U.S. hasn't seen real wage growth since the late 1990's and our true unemployment rate remains a question. More significantly, the Millennial unemployment rate is more than double the national average. Opportunities to find gainful employment and begin to live the American Dream, would no doubt quell sympathy for the far far left agitators and the lose collective of anarchists who fuel them on.
Conversely, a stalled plan poses serious concerns. A stagnant economy will only fuel more social unrest and further polarize our nation. There are reports out that more rallies similar to the one in Charlottesville are being planned across the country in the upcoming months. You can be certain that leaders of both factions of the far far left (communist and fascist) see them as marketing opportunities and are actively engaging in on-line recruitment campaigns to attract new members (and sympathizers) to their causes.
That said, there are glimmers of hope that responsible community organizers from the left and the right are starting to come together. Case in point, leaders on both sides of the Civil War statue debate held a joint press conference in Charleston S.C. today condemning violence and announcing their commitment to engage in objective discussion to reach a compromise. Although the platforms of the two group's spokespersons are well outside the mainstream, it does demonstrate that Americans with opposing views, who share our basic common values and principles, can reach agreement when they rise above identity politics.
We won't speculate on how future events will unfold. We'll leave that to the talking heads in our polarized free press. That said, every American who values our basic founding principles ought to take stock of our mainstream news outlets and begin to hold them to account. Journalistic standards are dying before our very eyes.
It's important to realize we're not dealing with "Fake News" in a true sense. Rather, we're flooded with agenda-driven partisan propaganda (left and right) that threatens the very fabric of our Constitutional Republic. Obviously, free market capitalists around the globe have reasons to be concerned.
Author: Erik Gagnon - Managing Partner, Chi Rho Consulting