[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                      NATIONAL ENTREPRENEURS' DAY

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           NOVEMBER 17, 2015

                               __________
                               

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 
                               

            Small Business Committee Document Number 114-029
              Available via the GPO Website: www.fdsys.gov
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                          MIKE BOST, Illinois
                         CRESENT HARDY, Nevada
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts
                           MARK TAKAI, Hawaii

                   Kevin Fitzpatrick, Staff Director
            Stephen Denis, Deputy Staff Director for Policy
            Jan Oliver, Deputy Staff Director for Operation
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                            
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Chris Ostoich, Co-Founder & VP Marketing, LISNR, Inc., 
  Cincinnati, OH.................................................     4
Mr. Sam Zietz, CEO and Founder, Touchsuite, Boca Raton, FL.......     6
Mr. Drew Bartkiewicz, CEO and Founder, lettrs LLC, Collinsville, 
  CT.............................................................     8
Ms. Jen Pepper, Owner, Peppersprouts and The Chatty Press, West 
  Newbury, MA....................................................     9

                                APPENDIX

Prepared Statements:
    Mr. Chris Ostoich, Co-Founder & VP Marketing, LISNR, Inc., 
      Cincinnati, OH.............................................    26
    Mr. Sam Zietz, CEO and Founder, Touchsuite, Boca Raton, FL...    29
    Mr. Drew Bartkiewicz, CEO and Founder, lettrs LLC, 
      Collinsville, CT...........................................    33
    Ms. Jen Pepper, Owner, Peppersprouts and The Chatty Press, 
      West Newbury, MA...........................................    37
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
                      NATIONAL ENTREPRENEURS' DAY

                              ----------                              


                       TUESDAY, NOVEMBER 17, 2015

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[Chairman of the Committee] presiding.
    Present: Representatives Chabot, King, Luetkemeyer, 
Huelskamp, Brat, Knight, Curbelo, Hardy, Kelly, Velazquez, 
Hahn, Meng, Lawrence, Adams, Moulton, and Peters.
    Chairman CHABOT. Good morning. The Committee will come to 
order. Earlier this month, I, along with Ranking Member 
Velazquez and several members of Congress, including many on 
this Committee, introduced a resolution to establish the third 
Tuesday in November as National Entrepreneurs' Day. As today, 
November 17th, is the third Tuesday of this month, it seems 
only fitting that we hold a hearing to highlight the vital role 
that entrepreneurs play in the American economy and how being 
an entrepreneur is, for many, a large part of the American 
dream.
    We are a country that was founded by inventors and 
entrepreneurs, such as Benjamin Franklin and Thomas Jefferson, 
and even George Washington. Our nation's rich heritage of 
entrepreneurship should compel us to continue to create 
opportunities for individuals who dream big and strike out on 
their own. In America, entrepreneurship is a viable career 
path, one that a majority of Americans consider a measure of 
success. We lead the world in ingenuity and innovation, and we 
should be proud of that.
    As the Committee on Small Business, we recognize that our 
entrepreneurs are in every community, whether it is running a 
100-year-old family restaurant or creating the next big product 
at a local accelerator. Each and every day, entrepreneurs are 
seeking to provide for their families, and build their 
communities, and live the American dream.
    However, sadly, we do know that the rate of new business 
creation is less than it was a few decades back. And while 
everyday people still dream of starting their own small 
business, it has become harder given the increase in 
regulations, challenges accessing capital, and general 
uncertainty in our economic climate.
    Today, though, we are fortunate to be joined by a great 
group of witnesses who have been successful striking out as 
entrepreneurs and who continue to promote entrepreneurship in 
their communities. I want to thank our panel for taking time 
away from their jobs and making the trip to Washington for this 
important hearing, and we look very forward to your testimony 
here this morning.
    And I will now yield to the ranking member, Ms. Velazquez, 
for her opening remarks.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Entrepreneurs are one of the leading forces in our economy. 
They develop new products, stimulate other industries, and 
create new markets. As a result, startups have a 
disproportionately positive impact on job creation. By starting 
new endeavors and developing cutting-edge products, entire 
industries, as well as the overall economy, are renewed and 
energized.
    Forming a new business and bringing innovative products and 
services to unproven markets is inherently risky. As a result, 
startups face unique challenges. From accessing capital and 
maneuvering an uncertain tax code, to managing operations and 
human resources, there are numerous hurdles to launching a new 
venture. Yet, despite the risks and challenges, new companies 
continue springing up, reinvigorating our economy. It is this 
committee's responsibility to ensure these firms have the 
resources they need to navigate these many complexities and 
take advantage of the wide ranging support available to them. 
Fostering innovators who are determined to turn their dreams 
into reality benefits the entire economy since these businesses 
create new markets and increase competition. Their actions have 
a multiplier effect on job creation as new enterprises and 
innovators are drawn into the new market.
    During today's hearing, we will have an opportunity to 
examine the unique role entrepreneurs and startups have played 
in strengthening our economy. Currently, entrepreneurship is 
experiencing growth as more immigrants, entrepreneurs, and all 
the professionals start businesses, and these job creators are 
becoming increasingly diverse with more than 40 percent of new 
entrepreneurs being minorities. While these numbers are 
promising, we have seen some groups steadily lose ground. In 
fact, the rate of women entrepreneurs has fallen to 36.8 
percent, which is close to a 2-decade low. And despite more 
college graduates starting businesses, the rate of younger 
entrepreneurs has been declining due to greater student debt 
burdens.
    Today's hearing will allow us to find solutions to these 
issues so we can learn how best to increase their participation 
as entrepreneurs. In order to facilitate their success, it is 
critical that as dynamics change, the strategy for supporting 
them also evolves.
    In advance to your testimony, I just want to take an 
opportunity to thank all of you for being here today. And I 
yield back.
    Chairman CHABOT. I thank the gentlelady for her opening 
remarks, and I would also like to ask unanimous consent that 
the gentleman from California, Mr. Peters, is recognized for 
the purpose of this hearing to ask questions and participate 
like any other member. He was, I believe, the lead sponsor in 
the last Congress of this legislation and was a cosponsor this 
time as well. So we thank him.
    Without objection, so ordered.
    I would now like to introduce our distinguished panel here 
this morning. I am very pleased to introduce our first witness, 
one of my constituents, Chris Ostoich, who is the cofounder and 
vice president of Marketing, LISNR, in Cincinnati. LISNR is new 
audio technology, and it recently raised $10 million in 
financing, which will lead to new jobs and opportunities in the 
Cincinnati area. But more importantly, Mr. Ostoich himself is a 
successful entrepreneur, and he has done a lot to reignite the 
spirit of entrepreneurship back in my hometown, and I thank you 
for that even though the Bengals lost last night for the first 
time this year. Very depressing today, so if I am a little 
less--well, never mind. It was just a sad, sad evening.
    So anyway, thank you very much for being here. And I would 
like to now turn to my colleague, Mr. Curbelo, to introduce our 
second witness.
    Mr. CURBELO. Thank you very much, Mr. Chairman, and I thank 
you and the ranking member for giving us this wonderful 
opportunity.
    I am pleased to introduce our next witness who hails from 
my home state of Florida. Mr. Sam Zietz is the CEO and founder 
of Touchsuite, located in Boca Raton, Florida. Mr. Zietz 
started his company, which specializes in point-of-sale 
technology, in 2003 and today employs about 60 people. He was 
recently recognized by Ernst and Young as the Southeast 
Region's 2015 Entrepreneur of the Year. In addition to his 
everyday job, Mr. Zietz is passionate about creating 
opportunities for America's youth to engage in entrepreneurship 
as a viable career path, and he is active in his local chapter 
of the Young Presidents Organization. He is joined here today 
by his wife, Sheila, and they are the parents of Rachel, 
Jordan, and Morgan. Rachel, an entrepreneur in her own right, 
Mr. Zietz has called his clone, and Jordan has also started a 
successful business. We will see what the future holds for 
Morgan, but I think we all have a pretty good idea as to what 
is going to happen. So thank you very much, Mr. Zietz, for 
joining us today.
    And Mr. Chairman, I yield back. Thank you.
    Chairman CHABOT. Thank you very much. And I would like to 
next introduce our next witness. Our third witness will be Drew 
Bartkiewicz, who is the CEO and founder of lettrs, which is 
incorporated in Connecticut but has much of its team located in 
Brooklyn, New York. As a resourceful entrepreneur, Mr. 
Bartkiewicz previously founded CloudInsure and CyberFactors. He 
is also a West Point graduate and proudly served in the United 
States Army. We thank you for your service, and also for making 
the trip to be with us here today.
    And finally, I would like to yield to another gentleman who 
we also thank for his service Mr. Moulton, to introduce our 
next witness.
    Mr. MOULTON. Thank you, Mr. Chairman.
    It is my pleasure to introduce my constituent from Newbury 
Port, Massachusetts, Ms. Jennifer Pepper. Jen is the owner of 
two Etsy-based stores. PepperSprouts opened in 2008, which 
sells woodland-inspired home decor, and ChattyPress, launched 
in 2011, which sells custom stationery. In 2012, Ms. Pepper 
left her job as a designer of the catalogue FetchDog to be a 
full-time entrepreneur operating her creative businesses. She 
owns and operates her online stores and works with other small 
businesses throughout the country to bring her nature-inspired 
home goods to life. Welcome, Ms. Pepper.
    Chairman CHABOT. Thank you very much. And I also would note 
that the gentleman from Massachusetts did an excellent job this 
morning on I think it was Morning Joe or one of those talk 
shows. So a nice job.
    Mr. MOULTON. Thank you, Mr. Chairman. Glad to hear you are 
watching MSNBC.
    Chairman CHABOT. Absolutely. It is a rare thing. I had a 
feeling I might get something like that but I have a very open 
mind. Once in a while--I will leave it there.
    Okay. Without further ado, we will go to our witnesses for 
their testimony. And I also want to just make sure you know 
what our rules are. We have basically a 5-minute rule, which 
means that you get 5 minutes to tell us everything you would 
like to tell us and then we get 5 minutes to ask questions. And 
we go back and forth to make it fair. And there is a lighting 
system. The green light will be on for 4 minutes. The yellow 
light will come on to let you know you have got 1 minute to 
wrap up, and then the red light will come on and we would ask 
you to try to keep within that as much as possible. We will 
give you a little leeway but not a whole lot.
    So Mr. Ostoich, you are recognized for 5 minutes.

