GE Vice Chair Beth Comstock and Silicon Alley Entrepreneur Kevin Ryan Lead Panel of Experts Dedicated to High-Tech Industry Growth
Agenda is to Reform and Update Laws & Regulations That Discourage Business Innovation in New York – Tech Community Is Invited to Submit Issues
The Partnership for New York City, the city’s leading business organization, today announced the launch of the Partnership Innovation Council, a panel of industry experts who will seekto ensure that New York’s legal and regulatory environment is keeping pace with the technological revolution that is transforming business and the economy.
New York City’s high tech sector has expanded by 29% in the past five years, but still generates only 4% of the city’s total economic output. There is enormous potential for accelerated expansion of economic activity and new job creation in tech businesses if New York takes aggressive action to encourage innovation. This will require eliminating bureaucratic barriers and updating laws that with were written for a different era. The Innovation Council will provide the private sector expertise and insight into emerging economic trends to help government devise and implement needed reforms.
New York is enjoying considerable success as a leader in technology. Entrepreneurs and tech talent are increasingly drawn to New York, seeking access to the city’s large cluster of corporate clients, investors, and huge consumer market. Venture capital investment in the city increased by 82% in the past year and Silicon Alley’s significant cluster of digital media and e-commerce startups is being replicated across other industries, ranging from Fintech and Health IT to Advanced Manufacturing, Biotech and Enterprise Software.
On the other hand, high-profile conflicts with state and city regulators and policy-makers, such as those experienced by Uber and Airbnb, illustrate the challenges that many more companies will face as they introduce new products and business models in one of the country’s most highly regulated jurisdictions. The Innovation Council will be a forum for private sector experts to work with government to resolve conflicts and adapt outdated city and state laws and regulations in order to accommodate the rapidly growing impact of technology on society and the economy.
“New York City is rapidly becoming a center of technology transformation, and the Innovation Council will ensure that industry has the advocacy required to help unleash its full potential,” said Beth Comstock, Vice Chair of GE and Co-Chair of the Innovation Council. “At GE we’ve seen firsthand the power of partnership between government, startups and established business to solve big problems together.”
“As a tech entrepreneur active in New York over the course of more than two decades, I have seen what a positive force Silicon Alley is for the future of the city,” said Kevin Ryan, Chairman and Founder of Gilt, MongoDB, Business Insider, Zola and Kontor, and Co-Chair of the Innovation Council. “Entrepreneurs want to be in New York. It is home to a large pool of fellow innovators, important corporate clients and millions of consumers. The Innovation Council will play an important role in ensuring the city is well-positioned to take advantage of this entrepreneurial activity.”
“It is tough to build any business in New York, but it is particularly difficult for companies that are defying established interests and introducing products or services that fall outside the old legal and regulatory formulas,” said Kathryn Wylde, President and CEO of the Partnership for New York City. “Our city cannot continue to be a leader in the innovation economy unless government and the private sector work together to create a system that is responsive to the business revolution brought on by technology.”
The Partnership Innovation Council will:
- Identify New York City and State laws and policies that are obstacles to innovation.
- Educate policy makers on the needs of the innovation sector and best practices that other jurisdictions have put in place to address those needs.
- Develop a forum through which legal experts, industry leaders and government agencies are encouraged to collaborate to improve the business environment for innovation in New York.
- Advocate for reforms to New York’s complex business, regulatory and political environment to accommodate new business models.
The Council is inviting entrepreneurs, investors and advocates of innovation to submit information on the challenges they anticipate or have encountered while trying to do business in New York City. Companies are encouraged to submit this information confidentially through the Partnership Innovation Council’s website: www.innovateinnyc.org. The Council will not advocate on behalf of individual companies. Instead, it will aggregate examples of legal and regulatory barriers to innovation in order to shape its action agenda.
There are many examples of outdated regulations that the Innovation Council is likely to address, including the following:
- Laws and regulations that fail to accommodate the internet marketplace: New York City has spawned a number of on-line marketplace companies that connect producers of goods and services with customers around the world. These companies do not carry out any direct sales or fulfillment functions. They do provide very low cost access to markets because they do not have to build out compliance infrastructure in every market where their users reside. Tax collection agencies have suggested mandating that such companies be required to collect and remit taxes on behalf of their users, which could literally put them out of business. The State Education Department has interpreted state law to make a marketplace service for noncredit educational and vocational classes illegal.
- Procurement rules that put newer companies at a disadvantage: Government agencies often put eligibility requirements on bidders that exclude or disadvantage new companies. For example, they require a company to have been in business for a certain number of years in order to secure a contract.
- Expensive and unnecessary “paperwork”: State law requires every new Limited Liability Company (LLC) to place notices in two print publications for six weeks in order to announce its formation at a significant cost. Other laws and agency regulations require that applications, permits and documents be filed or issued “hard copy”, rather than on line. Moreover, filing requirements are inconsistent across agencies. A consistent policy for moving “paperwork” on line is an easy fix for allowing government and business to function more efficiently and at lower cost.
Council members include:
Orlan Boston, Global Client Service Partner & Americas Life Sciences Transactions Leader, Ernst & Young LLP
Beth Comstock, Vice Chair, General Electric Company
Mylan Denerstein, Partner, Gibson, Dunn & Crutcher LLP
Stuart Ellman, Co-Founder & Managing Partner, RRE Ventures
Jared Kushner, Chief Executive Officer, Kushner Companies
Anthony Malkin, Chairman & CEO, Empire State Realty Trust
Andrew McLaughlin, Partner, Betaworks
Greg Mondre, Managing Partner & Managing Director, Silver Lake
Jennifer Nason, Global Chairman, Technology, Media & Telecommunications Investment Banking; J.P. Morgan
Michael Rhodin, Senior Vice President, IBM Watson, IBM Corporation
Kevin P. Ryan, Chairman and Founder of Gilt, MongoDB, Business Insider, Zola and Kontor
Robert K. Steel, Chief Executive Officer, Perella Weinberg Partners LP
Michael Steib, President & CEO, XO Group Inc.
Mark Stein, Senior Vice President & Chief Strategy Officer, IAC
The Council’s work will be supported by a Legal Advisory Group, comprised of lawyers from:
Bryan Cave LLP
Davis Polk & Wardwell LLP
Debevoise & Plimpton LLP
Fried, Frank, Harris, Shriver & Jacobson LLP
Paul, Weiss, Rifkind, Wharton & Garrison LLP
Proskauer Rose LLP
Sidley Austin LLP
Simpson Thacher & Bartlett LLP
Wachtell, Lipton, Rosen & Katz
Wilmer Cutler Pickering Hale and Dorr LLP