Hard to see how this passed anybody's internal alarm that warns them of impropriety and conflict of interest. As a developer living in Hawaii that dreams of building my own company one day (and dreams of building that company in Hawaii), this doesn't look good for our ecosystem.
Ugh. I live on Maui and wish there was a better tech eco system on the island for many reasons.
I often get the feeling that this sort of self-serving entrepreneurship seems somewhat standard on the island. Some of it is just the "small town" and insular nature of the business scene here, but sometimes I wonder if there's something more malicious to it.
Prototype manufacturing plants need a source of material having to fly things in automatically makes them more expensive.
Software companies need engineers but engineers typically go to where the jobs are. So until there are jobs, there are few engineers.
Infrastructure companies need startup companies that are being created to keep the gear around so that they can help build infrastructure.
Entrepreneurs need a source of capital that understands both the opportunity and the risks. They need banks that also understand the opportunity and the risks.
What is the current connectivity solution for Maui? Is there 10gbit connectivity back to the mainland? At what cost per Mb? Any local data centers?
What are the minimum taxes on a business in Hawaii? What are the minimum compliance regulations?
Is there an advocacy group, something like the Chamber of Commerce which has a whitepaper (should have answers to some of these questions in it)
Great questions that hit on many of the key challenges here.
Maui and Hawaii certainly have some intrinsic difficulties inherent to having a lower population base located 3000 miles from just about anything, but all in all I'd say there's more movement towards helping create a better tech eco system here. Part of what makes this sort of dubious investment so unfortunate is this clearly was part of that drive to provide some startup fuel to companies here.
I just spent the last week-and-a-half on Maui for vacation. I was thinking about how I could get to work from there for ~3 months out of the year...
I came to the conclusion, in my own little thoughts about it, that Maui s best suited for remote dev/sysad/ops work if anything.
While I wa just thinking for myself - it could be expanded to a contract support/ops/development company that lures talent there via the fact that it is maui....
I don't know anything about the housing costs - but food was pretty expensive.
Local Mauian, born and raised, moved to the mainland, and now working as developer in Los Angeles -- I know that place first hand -- nobody there is looking for change -- you can't fight the culture there (probably more there than other small towns), no manner how hard you want it to change.
We're making some progress. Oahu has a very prominent and active makerspace (hicapacity.org) and co-working space (www.theboxjelly.com) around which a whole host of tech events, talks, and meetups are orbiting. Maui has a pretty active makerspace as well (www.mauimakers.com). This is a very good time to be a developer in Hawaii, at least in terms of connecting to talented peers.
What we're still lacking is good jobs, and access to VC funding for companies we want to build. mbloom is not the fund that we need to grow our tech industry, if anything it's looking like it'll poison the waters.
Haven't been back in a couple of years. I think I'll be visiting in a few months though. What's your secret to finding work and paying rent, isn't it expensive there?
When were you last here? Maybe it's because I tend towards optimism, but I see a lot of hunger for change.
Maui is changing fast. There's quite a bit of construction going on, and wonderfully it isn't all dedicated to resorts and condos. Tourism will probably always be part of the local equation but some businesses are starting to use those tourist dollars to build more sustainable businesses (e.g. Maui Brewing Company, Ocean Vodka, Maui Built, etc.). What I hope to have happen is to have that growth channeled into making Maui more friendly to developers such as yourself. Things such as more banking geared to handle businesses, more/better funding of schools, some "affordable" housing that isn't surrounded by timeshares, co-working spaces, more knowledge sharing opportunities (conferences, informal networks, etc), and of course attracting talented people who can leverage all of this to build some great stuff.
isn't it possible they received the money from the state with the understanding that a portion of it would be invested in startups of which they were owners?
Perhaps the most shocking part isn't that these investments were made, but that taxpayer money went into a fund where there were no bylaws or contractual prohibitions on such investments in the first place. Someone with the authority to write multimillion dollar checks using taxpayer money isn't vetting their investments for these kinds of issues, and that is a significant problem.
I think one issue is that cities and regions all over the world are desperate to create a startup scene. They'll pony up some money and there will always be some insiders and grifters around to tell them how to spend it.
Yeah, both companies have been around for a while and don't look to be winning it big any time soon. Also, flikdate recently had a merger with CrossBox (http://www.sec.gov/Archives/edgar/data/1493563/0001575872140...) that previously (under the name gogreendirectories) was a "Web portal for environmentally friendly green products and services"? I fail to see the synergy there.
CrossBox is also somehow related to First Rate Boxing, which sells speedbags, so the synergy is obvious: dating + green products + boxing = environmentally friendly speedbags for first date boxing matches?
I signed up for a free trial on Ozolio and they emailed me asking to call for a demo and included nine links to customer pages that included live webcam footage. Seems legit, although not necessary a smokin' hot game changer.
To me there is a lot of irony in investing public money into startups when most citizens cannot easily invest in startups themselves given the accredited investor capital requirements.
Here's how I see the irony unfolding in broad strokes:
1) Average middle class person wants to invest some extra money in a startup, but cannot easily do it because he does not meet the SEC requirements to be an accredited investor (http://www.sec.gov/answers/accred.htm)
2) The State of Hawaii invests public money in startups (in this case based on cronyism -- even worse)
3) Where did that money come from? Tax revenue. Who contributes to tax revenue? The average middle class person from #1.
So basically the person is investing in startups in a roundabout fashion. He just can't choose which ones he invests in and he misses out on the major upside of successful startups. Of course, if the startups fail and the state loses its money, the state will go right back to the average person for more tax revenue.