 STATEMENTS OF CHRIS OSTOICH, CO-FOUNDER & VP MARKETING LISNR, 
INC.; SAM ZIETZ, CEO AND FOUNDER TOUCHSUITE; DREW BARTKIEWICZ, 
  CEO AND FOUNDER LETTRS LLC; JEN PEPPER, OWNER PEPPERSPROUTS

                   STATEMENT OF CHRIS OSTOICH

    Mr. OSTOICH. That would help. Does my time start over?
    Chairman CHABOT. Yes, we will restart the clock there.
    Mr. OSTOICH. Okay. Thank you for restarting my clock. I am 
about 5 minutes, 8 seconds.
    So, as I said, I am Chris Ostoich. I am an entrepreneur. 
This is my third entrepreneurial tour of duty, if you will, as 
cofounder and marketing leader at LISNR, which is a connected 
devices company based in Cincinnati, Ohio. I would like to 
thank Chairman Chabot and the rest of the Small Business 
Committee for having me here today. This is a real honor to be 
here in D.C.
    So I started my first company in 2006, and I started that 
company because of a pain that I felt personally. The pain was 
being new to a job in a city that I did not know. So I was new. 
I was disconnected. I did not have professional or social 
networks that mattered, and I do not mean the digital kind. I 
wanted to have a life that was full of meaningful 
relationships, both at home and at work. So I did what most 
rational people would do--I took all of the money that I had to 
my name, moved into my parents' basement. At 28-years-old, I 
took a job waiting tables at night and I went to work building 
this company.
    What I found very, very quickly was this. Your money goes 
quickly. Second, in any successful startup or entrepreneurial 
ecosystem, you always have three things--entrepreneurs with 
scalable ideas, investors will to back those ideas, and 
customers willing to engage and buy those products. Cincinnati, 
at this time in 2006, was a little short on all three.
    It was clearly not the first place on earth that one would 
think to build a tech company. We did not have accelerators. We 
did not have incubators. We had very little venture capital 
available to companies like mine. What I did not know, however, 
was that there was something very special in the works that was 
set in motion years before. There were things already happening 
that would very quickly make Cincinnati and the rest of Ohio 
what we call ``flyover country'' no more.
    In 2002, the Ohio Third Frontier was established to change 
the trajectory of Ohio's economy. The $2.1 billion initiative 
provides funding to Ohio technology-based companies, 
universities, research institutions, and other organizations to 
create new stuff--new technology-based products, companies, and 
jobs. It also set up regional investment arms in cities all 
over Ohio, including Cincinnati, Columbus, and Cleveland. By 
2006, the Ohio Third Frontier was starting to actually reach 
into these communities, and our regional investment arm in 
Cincinnati of the Third Frontier itself was called CincyTech, 
and they were just about to start making their first 
investments. So definitely right time, right place for me.
    My first company, BlackbookHR, was funded in 2008 by 
CincyTech and a syndicate of angel investors. By 2013, 
BlackbookHR was one of the industry's leading software 
solutions for employee engagement. In 2013, I started my next 
business with friend and P&G marketing veteran, Rodney 
Williams, called LISNR. So LISNR is a new communication 
protocol, not, you know, unlike Bluetooth. However, we are 
simply using sound around us to connect devices. In 3 short 
years, we have grown LISNR to more than 40 employees. We will 
reach 80 by the end of 2016. Just last week, as Chairman 
mentioned, we announced our $10 million Series B financing that 
was led by one of the most successful corporate venture 
capitalists in the world, Intel Capital, the chipmakers, as you 
probably know.
    CincyTech, however, has participated in each company that I 
have led, and almost every round of capital that we have 
raised. Collectively, companies that I have started have raised 
more than $20 million of venture capital money, and in total, 
we employ more than 60 people in all of those companies at an 
average salary of approximately $70,000, something I am very 
proud of.
    And I am just one representative from this great community. 
There are hundreds more like me in Cincinnati and in other 
cities in Ohio right now. In fact, many people are saying the 
Midwest offers the best opportunity for growing companies 
outside of Silicon Valley, and the math behind their logic is 
fairly straightforward. The Midwest makes up 19 percent of the 
country's GDP. We generate almost 20 percent of its patents. We 
have some of the best engineering schools in the world, and we 
house and hold more than any other region in the country in 
terms of the concentration of Fortune 500 companies. Yet, the 
region only attracts 5 percent of the nation's venture capital. 
So that is where state and federal government come in.
    As I mentioned previously, there are three things that are 
a part of any successful startup ecosystem--entrepreneurs with 
scalable ideas, investors willing to invest in them, and 
companies willing to do business with those companies. We still 
do not have enough access to capital in southwest Ohio, and we 
would not survive without programs like the Third Frontier. 
Today, the world has changed in Cincinnati and in Ohio, and 
here are three examples of the Third Frontier's influence.
    First, CincyTech has invested more than $25 million in 59 
companies in Cincinnati. Those companies have generated more 
than $500 million of follow-on capital and more than 760 jobs 
have been created. The Brandery has graduated 56 companies that 
have generated $120 million in follow-on funding, and lastly, 
Cintrifuse is a network connecting the region's high potential 
startups with talent, funding, and customers.
    Chairman CHABOT. Mr. Ostoich, if you would not mind 
concluding.
    Mr. OSTOICH. Certainly.
    Chairman CHABOT. Thank you.
    Mr. OSTOICH. This is the end. We would not be here if I did 
not have access to initiatives like the Third Frontier. We have 
come a long way in less than a decade, and there is still 
