The response to my post Beyond ACA: Healthcare Reform for Entrepreneurs has been overwhelming.
I believe it’s because most, if not everyone agrees, we should have the ability to change jobs, leave our employers or even move to another state and keep our same health insurance coverage. This is the merit to a single payer system, which is prevalent across the developed world. Yet Americans are not yet sold on a single payer system.
Most Americans would agree that private insurance is not the problem – and in reality, has succeeded in helping the United States become the most advanced healthcare system in the world. The problem is employer provided insurance, and the unnecessary government mandates and restrictions that limit portability and individual freedom.
So where do we start then? Well, we must first level the playing field by providing individuals with the same tax breaks as corporations for health costs. If you are self-employed, a struggling entrepreneur or simply out of work, you should not be penalized from purchasing the health insurance you need. Tragically today when you are laid off from work, you not only lose your paycheck but you lose your health insurance. And your only choice is COBRA, which for most people is unaffordable.
We need to change the paradigm on how we pay for health insurance. Just like 401Ks have enabled individuals to switch jobs and yet keep saving for their retirement without a penalty – we need to do the same with healthcare. It all begins with everyone having a “Health Investment Account” – a 401(k) for your health. We need to revamp the tax code to allow employers and individuals to contribute tax-free into accounts “owned” by the employee, not the employer. These accounts should not expire at the end of the year, like Flexible Spending Accounts, but instead, they should accrue interest or be invested similar to a 401(k).
Health Investment Accounts should allow people to buy heath insurance from pre-tax contributions reducing the tax burden on individuals. And people should be allowed to use these accounts on medical expenses for others, such as aging relatives, and/or their children. This makes health insurance more affordable and more attainable for a larger population and ultimately – portable.
Beyond the positive impacts on individuals, Health Investment Accounts would reduce the administrative burden on employers. Health insurance and benefit administration is a hidden tax on our nation’s job creators. This is especially burdensome to small and start-up companies; and oftentimes places start-ups at a huge disadvantage. By placing individuals in charge of their healthcare through Health Investment Accounts employer’s costs to manage benefits are dramatically reduced.
My company only employs a small number of people and dealing with health insurance is an unnecessary distraction. With Health Investment Accounts we could provide a fixed contribution per employee and match a portion of the employee’s contribution – just like a 401(k). This would eliminate the need for a Benefit Manager and/or other benefit administration expenses that places small companies like us at a competitive disadvantage.
To make portability a reality, we must reform the tax code to make Health Investment Accounts possible. We must abolish expensive government mandates that dictate the coverage provided by insurance companies. We must abolish the state laws preventing insurance companies from competing across state lines. We need to have a legal right to buy health insurance in any state, from any insurance company. This will make health insurance more affordable and portable – and allow all of us to use our health insurance wherever we go and wherever we live.
While we all wait with great anticipation for the Supreme Court’s ruling on the Affordable Care Act and specifically if the individual mandate will be stuck down, I feel it’s crucial for entrepreneurs to be proactive and focus their energy on uniting around a single reform that ultimately will create jobs and facilitate greater innovation in America.
As a young single person I don’t have the same worries that many have taking the risk of starting a new company. So I can afford a reasonable individual health plan, without sacrificing my entrepreneurial spirit. But many cannot. Instead, many creative people remain in stagnant positions because they need health insurance continuity, rather than starting their own companies or even simply joining smaller less secure ventures. When you factor in those individuals and/or their family members who may have chronic conditions – more restrictions are placed on those individuals seeking a better or more entrepreneurial opportunity. This restricts employees from becoming employers and reduces the velocity of our nation’s job creation.
So what needs to be done? At the core – we must fundamentally change how we pay for healthcare. By its very nature, the employer-provided health insurance system of today limits portability, and restricts employees from becoming entrepreneurs.
I believe the single most important reform needed is to provide true health insurance portability – and here’s why:
If employees “owned” their insurance they would have the ability to navigate jobs, start their own companies or simply join a start-up – and our economy would see rapid growth and accelerated innovation. Just think, somewhere, right now there may be a brilliant scientist who could invent a cure for cancer or a software engineer who could develop a company to prevent cyber attacks on our nation’s energy grid – but they are unable to pursue their business ideas, because their child may have a chronic disease.
