DC Grapples with IoT Cybersecurity. The Internet of Things (IoT) has grown exponentially in recent years: there are now approximately 6.4 billion internet connected devices worldwide, a number that is increasing by 5.5 million every single day. While the growing IoT holds tremendous potential, recent cyberattacks have left policymakers increasingly concerned over vulnerabilities in connected devices. On Tuesday, the National Institute of Standards and Technology (NIST) issued a set of guidelines on IoT cybersecurity, while the Department of Homeland Security (DHS) published its own policy principles for securing connected devices. The following day, policymakers on the Hill held a joint hearing to discuss security and cyberattacks on the IoT. There was consensus among panelists around the importance of standards and guidelines like those released by the Administration earlier in the week. However, there was disagreement over whether formal regulations are necessary. While one participant called for government intervention, Rep. Greg Walden (R-OR), who chaired the hearing, noted that regulations would be a "knee-jerk reaction" to recent attacks. We’re tracking.

Tech Confronts the Reality of a Trump Presidency. It’s no secret that Donald Trump has been at odds with the tech community throughout his campaign. And while much of the industry is still reeling after Tuesday’s results, startup and tech leaders are beginning to come to terms with the reality of a Trump presidency. While a number of the positions espoused by Trump are antithetical to those held by the tech community (think immigration, encryption, net neutrality, etc.), some tech leaders are approaching President-elect Trump with an open mind and expressing a willingness to work with him. Then, on the other end of the spectrum, there’s VC Sherwin Pishevar calling for California to secede. No one can know exactly what Trump’s presidency will mean for startups and tech, but numerous publications are making predictions. A few of them can be found here, here, here, here, and here. 

This week, 84 business executives, both male and female, penned an open letter to our next president detailing the steps that he or she should take to bolster the participation of women in entrepreneurship. They grouped their suggestions into three broad categories: access to financial and human capital, access to local and global markets and networks, and help with the changing-face of technology. The lack of diversity in startups and investments is well documented. But it’s also indisputable that improving the landscape for female entrepreneurs will create positive economic and social impacts. As the group pointed out in their letter, if women and men participated equally in the entrepreneurial ecosystem, the United States’ GDP could rise by $30 billion. The business leaders also noted that women invest 90 percent of their income into their communities, meaning that an investment in their careers could easily benefit society as a whole.  

Change in Leadership at the Copyright Office. Last Friday, Maria Pallante was removed from her post as Register of the Copyright Office by the new Librarian of Congress, Carla Hayden. While Pallante was reassigned as a senior advisor on digital strategy, she formally declined the new position, resigning from the Office on Monday. As the 12th Register, Pallante was both a vocal advocate of separating the Copyright Office from the Library of Congress and an early supporter of SOPA—two policies strongly opposed by the startup and tech communities, as well as public interest groups. The abrupt change-up has sent shockwaves through both the tech and entertainment industries, and many believe it is a foreshadowing of the larger copyright reform debate that is expected to occur early in the next Congress. We’re tracking.

For years, the startup and tech communities have been advocating for a pathway that would encourage the most promising immigrant entrepreneurs to start and scale their companies in the U.S. While no program currently allows for this, a recent proposal from the White House could change that. The International Entrepreneur Rule, proposed by the U.S. Citizenship and Immigration Services (USCIS) in August, will allow qualifying foreign entrepreneurs to live in the U.S. to build their startup for up to five years. On Monday, Engine and New York-based technology trade group Tech:NYC submitted comments supporting the rule and recommending a number of targeted modifications, which we believe will allow the Rule to have an even greater positive impact. You can learn more and read the full comments here. 

Engine and Tusk Ventures have released our second “Grading the Candidates on Tech” report card, this time focusing on the candidates in some of November's tightest Senate races. We evaluated the candidates in eleven different contests based on their positions on key issues including broadband access and infrastructure, intellectual property, data security and privacy, and talent acquisition. The report card showed there were no overall leaders in the pool of 22 candidates and all but four candidates received an “incomplete” on a key issue on their respective report cards. The grades also reveal that many have failed to outline or champion any tech policies throughout their political careers, with data security and privacy receiving the most “incomplete” grades due to the lack of unbridled advocacy in supporting reforms to U.S. government surveillance laws. View the full analysis here. 

Our weekly take on some of the biggest stories in startup and tech policy. This week, we look at efforts around the upcoming election, the FTC's report on patent trolls, a lawsuit against Amazon, and Engine's travels with Rise of the Rest.

Our weekly take on some of the biggest stories in startup and tech policy. In this week's digest: stock options legislation, set-top box delay, new broadband adoption data, free rides to the polls, and the EU's copyright directive.

An Engine-championed bill that would make it easier for startup employees to exercise their stock options cleared important hurdles in Congress this week. Yesterday, the House of Representatives passed the Empowering Employees Through Stock Options Act, and a companion bill cleared the Senate Finance Committee earlier in the week. Even with partisan divisions higher than usual in this contentious election year, Democrats and Republicans came together to support EESO, passing the bill unanimously in the Senate Finance Committee and with substantial bipartisan support in the House. As we’ve written in the past, because employees exercising certain types of stock options must pay an immediate tax upon exercise (even though there is no public market on which to sell some of the newly acquired shares to pay the tax), startup employees are often unable to purchase their shares, making it difficult for startups to attract and compensate top talent. EESO allows employees to defer the tax payment on options for seven years or until the underlying shares are actually sold, providing workers with the flexibility they need to realize the value of their contributions to their companies. We are hopeful that the full Senate will consider the bill as expeditiously as possible so that it can head to the President’s desk before the end of his term.