plenty of work to do. But I will tell you today, that Ohio is 
``flyover country'' no more.
    Thanks again for having me here today. It has been an 
honor.
    Chairman CHABOT. Thank you very much.
    Mr. Zietz, you are recognized for 5 minutes.

                     STATEMENT OF SAM ZIETZ

    Mr. ZIETZ. I am happy to be speaking before you today on 
National Entrepreneur Day. Entrepreneurship is what built this 
country through the likes of Rockefeller, Carnegie, Edison, 
Ford, and many others, and entrepreneurship remains the only 
competitive advantage we have over the rest of the world.
    I am extremely passionate about entrepreneurism, and 
actually just came back two days ago from the EY Strategic 
Growth Forum where I was fortunate enough to be recognized as 
one of the Entrepreneurs of the Year. I have also had my 
companies appear on the Inc. 500 List of Fastest Growing 
Companies seven times. My company, Touchsuite, is a financial 
technology company focused on the payment processing space. We 
provide businesses throughout North American with the 
technology necessary to accept payment. I believe that every 
great company needs to have a purpose greater than themselves 
and profit.
    At Touchsuite, our purpose is to help rebuild America one 
small business at a time. Through the products we create, we 
help other small business owners to compete with larger 
companies by giving them the same access to data, marketing, 
and capital that Fortune 500 and big box retailers have long 
enjoyed. As a result, they are able to increase their 
businesses, expand, provide for additional jobs, and stimulate 
the economy.
    However, I am most proud of the amazing entrepreneurs that 
my wife Sheila and I are raising. My oldest daughter Rachel is 
a passionate lacrosse player and saw a need for improved 
practice equipment and started her own company, Gladiator 
Lacrosse, when she was just 13 years old. She participated in 
the local chapter of YEA, Young Entrepreneur Academy, which is 
a 33-week program for students after school where they learn 
how to start a business, write a business plan, receive 
mentorship, and ultimately pitch investors for funding. She is 
now 15 and generating over 1 million in revenue. She is the 
top-seller on Amazon, has created multiple jobs, and was 
recently recognized by Governor Scott with Florida's Young 
Entrepreneur Award. My son Jordan also participated in the YEA 
program last year and won the local competition, the regional 
competition, and finished third in the nation out of 
approximately 4,000 students.
    I grew up in a blue-collar neighborhood outside Detroit, 
and even though I did not have much, I recognized there was 
opportunity for everyone regardless of the position you started 
in life, unlike so many other countries. I always wanted to be 
an entrepreneur, but I figured you needed one of two things--
money or know-how. I did not have any money, so I figured I 
better go get some know-how and went to law school. In 2001, 
with two young children, I took a leap of faith and followed my 
dream of starting my own business. I made it against the odds 
because of my legal background and the people I met along the 
way. If you want to make a decision at the governmental level 
that will increase the odds for others, then I would suggest 
you take the following four actions. First, make the capital 
markets available to everyone, not just large corporations. If 
small business had access to capital, there are a million ways 
they could effectively deploy it to obtain amazing returns for 
their business. Empower banks, particularly community banks to 
make loans. Banks by their very nature are not entrepreneurial 
and they want to avoid as much risk as possible. However, if 
the government were to insure part of the loan by charging a 
premium, they could go a long way towards offsetting the 
increased losses that would have to be paid out. Not only would 
this drive additional revenue through the premiums, but 
deploying capital into small businesses will create additional 
jobs, taxes, and capital expenditures.
    Second, reduce regulation. The cost of compliance is too 
high. There are many valid instances where regulation is 
necessary; however, we need to be able to remove as many 
obstacles as we can for businesses to be successful. Across the 
board, private enterprise has always been more efficient than 
government in execution. Less involvement in government in 
small business affairs equals stronger small businesses which 
equal more jobs.
    Third, create a favorable tax environment so people will 
want to invest. Like any good business person, they will run a 
risk-reward analysis. Any potential investor takes into account 
their after-tax return, which needs to be high enough or they 
will sit on the sidelines and not deploy their capital.
    Finally, promote entrepreneurship in the next generation. 
Entrepreneurship is as important as any core curriculum and 
needs to be taught to our children. We need to empower the 
future generation with the tools to succeed. Technology is 
rapidly changing at unprecedented levels, and that will only 
continue to speed up. We cannot train them for the jobs of the 
future since we do not know what they will be or the skills 
that will be required. However, we can prepare them for the 
mindset necessary to be successful.
    Our government needs to continue to support what built this 
country and foster an environment that is pro-entrepreneurship. 
It is my belief that through the planting of the seeds 
necessary to foster entrepreneurship in this country, we can 
harvest everything we need to regain our greatness. A strong 
culture of entrepreneurship in this country will solve most of 
our problems, will create jobs, will help the GDP rise, and 
shrink the deficit. Much in the same way that we rely on the 
brave men and women of the armed forces to fight for us and 
protect us, we need to remove the restraints we have placed on 
our small business community and allow them to win the global 
economic war we are fighting.
    Chairman CHABOT. Thank you very much.
    Mr. Bartkiewicz, you are recognized for 5 minutes.