Our current healthcare system prevents the needed “risk taking” required for entrepreneurship – and so ideas are stifled and dreams never become a reality. Regardless of your political persuasion entrepreneurs should unite around the common belief that everyone should control their own healthcare and own their health insurance and ultimately their own destiny.
Everyone should have the ability to pursue their dreams – and together we can make that happen.
Over the past few years I’ve been asked: “How have you managed to build such extraordinary Advisory Boards?” My answer is simple, “LinkedIn.” Using LinkedIn, I’ve successfully built world-class Advisory Boards for my last two start-ups – all by networking on LinkedIn. And most of these contacts are people I never would have met otherwise. In my last company, after working together for two years – I even hired one of my Advisors from LinkedIn to serve as my COO.
Simply put: LinkedIn is a very powerful tool for entrepreneurs who need to build contacts in a specific industry very quickly. I’ve used two primary approaches to identify my targets: First, I search for people with certain titles and narrow it down by industry, location and past and/or present company. Once I find interesting candidates, I follow where their profile takes me: usually there are other interested profiles associated through referrals or “Viewers of this profile also viewed…” Don’t underestimate the power of crowd sourcing and the data team at LinkedIn. And without a paid account on LinkedIn, “Viewers of this profile also viewed…” has become the quickest way for me to find targets matching my criteria.
Before you get started building your Advisory Board on LinkedIn, make a list of the personas of the ideal candidates for each available board opening. In my current company, I had very specific requirements and I didn’t limit myself to any geographies. This allowed me to build a Business Advisory Board of 5 people in 60 days that were almost the exact fit to my criteria – and all have proven to be valuable additions.
I’ve also learned to add Advisors before you need them. So for example, if you need someone who is connected with Venture Capital firms, add that person as an Advisor a year before you plan to raise institutional money so that the person can track your progress and believe in your team’s ability to execute.
And just like any new relationship, you only get out what you put in. Over the first few months, I suggest you actively communicate and share your Company’s vision with your Advisors. You want Advisors interested in becoming part of your operation in their area of expertise – this will pave the way!
As an avid sports enthusiast and social media user, live sports events have provided the ultimate convergence between broadcast media and the real-time web. Watching a NFL game and tweeting with my “Twitter Friends” has enriched the experience and the anticipation of every play – making Twitter a must have viewing companion. And beyond the personal connections and individualized real-time conversations, Twitter provides extended access to professional analysts from print, TV and web properties – adding an extra dimension to the viewing experience. For instance, you no longer must rely on the narrow opinion of the booth announcers to discuss a coach’s challenge or a key decision to go for it on a 4th down – or even just the thrill of sharing your excitement when your favorite team scores a touchdown.
Like most, I generally watch sporting events live; but because of the time-zone of most races I often watch Formula 1 time-delayed via my DVR. As such, tweeting in real-time is not a viable option. This has led me to become more distracted and less engaged during F1 races than prior to my “tweet while watching habit”.
When examining the broader television industry, mass-market penetration of DVRs made many fearful of time-shifting viewing – because viewers often skip over commercial advertisements. While time-shifting provides the ultimate flexibility, it also further alienates users and inherently makes TV less social. I don’t believe I’m alone in preferring to experience my viewing entertainment with others – physically or virtually. People should not have to choose between time convenience and real-time social interactions. Herein lies a major opportunity for innovation.
The discrepancy between my experiences between the NFL and F1 has been a real eye opener to the incredible potential of more personalized real-time platforms to enhance television and movie viewing. While Twitter has become the most widely adopted real-time communications platform, I expect more vertically focused services to accommodate the unique opportunities of the broadcast media industry.
I wanted to briefly share some additional thoughts after listening to my readers. As you recall, I have written numerous times about NASCAR’s need to implement a far reaching digital strategy. Without a doubt – NASCAR has demonstrated it does not have the expertise to generate or execute such a significant undertaking.