On Wednesday, the House Ways and Means Committee voted to approve the Empowering Employees through Stock Ownership Act (H.R.5719), legislation that will make it easier for startup employees to exercise their options. Two days prior, Engine led a letter signed by over 50 startups expressing support for the bipartisan bill, which would allow employees to defer the tax liability they owe when they exercise illiquid stock options for up to seven years or until there is a liquidity event (whichever happens first). As the letter notes, the bill “will make it possible for more employees to obtain an ownership stake in the companies they help build and make it easier for startups and private companies to attract the talent necessary to grow the economy.” The bill is scheduled to face a floor vote in the House later next week, and the Senate Finance Committee is also likely to consider it before the Senate recesses next Friday. 

Never a fan of net neutrality, AT&T has upped the ante on controversial zero-rating programs, announcing a new program this week that will allow subscribers to stream video from DirectTV (a company AT&T owns) without consuming data under the company’s data caps. This means that AT&T is giving preferential treatment to its own data and putting all other video providers at a clear competitive disadvantage. While other programs like T-Mobile’s BingeOn service have tried to avoid the most egregious net neutrality violations by allowing any video service to participate in the zero-rating program without payment, AT&T’s program seems to directly implicate the Federal Communications Commission’s Open Internet Order. 

Engine is looking for startups, entrepreneurs, and the organizations that support them to sign our letter telling Congress that startups care about broadband competition. Startups, businesses, and other institutions often need significantly more internet bandwidth than consumers use at home, so they rely on what are known as “business data services” (BDS) to deliver high-speed, high-capacity connectivity. Unfortunately, the BDS market is dominated by a few broadband gatekeepers that distort the market and jack up prices for startups and other customers. But that could change soon: the Federal Communications Commission (FCC) is in the process of a rulemaking that will introduce competition and lower prices in the BDS market.

For years, the startup community has been calling for reforms to our immigration system that would allow immigrant entrepreneurs to build their companies in the U.S. It’s a no brainer, especially in light of the fact that more than half of the current group of U.S.-based “unicorns” (startups valued at more than $1 billion) have a foreign-born founder. While reforms in Congress have stalled, the Administration is proposing a new International Entrepreneur Rule that will allow foreign entrepreneurs to live in the U.S. for up to five years to help scale their business. To be eligible, the entrepreneur must have a 15 percent or greater ownership stake in the company and play an active and central role in its operations. 

We’ve lamented again and again that the current patent system just isn’t working for innovators. There’s been lots of talk about ways to curb abusive patent litigation tactics, but efforts to push legislative solutions through Congress have stalled for the time being. Still, there are creative ways to combat troll tactics in the short-term. This week, Engine announced a partnership with the Electronic Frontier Foundation to Reclaim Invention. The initiative aims to address one of the unexpected sources of troll behavior: American universities. Did you know that universities often license or sell their inventions to patent trolls?

By June 2012, President Barack Obama and his Republican rival Mitt Romney had already received over $11 million in donations from tech industry workers. But these employees—“long a reliable source of presidential donations”—haven’t been as generous with the 2016 nominees. Hillary Clinton and Donald Trump have only received a combined $3.5 million from tech workers so far. And Trump is faring much worse than Clinton, having pulled in a mere $128,000 from 238 tech donors so far. That’s less than 6 percent of what Romney had raised from tech by this point in the race.

Back in May, regulation crowdfunding went into effect, allowing anyone to invest in a startup through an online platform for the first time ever. But, as Engine has previously explained, we’re skeptical about the extent to which this market will truly take off given the current regulatory framework. We welcomed the House’s passage of Rep. Patrick McHenry’s Fix Crowdfunding Act (H.R. 4855) last month, which makes a couple of fixes from the startup community’s wish list like permitting special purpose vehicles. But the bill was heavily amended before passage, and as Evan argues in Bloomberg this week, it is missing a number of the startup community’s desired changes. 

Three weeks ago, Engine took a look at how the Democratic Party’s draft platform would impact the tech and startup communities. This week, the party released their final platform to coincide with the beginning of the Democratic National Convention (DNC). Building on their draft, Democrats committed to rolling out broadband to every American and added language around the deployment of next-generation 5G technologies and free, public Wi-Fi. Some changes were made around encryption as well. While the initial draft did not even mention the issue, the final platform pledged support for a “national commission” on encryption, an idea that has been championed by Sen. Mark Warner and Rep. Michael McCaul.

As the Republican National Convention kicked off this week, GOP leaders released the final draft of their party platform. The platform included a commitment to several issues important to the tech industry, such as expanding broadband access and pushing back against over-regulation, as well as a nod to startups and small businesses by supporting an expansion of tax deductions for startup and small business expenses. The GOP also reaffirmed their commitment to digital privacy rights and called for a resolution to the ongoing encryption debate, though they declined to take a firm stand on the issue. Unfortunately, the party reiterated their ardent opposition to net neutrality, and language in the platform on high-skilled immigration reform and LGBT issues will likely disappoint the tech community. 

Startups across the U.S. use stock options to attract and incentivize top talent. But as we’ve written before, the current tax code makes it difficult for employees to exercise those options requiring employees to pay taxes on their options even when there’s no public market to sell them to cover the tax burden. On Tuesday, Senators Dean Heller (R-NV) and Mark Warner (D-VA) and Representative Erik Paulsen (R-MN) introduced a bill aimed at remedying this. 

Over 40 technology startups from across the country signed Engine's letter to Congress explaining why encryption is essential to their business operations and their users’ digital security and trust. “Encryption is at the heart of many of our products and services. Without the security and confidence that encryption provides, it would be difficult or impossible for us to find customers and investors, and ultimately, grow our businesses...