                 STATEMENT OF DREW BARTKIEWICZ

    Mr. BARTKIEWICZ. Thank you, Chairman, and members, for 
inviting me today.
    I am a former 82nd Airborne paratrooper, so when I see a 
red light, if there is a compulsion to jump off the desk, you 
will know why.
    It comes as really a fascinating story for me to even be in 
front of you today. About 2-1/2 years ago, with three teenage 
children and my wife from Madrid, Spain, I began to lament 
that, in fact, there were no lasting words coming out of their 
device of choice. Their device of choice, whether we like it or 
not, is not the writing desk, it is not parchment paper, it is 
not quill pens. Their writing desk is right in their hand. I 
spent 20 years in the software industry since I left the 
military in the mid-'90s and graduated from the Yale School of 
Management. And, in fact, in the summer of 1994, I had a life 
event that put me on the path to start my company, and that 
path was I met a beautiful Spanish woman from Madrid, Spain, 
and for the next 6 months of our lives, we conducted long-form 
letter writing which became the foundation of our marriage of 
the last 19 years. (Speaking in Spanish)
    Lettrs is a bilingual application. In fact, it is 80 
languages at once, to invite people into a more deliberate, 
more passionate, and a more lasting communication. That 
business and that idea has, in fact, been, in the beginning, an 
extremely lonely journey. Every entrepreneur here knows that 
when you build something new, you are, in fact, going to be 
alone for a while because people are going to think you are 
either nuts or you have lost it or you are having a middle-age 
crisis. That was my case, by the way. But, in fact, when I 
unearthed these letters from 1994 and I started to circulate 
them on my fridge at home with my three children starting to 
observe, we realized that letter writing was not dead; letter 
writing simply had not yet been brought to the millennial 
generation.
    I, frankly, am sickened by the number of apps out there 
that are really, to me, frat apps. They invite anonymous 
messaging. They invite messaging that disappears. And where 
would this institution be if we had treated words with such 
dismissive ideology and such disdain. Words are, in fact, the 
most profound invention of human beings in terms of how we 
communicate and how we connect with other people.
    So my company, I am proud to say, has raised $2.3 million 
to create a technology network and a platform which does three 
very simple things. First, it takes you into the device of 
choice where people are, and I put a West Point-type rule when 
we launched the company, and that was you could not write a 
fast letter. The app would stop you. You cannot publish a 
letter quickly. You cannot deliver a private letter quickly. 
You were asked and invited into a more deliberate mobile 
communication. What happened from that point on shocked me. We 
were downloaded in 170 different countries. Five MBA players 
joined our network. The author, Paulo Coelho, The Alchemist, 
joined our network. Actress Izabella Miko. And the irony is, as 
a technologist, I did all of my study and research for timeless 
communication right across this green at the Smithsonian 
Museum, at the U.S. Postal Museum, and I spent time asking 
curators in the museum, what was the ingredient of the personal 
letter that was timeless? Not one of them said that because it 
was on paper. Not one of them. Paper and postal delivery was 
simply the medium of choice. It is what we relied on for 
personal correspondence. It is much the way picture-taking is 
no longer defined by the darkroom and 35 mm cameras. Picture-
taking is defined for the mass part of the world right here.
    And so thanks to the U.S. Postal Museum, we really studied 
what are the three elements of this technology that can be 
resurrected for a mobile world where all of the House members 
here, for example, could not only publish letters, sign those 
letters. By the gift of us today, you have a stamp for each one 
of you that is on the network today, and the aspiration of a 
letter is that it is something people want to read. The 
affirmation of a letter, it is something you are willing to 
sign. And every letter on our network is signed with a stylus 
or write with someone's finger. And I am proud to say over half 
of our investment has come through other Academy graduates and 
veterans who saw this as a meaningful company. I am delighted 
to say that our creative and coding staff is located in 
Brooklyn, New York. It is a hub of creative people who care 
about reviving a national pastime for words that last. And 
joining me today as well is an Air Force Academy graduate, 
Andrew Commendo, who was also funded by many Academy graduates 
and started an augmented reality company. So thank you for 
recognizing entrepreneurship, and on behalf of Mr. Ostoich, Mr. 
Zietz, and Ms. Pepper, it is great to be here. Thank you.
    Chairman CHABOT. Thank you very much.
    Ms. Pepper, you are recognized for 5 minutes.