I believe it’s time for NASCAR to hire a Chief Digital Officer to lead the development and implementation of a marketing strategy and business model to engage fans across digital platforms. And equally as important, work in concert with broadcast partners, corporate sponsors, teams, drivers and digital media entrepreneurs to maximize the potential of the digital medium.
For the sake of all stakeholders, let’s hope Brian France is listening and takes intelligent action that is currently available to quickly reverse the downward trends before ratings, attendance and corporate sponsorships are permanently in reverse.
The “secret” is out: NASCAR is facing significant problems. Since 2007, when the downturn became more pronounced – NASCAR’s management has attributed their accelerated drop in race attendance, corporate sponsorship deflections, and decline in television viewership to the faltering economy. But clearly, any objective person should recognize the economy has only heightened the fundamental flaws of the NASCAR business model and strategy. As many know, I have written extensively about the problems within NASCAR – so I will not beat the dead horse. However, I do hope Brian France is reading my suggestions and perhaps will answer the call to establish a viable business model and new strategy. As a long time fan, I was extremely fortunate to realize my dream at the age of 23; when against all odds, I became a NASCAR team owner and lead Toyota’s Flagship team to its first NASCAR victory in 2004. It would be wonderful if every young talented and aspiring driver (and maybe owner) could have the same opportunity and thrill of fulfilling their dreams. Unfortunately, the NASCAR I grew up morphed over the years to alienate their grassroots. Today, unless you have wealthy parents there is little chance and more likely, no chance of reaching the dream of becoming a NASCAR driver.
What most fans don’t realize is an insider’s little known secret – nearly ALL NASCAR teams are financial failures. Even the most successful teams, such as Hendrick Motorsports or Penske Racing – are dreadful businesses – and would be unsustainable if not for their wealthy owners. Unlike nearly every other sport, where the most successful and popular teams are profitable and have long term shareholder value, the on-track success or even popularity of a NASCAR team has little impact on the financial results of the team. It is shocking to learn that the operating budget cannot even be met for a team that wins every single race, when the race winnings are barely 40% of the operating budget. How can teams survive – and even more so, how can this sport survive?
Some may argue an antiquated assessment – successful on-track performance will translate into more sponsorship dollars. However, in today environment the annual NASCAR team budget (each car) exceeds $20 million dollars.
With that being said, NASCAR has the potential to unlock opportunities to revive the financial outlook of the sport. But it must begin with reacquiring all the digital rights that have been irresponsibly divided and parsed between Turner Sports and Sprint. NASCAR needs to stop licensing and giving up rights for short term financial gains of the sanctioning body and recognize that the digital channel may be the last and best hope for teams to survive. This begins with a cohesive digital strategy that works across all broadcast partners – instead of isolating TNN (Turner) from Fox, ESPN, and NBC. If NASCAR.com is going to offer a live simulcast of races during TNN broadcasted races, which I support, NASCAR needs to find an acceptable business model to extend this platform to all broadcast partners. While this would be a good foundation, the real opportunity is to unlock real-time data from the on-board black boxes (telemetry) and team communications to a broader set of partners and participate with revenue sharing agreements to monetize these underutilized assets. (NASCAR Must Embrace New Media: Proposal Attached).
As someone on the front lines of the digital content industry I often hear entrepreneurs, venture capitalists and many tech bloggers speak about the Netflix Streaming service becoming the de facto digital movie experience ultimately cannibalizing Video On-Demand (VOD) or Electronic Sell-Through (EST). While I am a huge fan of the Netflix “experience” that includes streaming to most internet connected devices, I do not believe Netflix Streaming is the “Holy Grail” for digital movies. What I do believe is that Netflix Streaming is NOT a competitor for VOD or EST, but rather is an alternative for Pay TV services such as HBO, EPIX and Showtime.
Digging deeper into the marketplace, one recognizes that the content available on Netflix Streaming is at best equivalent to Pay TV. For further clarification, 80% of DVDs, VOD or EST purchases occur in the first 120 days after the release to DVD – well before the Pay TV window or availability on Netflix Streaming. (Note: New Release DVDs are available for rent on Netflix 28-days after release).
