Radio Recaps, Startup Ep 7: “Kids, Work, Kids, Work. There’s Nothing in the Middle”
Just joining us? There’s a radio renaissance happening and we’ve decided to participate by recapping one of this year’s most exciting new shows: Alex Blumberg’s podcast StartUp, about a middle-aged dude with a wife and a family who quits his job working for Planet Money and This American Life to start an audio creation and distribution company called Gimlet Media. You can read the recap of episode 6 here and download episodes for free on iTunes and elsewhere.
Episode 7 of Alex Blumberg’s podcast StartUp covers two topics: 1) why normals, as opposed to rich people, are not allowed by law to invest in certain companies; and 2) what starting a business can do to your spouse and your children. Primarily your spouse.
In Alex’s case, he discovers, when he checks in with his wife Nazanin, that Nazanin is feeling exhausted by the demands of parenthood, full-time work, and having a husband who can’t participate as much as he used to because he’s devoting himself to this particular kind of barn-raising. “I’m feeling like if it doesn’t kill me, it’s going to be great,” says Nazanin. “It’s going to be great! I just might die in the interim.”
They agree to ask Alex’s parents for occasional help with childcare. Being retirees, they are only too happy to oblige. (Nazanin’s parents, by contrast, are still working themselves and live across the country.) But the burn out in Nazanin’s voice is real. FT work can be exhausting. FT work and raising kids is like being outside in a hurricane. Sometimes someone darts over and hands you an umbrella, which helps for a while; soon enough, though, you’re soaked again. The only real thing that helps is having a partner who’s as invested as you are. When your partner is distracted by trying to build a company from scratch, he can’t be.
OK, enough interpersonal dynamics. The episode shifts back to the initial topic of conversation: who can invest in a start up like Gimlet Media and why.
A law passed in 2012 called the JOBS Act (the “Jumpstart Our Business Start-ups Act”) intended to open doors to regular investors and not merely rich folks. “Rich” is defined as people with over $200,000 in income a year for two years, or $1,000,000 in liquid assets, not counting the value of their houses; and since the Great Depression, they’re the ones who’ve been allowed to invest in these kinds of fledgling companies. In 2012, Obama thought it might be a good idea to make the whole thing more democratic. Level the playing field, you know.
“Cost-effective access to capital for companies of all sizes plays a critical role in our national economy, and companies seeking access to capital should not be hindered by unnecessary or overly burdensome regulations,” says the SEC website. But for over a year, the law has languished behind the closed doors of the SEC. It can’t be fully implemented — meaning ordinary people can’t invest in companies like Gimlet Media — until the SEC finishes writing up the rules, which are more than a year overdue.
Alex investigates the hold up with a friend from Planet Money. There’s a natural backlog, sure. The SEC is a busy and probably understaffed government organization, and lots of laws passed since the financial crisis require review. But Alex suspects some kind of “cabal” is also at work, a lobbying group perhaps that doesn’t like the law and wants the SEC to drag its feet as long as possible to keep the JOBS Act from going into effect.
“Your villain,” says Jonathan from Planet Money, is a consumer-protection advocate who recuses mutt puppies from the pound. She says she’s not trying to slow down implementation of the law per se, but she does think it’s dangerous to allow “unsophisticated investors” to get drawn in by “internet hype” to funnel their money to “inexperienced issuers.” And she has a point! It is, of course, a Nanny State type point. Who do you want deciding whether you can help crowdfund a project? Isn’t it your choice how you spend your money, or shouldn’t it be? Do you want/need the government looking over your shoulder and saying, No, honey, you can’t play with that, that’s too dangerous.
“Paternalistic is a loaded word, but [this] clearly is,” says Jonathan. It’s also perhaps a bit hypocritical for a government that doesn’t mind lotteries — and in fact goes out of its way to encourage you to waste your money getting addicted to state-sanctioned lotteries — to suddenly be so concerned about the financial welfare of the average Joe.
“When did you become a Libertarian?” Alex asks one woman, jokingly, who had wanted to invest in Gimlet Media and was told that, under the new law finally goes into effect, she doesn’t qualify. “Right now!” she splutters. She’s laughing but she’s also indignant. And it’s hard not to feel like she has a point.
If you are “rich,” btw, and want to participate, here’s a link to invest.