                    STATEMENT OF JEN PEPPER

    Ms. PEPPER. Good morning. My name is Jen Pepper, and I am a 
creative entrepreneur from the North Shore of Massachusetts. 
Thank you, Chairman Chabot, and Ranking Member Velazquez, and 
all the members of the Committee for the opportunity to share 
my story with you today.
    I opened my first Etsy shop, PepperSprouts in 2008, where I 
make nature-inspired home decor. Etsy is an online marketplace 
where you can buy handmade and vintage goods from artists, 
designers, and collectors all around the world. When I opened 
my first shop, I was working full-time as a graphic designer in 
New York City, and PepperSprouts was just a creative for me. I 
sold some illustrations and a few greeting cards, but I never 
considered it a business. A few months in, I received an offer 
to try laser cutting for the first time, so I illustrated a 
design for a set of coasters and had them laser cut. I posted a 
photo of the coasters online and I started getting encouraging 
responses from friends and strangers and a few blogs. So with 
that encouragement, I started trying to sell them on Etsy. 
PepperSprouts kind of took off. My coasters have been featured 
in national magazines, sold in museum gift shops, and most 
importantly, treasured by people all across the world.
    In 2010, I opened another Etsy shop called the Chatty 
Press, where I sell stationery and address stamps for paper 
letters. I ran the shop in addition to working as a full-time 
graphic designer and running my original shop as well, and it 
grew slowly and steadily. And after another successful holiday 
season, in 2012, my fiance at the time and I agreed that I 
would quit my day job. This spring will mark my fourth year as 
a full-time creative business owner, a milestone I am 
incredibly proud of.
    But my experience is not unique. There are over 1.5 million 
sellers on Etsy. Together, we sold $1.93 billion in goods in 
2014. Most of the sellers there are underrepresented 
populations. Eighty-six percent of all Etsy sellers are women. 
We are twice as likely than other small business owners to be 
under the age of 35, and many sellers are parents with children 
at home. For many, Etsy acts as a starting point to creative 
entrepreneurship because it eliminates the barriers and risks 
to starting a business. It costs 20 cents to list one item on 
Etsy, and the platform takes just 3.5 percent of the 
transaction, so it is not surprising that nearly half of all 
Etsy sellers sold their first product on Etsy just like me.
    Some people may think that Etsy sellers are hobbyists, but 
we are small business owners in our own right. In fact, 76 
percent of all sellers on Etsy label their shops as businesses, 
and for 30 percent of those sellers, it is our sole occupation. 
For the rest, it provides an important source of supplemental 
income. Every part of my business stems from my heart and my 
own hands, and like the majority of Etsy sellers, I run all 
aspects of my shop by myself from my home. I write my own copy, 
I photograph my own products, I draw my designs, I stain and 
sand every set of coasters that goes through my house, and I 
typeset every address stamp that is sold in my shop.
    While operating as a business of one has been really 
liberating, it does come with challenges that policymakers 
could help address. First, I am concerned with the Remote 
Transactions Parody Act, H.R. 2775, which would require sellers 
like me who sell online to collect and remit sales tax in every 
state regardless of how big we are. There are over 9,000 tax 
jurisdictions in the United States, and it would be impossible 
for me to manage these new requirements without hiring 
additional help. H.R. 2775 would increase barriers to 
entrepreneurship and stifle creative microbusinesses, owners 
like me, who do not have the time or the resources to comply 
with this act.
    Second, policymakers could help by reducing the barriers we 
face when shipping goods across borders. Around 15 percent of 
my sales are to people in the U.K., Australia, and Canada, and 
while I love seeing my work in homes across the world, it can 
be a frustrating process to ship them there. Customs duty 
requirements vary by country, and tracking often stops at the 
border on packages. I do have to work harder than other large 
businesses, which have the means to navigate these complex 
shipping challenges and trade rules, and policymakers can help 
creative micro entrepreneurs like me by prioritizing higher de 
minimis custom exemptions in trade negotiations around the 
world. I am thank for the provisions in the Customs Bill 
increasing the U.S. de minimis to $800 and encouraging the USTR 
to prioritize this issue in future trade negotiations. I 
encourage lawmakers to quickly pass this important piece of 
legislation.
    Finally, policymakers can help build new systems to ensure 
economic security for self-employed people like me. As a 
business of one, it can be incredibly difficult to manage 
periods of slow sales, safe for retirement, or even take a sick 
day. When you are a business of one, there are no coworkers 
filling in when you are sick. Time away from my studio means 
money lost and increased stress upon my return.
    More people are earning income outside the employer-
employee relationship and working in the broader gig economy, 
and I encourage policymakers to consider new portable benefit 
models that ensure everyone has access to economic security 
regardless of the way they earn a living.
    I am deeply appreciative of the opportunity to share my 
story with you, and I hope that I have shed some light on the 
challenges creative entrepreneurs face today. I hope this 
coming year brings more success and more customers, so that I 
can hire an employee and perhaps even move into my own studio 
space. My dream is not only to sell my own work, but also 
create a lasting business that is bigger than just myself, and 
I would welcome the opportunity to work with all of you to make 
that dream a reality.
    Chairman CHABOT. Thank you very much. We thank the entire 
panel. It was very good testimony. Really.
    And I will recognize myself for 5 minutes now to ask 
questions. And I will start with you, Mr. Ostoich. It is my 
responsibility to be kind of the timekeeper here, so I 
apologize for cutting you off, so I will start with my first--
let me give you a minute or so. Is there anything that you 
would like to have said that you kind of ran out of time there 
at the end? So I will not ask you a specific question.
    Mr. OSTOICH. No, I think I got everything in that I have 
written, so I am happy to field questions.
    Chairman CHABOT. Okay. All right. Thank you.
    Well, let me ask you, you mentioned the Ohio Third Frontier 
Program. Could you maybe elaborate a little bit on that and how 
that happens, how it works in our state for small businesses 
and entrepreneurs?
    Mr. OSTOICH. Sure. Certainly. So I can tell you how I have 
seen it impact me personally. I was introduced to the Third 
Frontier through the CincyTech Initiative. So they deployed 
capital through regions in the state by focusing on regional 
networks. So Cincinnati has an entity, CincyTech. Tech Columbus 
is the entity in Columbus that invests in companies. Cleveland 
has Jump Start. So every major city that applied for this kind 
of capital, it was sort of an ask. And then the Third Frontier 
said, hey, in your region, if you can assemble a team of people 
to build this and then go raise funds to match what we are 
willing to give you--so it was a matching program, dollar for 
dollar--we would start pushing venture money into the region. 
It started as a nonprofit, and they quickly realized for 
investors to participate, as I mentioned, was important in that 
equation, that it needed to have a for-profit entity as well. 
So my experience with the Third Frontier has been working 
directly in CincyTech. They have invested between $500,000 and 
$800,000 in every company that I have started.
    Chairman CHABOT. Thank you very much.