But even more revealing, the available content on Netflix Streaming may become increasingly more difficult to expand. Back in 2008, Netflix signed an agreement with Starz to gain backdoor access to Disney and Sony Pictures’ movies during the Pay TV window. However, the deal expires in 2011 and Disney has recently made a concerted effort to renegotiate its Starz deal to circumvent Netflix’s ability to renew its Starz license. With this being said, it appears difficult at best for Netflix to maintain the Starz relationship and its considerable portion of the content available for streaming. Conversely, if Netflix is successful in renewing its license with Starz my estimates would place the licensing cost at upwards of $300 million a per year or about $20 per user, which could drive up the monthly subscription price.
Many believe that the uncertainty surrounding its license with Starz was a driving force behind its deal with Epix. While much has been made by the media of the deal with Epix to provide Netflix the ability to stream movies from Lionsgate, Paramount (excluding DreamWorks) and MGM, the movies won’t be available until 90 days after the Pay TV window or approximately 1 year after the initial DVD release. While this is still a big win for Netflix, it has little negative effect on the VOD or EST marketplace. However, on the other hand, Netflix has a major impact on consumer behavior – by shifting more consumers away from physical discs – digital then becomes the primary method for consumers to watch movies. Unlike the music industry, where the most devoted music consumers can opt to subscribe to Spotify or Rhapsody to gain access to ALL music they want to consume, the movie industry is vastly different and is unable to support an all you can eatmodel for its premium content. Currently, consumers who want to digitally “rent” or to “own” a new release or recently released movie must choose an alternative to Netflix Streaming – which currently is only a la carteservices.
As Netflix has demonstrated, the Connected TV and Set-Top Box marketplace has transformed the digital entertainment landscape. I believe the result of this transformation will be demonstrated in the next few years with consumers gaining more choices in how they watch movies and will ultimately shift the power from cable and TV service providers into the hands of innovative services providing consumers with anytime, anywhere access to their favorite movies. The future for digital entertainment is bright – and I predict dramatic innovations for 2011.
Throughout this country, in conference room after conference room and boardroom after boardroom, executives of content companies strategize how to respond to the alarming trends associated with owning physical media content. This has been mainly reflected in the downturn in CD and DVD sales. More recently, games have been added to the list. Many in the media industry are frustrated by the slower than forecasted growth of electronic sell-through or download to own content. And, specifically in the music industry, many are split between two ideologies for monetizing digital content – Ownership vs. Access.
While many believe that Spotify and/or Mog are going to transform the music industry and somehow replace the revenue from the fast eroding music purchaser, I am doubtful this approach will save the industry. Furthermore, this dialogue camouflages the true problems with digital sales. In the physical world, Ownership and Access are clear cut user experiences each with their own value proposition. In the Digital Age content is easily available through illegal file sharing, and digital ownership experiences are limited and governed in a way that challenges the integrity of the intended experience. Therefore, if media executives are committed to electronic sell-through or download to own content, they must re-examine how they define digital ownership and encourage meaningful innovations.
Again, looking at the music industry, Lala introduced a novel access based business model – but failed to gain traction because of other more compelling (free) access models in the marketplace. Without question “free” access is highly desirable for consumers, but content owners and entrepreneurs have yet found a profitable monetization strategy. In December, when Apple acquired Lala, most industry insiders recognized Apple’s desire to transform iTunes from a pure download to own experience to a cloud-enabled ownership model. The complexities of music licensing however, may prevent this vision coming to fruition.
In the music industry, there are competing opinions of what is meant by “Digital Ownership”. Michael Robertson, an outspoken critic of the licensing practices of the industry, founder of MP3.com and current CEO of MP3tunes.com, has spoken frequently that consumers should have the right to stream their personal owned music from personal lockers or cloud services without the service provider being responsible paying additional royalties to labels. But labels on the other hand, contest this position and argue that cloud based streaming constitutes a different licensing right than electronic sell through and thus triggers additional royalties.
