RonAmok!

A few months ago, I was asked to participate on a panel for UCLA’s Career Week. I jumped at the opportunity because I’ve found that whenever I speak with college students, I always learn something. This experience was no exception.

Last Thursday, I joined a panel with four others to discuss social media. Simple, right? But things got a little odd when the panel was introduced similarly to those who spoke earlier of careers in engineering, government, finance, politics, public security, international business, education, etc….

The problem is that social media is NOT a career.

Social Media a set of communication tools that carry content, whether that content comes in the forms of text, audio, video, GPS location, etc… These powerful tools give us the ability to share our opinions about life, passions, products and services. Social media provides vehicles for us to demonstrate our expertise and talents. It gives us a way to seek the opinions of others, no matter where they live.

Social media is not something that stands alone as a career. Instead, it’s an integral part of one’s career, whether we choose engineering, government, finance, politics, public security, international business, or education.

You can’t have a career in social media, however, you can use social media in your career. The keyword is “use.” Use social media to separate yourself from other candidates in the job market. Use social media to help your company, nonprofit, or club to communicate their value to their constituencies. Use social media to interact with customers, vendors, investors, and employees.

Choose a career. Enhance it with social media.

Last week, the Senate passed a modified version of H.R. 3606, essentially adding investors protections through increased SEC filing requirements. Today, the House passed the Senate’s version of the Bill by a vote of 380-41, sending it off to President Obama to be signed into law.

This soon-to-be law is drawing criticism from both ends of the extreme. Some see it as the ultimate panacea of entrepreneurial opportunity. Others see it as a tool for hucksters and charlatans to separate us from our hard-earned money.

I’m willing to bet that the truth lies somewhere in the middle.

Those who see legalized crowdfunding as the answer to our economic prayers must understand that all business aren’t created equal. Some will succeed and some will fail. Investing is risky. If you’ve ever invested money before, you’ve probably lost some of it. It happens. Buyer beware.

On the other hand, those who see crowdfunding as the new “smoke-filled room where digital thieves plan to pick our pockets” need to understand the power of the networked crowd. Public offerings aimed at specific communities will be vetted by those communities. Crowdfunders for a particular project probably have intimate knowledge about the products, services, and sometimes even the players. Those vetted by a networked community will have a good chance of getting funded by it. On the other hand, any company or individual who has broken trust with that community will likely suffer its wrath.

Is H.R. 3606 perfect? Probably not. But it offers American entrepreneurs access to something that their European counterparts already have–crowdfunding sources such as CrowdCube.

The networked economy is upon us. We can choose to sit and wait for other countries to lead the way, or we can dive right in too.

Are you in?

Successful, million-dollar Kickstarter projects such as DoubleFine Adventure and Elevator Dock have proven that there is a demand for crowdfunding. Small businesses are using intermediaries like Kickstarter to help them pre-sell yet-to-be-developed products, and thousands of “backers” are lining up to accept their offers.

But what if one of these Kickstarter backers wants more than just a game, a tee-shirt, or an Elevator Dock? What if they want a piece of the company or a piece of the project? Wouldn’t it be possible for someone like Tim Schafer to sell stock in his company through a service like Kickstarter?

Not in the United States.

Although crowdfunding for equity is allowed in some European countries, investor protection laws that resulted after the Crash of ‘29 preclude the practice here. But change is in the air. Legislation is working its way through Congress to allow small businesses to sell securities under lighter SEC restrictions.

Congressman Patrick McHenry (R) of North Carolina, introduced H.R. 2930, The Entrepreneur Access to Capital Act. After some debate, H.R. 2930 passed the House by a vote of 407 to 17, where it now sits in the the Senate’s Committee on Banking, Housing, and Urban Affairs.

The bill seeks exemptions in the Securities Acts of 1933 and 1934 to allow companies to raise funds by selling securities under certain restrictions:

• Company can raise $2 million per year by providing investors with audited financial statements. It can raise $1 million per year without providing those documents.

• Risk to investors is limited by restricting levels of participation to the lessor of $10 thousand or 10% of an investor’s annual income.

• Those who sell securities (whether they be the company or intermediaries) will still be subject to certain Securities and Exchange Commission filing requirements, but  neither will need to be registered “…as a broker under section 15(a)(1) of the Securities and Exchange Act of 1934 solely by reason of participation in such transaction.”

While H.R.2930 waits in the Senate, it has also been packaged with four other bills to form H.R.3606–a.k.a the Jumpstart Our Business Startups (JOBS) Act, (don’t you just love these names?) which was approved by the House, by a 390 to 23 vote. Those four other bills include:

• H.R. 2940 The Access To Capital For Job Creators Act
• H.R. 1070 The Small Company Capital Formation Act
• H.R. 2167 The Private Company Flexibility And Growth Act (Still in House)
• H.R. 4088, The Capital Expansion Act (The House version of S.1941)

And while all of the bills mentioned so far have “H.R.” in front of them, the Senate has its version too. Senator Scott Brown (R) of Massachusetts, introduced S. 1791, The Democratizing Access to Capital Act.

The largest hurdle these bills must overcome requires convincing lawmakers that investors are protected. With images of Enron and Bernie Madoff fresh in their minds, legislators will be taking a close look at the reporting exemptions from stringent reporting practices such as Sarbanes-Oxley that these bills offer small businesses.

The big questions will come down to risk. How much risk will investors be subject to? On Wednesday, March 21, 2012 the Senate’s Committee on Banking, Housing, and Urban Affairs will conduct an open hearing entitled “Examining Investor Risks in Crowdfunding” to discuss this very topic.

One of the questions that I had after reading these bills was: “And then what?” For example, H.R. 2930 restricts the selling of crowdfunded securities “…during the 1-year period beginning on the date of purchase, unless such securities are sold to–1) the issuer of such securities; or 2) an accredited investor.”

It makes for an interesting future. Let’s assume that a Crowdfunding Law is passed in 2012 and that some crowdfunded securities are sold to investors. At some time in 2013, will these securities be available to sell on the open market? If so, who will handle those sales? Will there be a new marketplace to buy such securities, like a Crowdfunding Stock Exchange?

Networked technologies have given us new ways to work together. Services like Kickstarter have given video game developers new options beyond finicky publishers. Crowdfunding for equity laws will give small businesses capital options beyond neighborhood bankers and traditional investors. If Congress can balance small business’s need for capital with an acceptable level of risk for investors, we may be entering a new era of entrepreneurialism.

What do you think?

Photo Credit: Library of Congress