    Mr. Zietz, I will go to you next. What were some of the 
challenges, things that made things tougher to be successful 
from the federal government? I know there are things with the 
local folks, but we tend to make it a lot tougher, whether it 
is regulations or whatever. What do we do that makes your life 
more difficult trying to be an entrepreneur and hire folks and 
be successful?
    Mr. ZIETZ. Yeah, there is a lot of regulation. I mean, one 
that recently impacted us and our clients was the Operation 
Choke Point that was implemented. It has since been supposedly 
curtailed and reversed, but the effect of it was to force us to 
stop payment processing service for Small Business, hundreds, 
and across the country, thousands, tens of thousands of small 
businesses because----
    Chairman CHABOT. Would you just briefly tell us again what 
Operation Choke Point was?
    Mr. ZIETZ. So Operation Choke Point was implemented to 
basically curtail the banking and payment processing for access 
to banking and payment processing for the business community. 
So if the government did not like a particular industry, even 
though it was completely legal, they would influence or 
prohibit the banks from allowing them to have bank accounts or 
payment processing to accept credit cards for payment. 
Effectively, the reason they call it Choke Point is you 
basically choke them off. If you cannot accept credit cards for 
payment, it is going to be a big deterrent to your business.
    Chairman CHABOT. Was not the firearms industry one of 
those, for example?
    Mr. ZIETZ. Absolutely.
    Chairman CHABOT. One that was kind of frowned upon by an 
administration at that time is my recollection. Yeah. All 
right.
    Mr. ZIETZ. That is exactly it. I mean, basically, the 
administration tried to implement social policy through 
Operation Choke Point.
    Chairman CHABOT. Thank you. I have only got a minute and 13 
seconds yet I have got two more I would like to get to.
    Mr. Bartkiewicz, let me go to you next. What is it about 
veterans? Why do they make such strong entrepreneurs oftentimes 
like yourself?
    Mr. BARTKIEWICZ. Ambiguity and uncertain outcomes is what 
you kind of adapt to in the military. So when you start any 
business, there is no shortage of ambiguity and there is 
certainly no shortage of uncertain outcomes. So I think your 
ability to adapt to a changing environment, your ability to 
have stamina and perseverance in terms of what you are doing 
are just two ingredients. I think the federal government could 
recognize that. Do exactly what you are doing today; just 
recognize it and it will happen.
    Chairman CHABOT. Thank you. Thank you for being brief on 
that, too, so I can get to Ms. Pepper. And I will be real brief 
on the question.
    Does intellectual property rights and making sure that they 
are enforced, et cetera, is that important to your business? 
Does that come into play at all?
    Ms. PEPPER. Absolutely. It would be great to have more of 
that infrastructure for outside countries as well. For me 
personally, I have had my work infringed upon by outside 
countries offering my designs using my own photos that I 
personally took and selling them for pennies on the dollar. And 
again, I am just a business of one, so tracking those people 
down and sending DMCAs to the sites is a lot to manage for one 
person.
    Chairman CHABOT. Thank you very much. My time is expired. I 
will now yield to the gentlelady from New York.
    Ms. VELAZQUEZ. Thank you. I was very happy to hear, Mr. 
Ostoich, that you mentioned the important role that government 
could play in providing access to capital or establishing 
contracting goals so that businesses could access the federal 
marketplace or the state government procurement processes, 
because that is a good way for a startup to get contracts. Do 
you think that it might be different to have that type of role 
played by government?
    Mr. OSTOICH. I do. In fact----
    Chairman CHABOT. The mike?
    Mr. OSTOICH. I do. Clearly, I have not figured this out.
    Both from the viewpoint of doing business with these 
entities.
    Ms. VELAZQUEZ. Sure.
    Mr. OSTOICH. In every one of my companies I could argue 
that the state or local government or the federal government 
could be a customer, but at the same time I would love to see 
more opportunities for in many cases big businesses to actually 
be incentivized by government to do business with small 
businesses. And that is one of the ways we get started. As a 
company that is less than a year old, it is all about whose 
logos you put up on your site in the first 12 months of your 
existence. And for us to have some incentive for big businesses 
to do business with us would be hugely helpful.
    Ms. VELAZQUEZ. Sure. We have contracting goals throughout 
the federal government, so if there is a prime contractor that 
has the opportunity to do business with the federal government, 
we require them to also subcontract with small businesses. So 
that is a way we incentivize the big, large businesses. They 
come in; they do business with the federal government and then 
provide an opportunity to contract with smaller businesses.
    Mr. Zietz, you mentioned it is important that we provide 
opportunities for everyone, and you also mentor young 
entrepreneurs, right, and startups? What would you say is the 
biggest challenge they are facing today, in terms of going 
ahead and opening their business but also in growing their 
business?
    Mr. ZIETZ. At a high level it is twofold. It is, one, 
access to capital. Two, it is experience. In experience scale, 
you always hear about entrepreneurs failing multiple times 
before they hit it big. Well, the reason for that is they are 
gaining experience. They are learning from their failures. But 
through mentorship, through programs that are out there, 
whether it is YPO, EO, incubators, et cetera, and even the 
universities have started to jump onboard, this education will 
provide them the experience necessary so they do not 
necessarily make those pitfalls.
    Ms. VELAZQUEZ. And what would you say is the biggest hurdle 
for young graduates to venture out and establish their 
business?
    Mr. ZIETZ. Well, they need access to the capital, but it is 
knowing that they can take that chance. When you are growing 
up, kids think they can do anything. In school and society, we 
kind of box them in. We need to stop boxing people in and 
letting them believe that they can do anything. And when they 
go out there, they will take those chances, they will take 
those risks, and many times they will create just unbelievable 
things that will propel our society.
    Ms. VELAZQUEZ. Do you think student debt is in a way a 
challenge for those graduates?
    Mr. ZIETZ. Well, my wife and I both graduated law school. 
We met in law school. And when we graduated, we joked that it 
would have been a huge head start if we had nothing because we 
had nearly $300,000 of debt. But we worked hard and paid it 
back and I was thankful for the access to it that allowed me to 
have an education.
    Ms. VELAZQUEZ. You mentioned that access to capital is very 
important, and we need to incentivize banks to lend more. And 
you say that community banks are the ones lending to small 
businesses in our communities.
    Mr. ZIETZ. I did not say that they are. I think they need 
to. I think----
    Ms. VELAZQUEZ. Well, when compared to the big banks, 
community banks are the ones that are lending to small 
businesses.
    Mr. ZIETZ. Yes, they are.
    Ms. VELAZQUEZ. And in the federal government, we 
incentivize community banks and other lenders to lend to small 
businesses by guaranteeing 85 percent of their loan. So I do 
not know if you are aware of this or whether any of you have 
benefitted in any way from the programs that are in place at 
the Small Business Administration.
    Chairman CHABOT. The gentlelady's time is expired, but if 
you would like to answer the question, go ahead.
    Mr. ZIETZ. I think the programs in place are very helpful, 