No matter which side of the argument your business interests may place you, the greater argument where I believe most would agree is that increasing the rights associated with “Digital Ownership” will make digital content more attractive to consumers, thereby making them more likely to become purchasers.
Those who believe that consumers want Access and don’t care about Ownership may be right. But then again, it may be those who believe that consumers want to own content, who are correct. Regardless, both sides would likely agree that Digital Ownership needs flexible usage models that include anywhere, anytime access – and responsible sharing or trading, otherwise, it is just not an attractive enough proposition to purchase digital content. Without innovation around Digital Ownership, the media industry may not have a choice – leaving them without an electronic sell through option to monetize digital content.
Just as technology has created unprecedented opportunities for Access models, the same holds true for commerce models that deliver on the promise of Digital Ownership. To date, there isn’t a single digital music, movie, television, book or gaming service that has delivered a Digital Ownership experience that exceeds the physical media experience. Until entrepreneurs and content owners effectively deliver on the promise of the Digital Age – none of us will fully embrace digital content ownership.
(Disclaimer: I am the CEO of huvi, a digital media service that is under development that promises to revolutionize what it means to own digital content.)
Earlier today, I read an interesting post by Josh Kopelman of First Round Capital and subsequent comments from Fred Wilson, at Union Square Ventures. Both men are well respected early stage investors and have demonstrated significant investor acumen.
Josh Kopelman pointed out some fascinating empirical evidence to support the need for massive innovation in the ecommerce marketplace.
- More than half of today’s top 15 most trafficked websites today did not exist back in 1999. That is not a surprise, as Facebook, Youtube, Wikipedia, Myspace, Blogger, Live.com and Twitter are all new — and are representative of the massive amount of innovation and disruption that has occurred in the last decade.
- Yet, of the top 15 most trafficked eCommerce websites today, just one of them did not exist back in 1999 (NewEgg – which launched in 2001). Which means that over 90% of the top eCommerce websites are over 12 years old! That is pretty remarkable to me — and reflects an amazing lack of external innovation (and disruption).
As Josh Kopelman further points out, the online shopping paradigm is finally changing. In the past year, there has been an increasing amount of innovation, including, group buying, private shopping sites and alternative payment technologies.
As an entrepreneur and ecommerce innovator, I believe the best is ahead of us. The future of ecommerce a/k/a Commerce 2.0 is a future whereby the service itself will be able to generate traffic in much of the same ways that Twitter and Facebook have transformed social media.
At my company huvi, we are developing a next generation digital media marketplace that will transform how consumers buy, share and consume digital content.
It is not possible to predict the road NASCAR will travel by the time we reach the final 2019 checkered flag, but it will be entertaining to speculate.
This decade begins as NASCAR tail spins in the wrong direction it’s a sharp contrast to the beginning of the last decade when NASCAR viewership, attendance and corporate interest were all surging. Today, all of those trends are in reverse, and this decade will truly define whether NASCAR remains as a mainstream sport or becomes another fledgling motorsport series.
I believe the major stories and events that will affect NASCAR in the coming years will have little or nothing to do with on track racing. So let me begin with a few predictions before we take our first green flag of 2010.
The Car of Tomorrow (COT)
By any account other than driver safety, the COT has been a miserable failure, and many point to the introduction of the COT as a defining moment in the accelerated decrease in fan interest. Since making its debut, the COT has been one of the most controversial rule changes to be introduced in NASCAR. There is no question that NASCAR will eventually make changes to their ill advised COT design, but the question is how dramatic and rapid will changes be introduced. I believe this decision will define the sport in the coming decade, because unless on-track racing significantly improves, NASCAR is doomed to become a second-rate sport with limited commercial exposure.