Isn't that generally the idea, though? You give your money to an entity that is presumed to be better at investing it than you ie bank, portfolio manager, mutual fund etc. etc.
The roundaboutness doesn't seem odd to me - the issue in my mind is if this is a sound investment decision for Hawaii. I'm not sure. The answer may be different after this sketchiness, as it could have been legitimately expected that it would help their tech sector in some way. That may still be the case. It really depends on the risk profile Hawaii is going for and the financial status of the state.
Hawaii has a long sad history in mis-funding tech startups.
Recall ACT 221, which provide 100% state tax credits for investors, resulting in massive wastes and various floundering startups.
In Hawaii, many of the 'leaders' in the tech sector believe that they are just as talented and smart as Silicon Valley, that all they need is the money to prove it. And then, over and over again, the State hands over money, just to end in more embarrassing results.
Such a true statement. The sad part about this john is that many people leading the charge have no recollection of ACT 221 and they write off the people like us that do as haters or non-believers.
31 comments
[ 3.1 ms ] story [ 69.6 ms ] threadCached version here: http://www.alohastartups.com/2014/07/12/wtf-mblooms-first-in...
Other writeups on this issue: http://www.hawaiiweblog.com/2014/07/10/mbloom-funds-mbloom http://www.civilbeat.com/2014/07/civil-bytes-is-there-a-conf...
I often get the feeling that this sort of self-serving entrepreneurship seems somewhat standard on the island. Some of it is just the "small town" and insular nature of the business scene here, but sometimes I wonder if there's something more malicious to it.
Prototype manufacturing plants need a source of material having to fly things in automatically makes them more expensive.
Software companies need engineers but engineers typically go to where the jobs are. So until there are jobs, there are few engineers.
Infrastructure companies need startup companies that are being created to keep the gear around so that they can help build infrastructure.
Entrepreneurs need a source of capital that understands both the opportunity and the risks. They need banks that also understand the opportunity and the risks.
What is the current connectivity solution for Maui? Is there 10gbit connectivity back to the mainland? At what cost per Mb? Any local data centers?
What are the minimum taxes on a business in Hawaii? What are the minimum compliance regulations?
Is there an advocacy group, something like the Chamber of Commerce which has a whitepaper (should have answers to some of these questions in it)
Maui and Hawaii certainly have some intrinsic difficulties inherent to having a lower population base located 3000 miles from just about anything, but all in all I'd say there's more movement towards helping create a better tech eco system here. Part of what makes this sort of dubious investment so unfortunate is this clearly was part of that drive to provide some startup fuel to companies here.
I came to the conclusion, in my own little thoughts about it, that Maui s best suited for remote dev/sysad/ops work if anything.
While I wa just thinking for myself - it could be expanded to a contract support/ops/development company that lures talent there via the fact that it is maui....
I don't know anything about the housing costs - but food was pretty expensive.
I am surviving well as a developer, living off the grid, with a satellite internet connection.
What we're still lacking is good jobs, and access to VC funding for companies we want to build. mbloom is not the fund that we need to grow our tech industry, if anything it's looking like it'll poison the waters.
Maui is changing fast. There's quite a bit of construction going on, and wonderfully it isn't all dedicated to resorts and condos. Tourism will probably always be part of the local equation but some businesses are starting to use those tourist dollars to build more sustainable businesses (e.g. Maui Brewing Company, Ocean Vodka, Maui Built, etc.). What I hope to have happen is to have that growth channeled into making Maui more friendly to developers such as yourself. Things such as more banking geared to handle businesses, more/better funding of schools, some "affordable" housing that isn't surrounded by timeshares, co-working spaces, more knowledge sharing opportunities (conferences, informal networks, etc), and of course attracting talented people who can leverage all of this to build some great stuff.
Where X coud be boat/yacht/helicopter/whatever?
So these crooks were able to fund their crappy startups with 700K out of the fund, giving them selves 7% overall of the fund.
Lets see what they spend that money on.
Also, am I correct in reading that they gave their companies 350k each, but the fund states it only gives out up to 250k investments?
http://www.flikdate.com/ http://www.ozolio.com/about.html
I signed up for a free trial on Ozolio and they emailed me asking to call for a demo and included nine links to customer pages that included live webcam footage. Seems legit, although not necessary a smokin' hot game changer.
Here's how I see the irony unfolding in broad strokes:
1) Average middle class person wants to invest some extra money in a startup, but cannot easily do it because he does not meet the SEC requirements to be an accredited investor (http://www.sec.gov/answers/accred.htm)
2) The State of Hawaii invests public money in startups (in this case based on cronyism -- even worse)
3) Where did that money come from? Tax revenue. Who contributes to tax revenue? The average middle class person from #1.
So basically the person is investing in startups in a roundabout fashion. He just can't choose which ones he invests in and he misses out on the major upside of successful startups. Of course, if the startups fail and the state loses its money, the state will go right back to the average person for more tax revenue.
The roundaboutness doesn't seem odd to me - the issue in my mind is if this is a sound investment decision for Hawaii. I'm not sure. The answer may be different after this sketchiness, as it could have been legitimately expected that it would help their tech sector in some way. That may still be the case. It really depends on the risk profile Hawaii is going for and the financial status of the state.
Recall ACT 221, which provide 100% state tax credits for investors, resulting in massive wastes and various floundering startups.
In Hawaii, many of the 'leaders' in the tech sector believe that they are just as talented and smart as Silicon Valley, that all they need is the money to prove it. And then, over and over again, the State hands over money, just to end in more embarrassing results.
http://www.uhero.hawaii.edu/assets/UHERO_WP2009-03.pdf