but I think we could go a lot farther with those programs by 
incenting, especially community banks who are on the 
frontlines. They know what that community needs and they know 
the character of that entrepreneur, and they are in the best 
position to make that--call it a bet on whether they are going 
to be successful. If the government backstops it with some sort 
of program where they can charge a premium to offset those 
losses, I think you will see a lot more entrepreneurism in this 
country.
    Chairman CHABOT. Thank you.
    Ms. VELAZQUEZ. We guarantee 85 percent. That is a big 
chunk.
    Chairman CHABOT. Thank you.
    The gentleman from Nevada, Mr. Hardy, who is the Chairman 
of the Subcommittee on Investigations, Oversight, and 
Regulations is recognized for 5 minutes.
    Mr. HARDY. Thank you, Mr. Chairman. Thank you for being 
here.
    You know, as an entrepreneurial small business owner myself 
in the past, I appreciate the risk that you take. It is a risk, 
and you know, every business that starts up takes that risk. 
That is truly what it means to be an entrepreneur. Putting 
everything aside, you move forward and you kind of try to 
figure out whether you can create a better mousetrap. So when 
you jump in, you either sink or you swim. Those that create 
that better mousetrap have success, as you folks have had. 
Those that do not kind of have to go back to the drawing board.
    Being that small business owner myself and stepping out and 
taking that chance, I want to give about 20 seconds to each of 
you if you would, to just tell me what you think caused you to 
take a step forward and take that challenge? Because it is not 
easy, at least in my opinion. But for some reason you push 
yourself to do it. What caused each of you to do that? If you 
do not mind, I will start with you, Mr. Ostoich.
    Mr. OSTOICH. I would say that for me it was a relentless 
commitment to my own pain. I think entrepreneurs are born out 
of either education or of pain, and for me it was a personal 
pain point that I was just relentlessly focused on making sure 
I solved for this, and I think that gave me the confidence to 
just take the lead.
    Mr. ZIETZ. I have a friend that says he is socially and 
economically unemployable, so I would say that probably applies 
to me as well. But it is really passion and purpose. I feel I 
had a purpose to go out there and be an entrepreneur and help 
other small businesses. We feel at our company that we champion 
the small business community and what we do is we solve their 
problems, and along the way we profit from that.
    Mr. BARTKIEWICZ. In my case, certainly, trust your 
instincts, and part of the challenge young people have in 
starting a new business and starting a company is they have not 
really fully developed confidence in those instincts. By the 
time that you have either previously failed or you felt the 
pain of working perhaps in another organization that did not 
fit for you, either the pain or the trust in your instincts 
just pushes you to do it. And the more philosophical answer is 
that I always believe what is most personal can also be the 
most universal, and therefore, if there is something that is so 
personal to you that you cannot see a world without it, you are 
just going to go do it.
    Ms. PEPPER. For me, it was part I did not have a choice. I 
had laid plans in the middle of 2012 after I was married to go 
full-time and quit my day job, and before we could get to that 
point in June, the catalog that I was working for actually shut 
its doors in March. So I was pushed into--I did not have a job 
anymore, so why not just keep working for myself because I 
already had these companies set up, so I just kept running with 
it, and here I am. I celebrate 4 years of it this spring.
    Mr. HARDY. Thank you.
    Mr. Bartkiewicz, I want to start with you first. First of 
all, you talk about you moved forward and did this as a middle-
age crisis. I must tell you, you are wrong. This is a middle-
age crisis. With that being said, back to your military 
background. I had the opportunity to go overseas and visit 
Israel, and they think some of their best entrepreneurs and the 
reason they are such an innovative country is because everybody 
has to be in the military. They have to grow up quick in Israel 
because they enter at 18 and they come out of there at 20, 21 
years old, and they have done some of the greatest innovations 
across the country over the past years. Did you see military 
life or service to your nation as an opportunity when you took 
that opportunity? And thank you for it.
    Mr. BARTKIEWICZ. For sure. You know, when I was in Iraq in 
1991, the vision of starting my own business was not in my 
mind. It was establishing the safe have for the Kurds. And when 
I play back the word nourishment that came through a letter, it 
is what I, 20-plus years later, revived. I think there is a lot 
of support for this nation for veterans, probably better than 
there ever has been. I think there is a recent decision on Reg 
A that allows noninvestors to get behind a new company and fund 
that company. So I certainly relied on the network of military 
people who knew me first as a place to start. I am sure every 
entrepreneur here went to people who knew them and trusted 
them. And you just build that incremental trust as you grow 
your company, and you discover that there are a lot of people 
in the world who want your services beyond just the military, 
which was wonderful in itself.
    Chairman CHABOT. The gentleman's time is expired.
    The gentlelady from California, Ms. Hahn, is recognized for 
5 minutes.
    Ms. HAHN. Thank you, Mr. Chairman and Ranking Member 
Velazquez for honoring our entrepreneurs in this country. I am 
happy to be a cosponsor of the resolution to declaring it 
National Entrepreneurs' Day, the third--is it the third 
Thursday? Or Tuesday. It should be every day.
    Thank you for your testimony, Ms. Pepper. I really 
appreciate that. I actually looked up your site while sitting 
here. You have some really creative, interesting items for 
sale. I love your woodland ornament advent calendar.
    Ms. PEPPER. Thank you.
    Ms. HAHN. Super cute. Anyway, you know----
    Chairman CHABOT. We may be violating some sort of 
advertising rules here, but you go right ahead. We want our 
small businesses to be successful.
    Ms. HAHN. I know. Right? It was super cute.
    Chairman CHABOT. I will give you some time at the end to 
make up for me breaking in.
    Ms. HAHN. I am certainly a strong supporter of women and 
minority-owned businesses. I have brought to my district in Los 
Angeles the former SBA administrator and other SBA officials to 
provide information. We have got seminars just for women-owned 
and minority-owned businesses. In fact, one in two new small 
businesses are Latinos in this country, so it really is 
interesting. And 86 percent of the businesses on Etsy are 
women-owned. So it certainly is a growing opportunity for women 
in this country.
    One of the things that you said in your testimony was that 
many small business owners lack access to retirement plans. In 
fact, over 68 million people lack access through their jobs, 
and I think this is an area where we really need to make sure 
people have the financial support and freedom and security to 
feel the confidence to start their own businesses. The Treasury 
Department started the pilot myRA program, and under this 
program, individuals can sign up for retirement accounts that 
have no fees or costs and no minimum balances. But more 
importantly, they are backed by our Treasury, and the account 
stays with you even if you change jobs or decide to open your 
own business. Have you personally heard of myRA? And do you 
think this program helps business owners like yourself? And do 
you think we should be doing a better job of promoting it?
    Ms. PEPPER. I have not heard of myRA, but it sounds like a 
great program that could definitely help small businesses, 