The Fall of Brian France
Mayfield vs. NASCAR is a fight NASCAR wishes it never fought. First, let me provide a bit of background information. In 2008 NASCAR implemented a clandestine drug testing policy where they refused to provide competitors a list of banned substances. And in 2009, long time driver Jeremy Mayfield, was the first driver to face a suspension for use of a banned substance. The drug was later identified as Methamphetamine, or more commonly known as Meth. (See my blog post in the summer of 2009 for more information – NASCAR in Peril: Victory for Jeremy Mayfield in Drug Testing Legal Battle). What NASCAR didn’t anticipate was Mayfield fighting back and filing a lawsuit to reinstate his license to drive in NASCAR. Both sides have won important decisions, but the court fight continues. However, just recently this soap opera is becoming even juicier, the U.S. District Court has ruled in favor of Mayfield to require sensitive documents about Brian France’s third (or fourth but who’s counting) marriage to be unsealed. Many insiders believe evidence will come forward further tarnishing Brian France’s ability to continue to lead NASCAR into the next decade.
Sprint as the Title Sponsor of the Cup Series
The elephant in the room is the pending expiration of the sport’s lucrative sponsorship agreement with Sprint as title sponsor of the NASCAR Cup Series. Back in the summer of 2003, when Sprint (f/k/a NEXTEL) agreed to a 10 year agreement with NASCAR, no one expected the rapid decline of fan interest and corporate sponsorship within just a couple of years. Ironically, Sprint too has blood on their hands for the sponsorship troubles of racing teams, which contribute to the overall problems in the sport. Sprint pushed out and prevented several companies from sponsoring racing teams, including AT&T Wireless who was prepared to enter NASCAR in 2004 as a primary sponsor, but Sprint through their exclusivity agreement with NASCAR, prevented AT&T from entering the sport. And then, after AT&T Wireless merged with Cingular Wireless (who was grandfathered into sport through their existing sponsorship agreement with RCR), Sprint pushed AT&T Wireless out once again. This was basically the same story for Verizon Wireless and Alltel. But I digress, we are discussing the future, and following the expiration of the current agreement with Sprint there is little doubt NASCAR will be left without a title sponsor of the Cup Series. And with the falling value of the title sponsorship rights, I expect NASCAR to be forced to sell the rights for a deep discount. But like everything else in NASCAR, the teams will bear the brunt of the negative financial consequences.
New Television Contracts
Not unlike, the situation with Sprint as the title sponsor, agreements with the existing television partners expire in a couple of years. And, with the enhanced competition from the NFL, all signs point to a significantly lower value being attributed to the NASCAR contract. The reduction in the sport’s revenues will further hamper smaller NASCAR teams from competing and consequently continue the most alarming trends of decreased fan viewership, attendance and corporate sponsorship.
The Retirement of Today’s Superstars
It’s no secret that Jeff Gordon has been suffering from significant back pain stemming from an on track accident. So the question begs, when will one of the greatest and most popular drivers hang up his racing helmet? Could the dominance of Jimmie Johnson accelerate Jeff Gordon’s retirement? And more so, Jeff Gordon isn’t the only NASCAR star that could retire in the next decade from full-time racing. Is it possible, if Dale Earnhardt Jr.’s performance doesn’t dramatically improve that he might head towards an early retirement? These questions will surely plague NASCAR in the forthcoming decade and could have far reaching effects on the entire sport. Even though in the past several years neither Gordon nor Earnhardt have been top performers on the track, they still remain the top two fan and sponsor favorites. And during a time when NASCAR is desperately trying to stop the hemorrhage of fan and corporate interest, the retirement of one or both iconic names could be devastating.
My negativity is an attempt to bring forth positive change to NASCAR. It is horrifying to watch a sport I have watched most of my life be destroyed. But without question, NASCAR, under the leadership of Bill France Sr. and Bill France Jr. made many wise decisions which helped to elevate the sport to the peaks in 2004. Unfortunately, the management decisions of NASCAR in the last half of the past decade have grossly undermined the sport. Even though the previous generations of the France Family were successful shepherds of NASCAR, under the faltering management of Brian France – NASCAR has failed its competitors, fans and sponsors. If the France Family truly loves NASCAR – then they must consider selling NASCAR to a new ownership group, who is prepared to rebuild the sport before all remains is a storied past.