November 5, 2013
To: David Burton, Heritage Foundation
Cc: Rule-Comments@SEC.GOV
Dear David,
Thank you for taking the time to speak to the important issues of startup company capital formation and for doing so with such authority and insight.
I hope that your letter is read far and wide, and is considered carefully by the Commission and everyone who enters this political debate:
http://www.sec.gov/comments/s7-06-13/s70613-462.pdf
Would the Heritage Foundation be willing to create a non-profit social media platform for startup capital formation? I will donate our systems and services to this cause if you can muster up the desire to make a difference by actually doing something about the problems rather than just winning all of the political debates about them. In my view, your comment letter won the debate. Now perhaps you will be able to use this intellectual and political victory to directly shape everything that anyone does in the future that uses public Internet media platforms to generally-solicit investors to fund worthy causes and startup companies across the nation.
I can donate, among other resources and assets, the GRANTCROWD.COM domain name. Surely the Heritage Foundation would jump at the chance to shape the public policy direction by operating the most successful public crowdfunding platform for grants, including startup grants for would-be company co-founders.
In my work as an information security and computer forensics expert witness over the last 15 years I have seen how much fraud and abuse there is in the grant / non-profit sector, and I personally provided information security consulting services, in a single preliminary telephone conversation when approached by a prospective client, that resulted in my prospective client using my information security expertise to defraud customers out of nearly $300,000,000.00 by selling the customers promises that they would be taught how to apply for government grants. When the customers received the initial training materials purporting to teach how to get grants, the merchant (my prospective client) apparently billed the customer over and over again, month after month, for an alleged "subscription" to this information.
When nearly every single one of the customers attempted to dispute these "subscription" charges -- many of which billed to debit cards and thus withdrew money from the customers' checking accounts, frequently overdrawing those accounts and creating bank overdraft fees -- the merchant apparently fought the charge backs and threatened the customers if they continued to dispute the charges with their card issuer. Customers who charged back the extra monthly fees had their personal information published by the merchant on BADCUSTOMER.COM ... Ultimately, the FTC took action to shut down the abusive scheme, but not until hundreds of thousands of people were harmed financially and emotionally.
It occurs to me that the Heritage Foundation and other groups with whom you probably have direct contact and long-term relationships could and should have been directly active in certain areas of consumer life and small business formation, particularly in terms of startup investing and non-profit operations or grant funding and donations given by the public to non-profits. If you and your colleagues had been active in this space yourselves, then people who prey on innocent victims (whether the victims are customers, donors, investors or people and startups who need help to grow economically) would have been forced to compete with your dramatically-superior scale of public outreach and political impact.
When millions of people are harmed because you did not take action to become involved in the aspects of our society that mark every person's rites of passage on the road to practical experience with the mechanisms of business, finance and politics, your lack of involvement indirectly enables the harm because you have failed to provide an alternative path, a "Heritage Platform," for people to follow. Nobody should have to suffer financial harm in every conceivable way just to learn how to avoid it in the future, or the heritage of the economic miracle created by the Baby Boomer generation is going to look, in hindsight, like a $200 Trillion Ponzi scheme that historians will perhaps refer to as "the world's delusional period of corrupt capitalism fueled by short-term population demographics and resulting macroeconomics of post-War population expansion."
If the Heritage Foundation will help materially to solve the problem of initial seed capital formation for startups, non-profits (which, strictly-speaking, the majority of startups in effect are because they never make a profit and then disappear from the economy) and existing small businesses that just need a small amount of equity investment or grant funding, and a few competent advisors, in order to grow something that serves a legitimate purpose and benefits others, then most of the concerns and challenges inherent to the microfinance end of the JOBS Act Rulemaking spectrum could be addressed with a single point of authority and creative effort: yours.
I have urged, rhetorically, that the SEC and/or an agency of Federal law enforcement undertake this challenge directly, to make available a national digital marketplace where literally anyone and anything legitimate could solicit and receive startup capital, or other funding, and perhaps even large companies could be required to generally-solicit and to offer unregistered securities through the same digital government platform. That is not likely to ever happen, of course, but if it did get created then in addition to HEALTHCARE.GOV we would all have access to something like:
To which we could turn in order to crowdsource bailout funding to solve the same type of problems that HEALTHCARE.GOV solves. The previous life-destroying catch-22 of needing health insurance but not being able to locate any because of a pre-existing condition is no different from the existing life-destroying catch-22 of needing startup capital but not being able to locate any because of a pre-existing condition: not having any money. The Federal government clearly has an obligation to help solve this problem in the marketplace, and if the marketplace won't solve it (because, for example, the marketplace doesn't want it solved because that would just make it harder for existing companies to trap employees in dead-end jobs and produce profits for pension funds) then just like HEALTHCARE.GOV the Federal government obviously has a duty to put the Federal Reserve's printing press to work urgently manufacturing bailout funding to start up the new-and-improved economy that is emerging in the global transition from the Industrial Revolution to the Information Revolution.
It seems somewhat strange to us younger-people that all of the old, retired, rich people are planning their end-of-life care and their round-the-world vacations and ticking things off their "bucket lists" while we are literally unemployed and hungry. There simply won't be any future Social Security payments for anybody, there will be no Heritage except crumbling national infrastructure and homes made of wood that deteriorate after just 30 years, when the Baby Boomers are gone unless several million more of them get off their asses and get into the market. What are you doing to help make this happen in a sensible, sustainable manner? Writing letters is a start, especially good ones like yours, but if you stop there it will be an epic failure of historic proportion.
Forgive the typos, and anything stupid that I might have written, this was composed on an iPad.
Sincerely,
Jason Coombs, Co-Founder and CEO
Public Startup Company, Inc.
https://publicstartup.com
+1.831.241.4900