especially small individual businesses. I think a lot of what 
is missing in retirement plans for single business owners is 
knowing what plans work best for me personally because I am 
married. I had an individual IRA that no longer worked for me 
due to the amount of money that my husband was making. I got 
absolutely no tax credit and no incentivization to have that 
retirement plan. So I had to go to my account to find out what 
worked for me now. And that is information that is not readily 
available online, which is where most people turn for this kind 
of information.
    Ms. HAHN. So we probably should be doing a better job of 
promoting those programs to our small businesses.
    So I like to do a lot of my holiday shopping on Small 
Business Saturday, the day after Black Friday. And it usually 
seems like a lot of our emphasis is on the brick-and-mortar 
stores on Small Business Saturday. Do you think we should do a 
better job of promoting online small businesses like yours in 
these kinds of shop small business campaigns in this country?
    Ms. PEPPER. It would be silly to say no. Yes, absolutely. I 
think a lot of it is about going out and shopping local, which 
I absolutely do, and I am a big fan of, like, my local 
boutiques that sometimes carry my work and works of my 
colleagues as well. But I think anything that, you know, the 
government can do or even other small businesses can do to help 
support not just brick-and-mortar physical locations but all of 
the Etsy shops and even small businesses that are not on Etsy.
    Ms. HAHN. Have you ever reached out to our Small Business 
Administration with suggestions on how they might be more 
supportive of businesses like yours?
    Ms. PEPPER. I have not, but I absolutely will in the 
future.
    Ms. HAHN. Great. Well, thank you for being here.
    Ms. PEPPER. Thank you.
    Chairman CHABOT. Thank you very much. The gentlelady's time 
is expired.
    The gentleman from Virginia, Mr. Brat, is recognized for 5 
minutes.
    Mr. BRAT. Welcome to everybody this morning. Thanks for 
being with us.
    I just have a question. Once in a while, politics seeps 
into the city up here. Have you all ever heard of that? I will 
try to bypass that. I am kind of interested, a lot of your 
stories were very individual and the product you developed 
seemed very individual and particular to you. And so that is 
amazing. I applaud that; following your passion and developing 
a product in that way. But in the back of your mind, I mean, to 
duck the politics, as a small business person, did you choose 
that path for a reason? Were there other avenues you probably 
knew you could not pursue? I am just interested in the mind of 
entrepreneurs out there. Are there some paths that you can 
pursue in business and other sectors you just know ``I cannot 
go down that route.'' If you can all just four--or friends you 
have in other sectors, other industries where there are also 
entrepreneurs. I just am curious, a quick response from each of 
you on that one.
    Mr. OSTOICH. No. It was a very clear path for me. I spent 
most of my early professional career in finance, and felt like 
I was dying a slow death. And now being three startups in, and 
I blew the first one up. I did not share that with everyone, 
but the first one got shut down. This will be the same thing I 
do over and over and over again, and that is what I love about 
it.
    Mr. BRAT. That is great. And just to be clear, I am trying 
to get at policy up here. Is there anything we are doing wrong 
that is crimping some sectors and keeping you from pursuing 
some lines where you chose to go into others lines? That kind 
of a thing.
    Mr. ZIETZ. As for me, as I made my opening remarks, I 
always wanted to be an entrepreneur, and that led me ultimately 
to law school and I practiced law. I worked at a very large 
firm, Skadden Arps in New York, and I was doing structured 
finance. So I was securitizing income streams for others and I 
thought to myself, how do I go get one of these for myself? And 
that is how I discovered the payment processing space. And like 
any entrepreneur, when you start a business, you start to 
pivot, and that is how we ended up becoming a financial 
technology company. And we kind of evolved that way. I would 
say, sure, there are certain industries where there are huge 
barriers of entry. I would never have dreamed of starting a 
defense company. I just would not have those resources. Or a 
pharmaceutical company. But, you know, I think what you do as 
an entrepreneur is you rely on what you know and what your 
niche is, and most great entrepreneurs came from that 
background. You know, my daughter started a lacrosse business. 
Why? Because she was a very good lacrosse player and saw a 
need. So that is where I think most people go.
    Mr. BARTKIEWICZ. You know, the nature of the question asks 
kind of why do something insane? Because it feels like an 
insane process. But you will come across an observation of your 
society that is not necessary in the interest or long-term 
benefit of the next generation. And so as you become a parent, 
you start to think not about problem-solving for what you are 
doing, but how do you anticipate the problems that are right in 
front of your kids? And I read a book called The Shallows, 
which was a bestseller by Nicholas Carr a few years ago, and 
Nicholas Carr cautioned us as a society about the narrowing 
band of attention, literacy, and even emotional care that young 
people have as they move into a more and more shallow band to 
multiplication of inputs on a mobile device. So when I read the 
book, 20 years in technology, I said, if we use technology to 
invite people to move to the shallows, let us turn it upside 
down and use the same technology but now invite them into a 
more reflective, pensive, and with a sense of permanence by 
design. And it was that book that pushed me down a path to just 
go do it and not really worry about the consequences 
afterwards.
    Mr. BRAT. I was going to ask another round two, but Ms. 
Pepper, maybe I can ask you and push the second one on you. I 
did not want to get to this ahead of times but sometimes there 
is a tension between small business and big business. So I kind 
of ask the first round just to see, are certain avenues closed 
off to you? Put a little bit more bluntly, are there areas 
where you just see small businesses are being discriminated 
against, there are huge roadblocks? Not just scale. I get the 
scale industry kind of thing you cannot go down, but are there 
ways which you just feel small business is getting the short 
shrift?
    Ms. PEPPER. I would say in some aspects yes, with getting 
financing, all of the hoops that you have to jump through as a 
small business. You do not necessarily have people working for 
you who can manage all these things. You really have to do all 
of the research on your own, which is the one downfall for 
small business versus a larger corporation.
    Mr. BRAT. Anyone else in 7 seconds?
    Mr. BARTKIEWICZ. Going back to a large business right now 
would be the death of me.
    Mr. BRAT. I will close on that one. Thank you.
    Chairman CHABOT. Okay. Thank you very much. The gentleman's 
time is expired.
    The gentlelady from North Carolina, Ms. Adams, who is the 
Ranking member of the Investigations, Oversight, and 
Regulations Subcommittee is recognized for 5 minutes.
    Ms. ADAMS. Thank you, Mr. Chair. Thank you, Ranking Member 
Velazquez, for hosting this hearing.
    I have said many times that small firms are the engines 
that help drive our economy and our nation's small business 
entrepreneurs are in the driving seat. We must continue to 
support these business owners as they start and expand their 
companies. It is critical to target areas where small firms 
have the most potential to create jobs and thrive. Some point 
to government contracting while others focus on exporting.
    Ms. Pepper, in your opinion, what area has the highest 
likelihood to make this possible?
    Ms. PEPPER. I think one thing that needs to be mentioned 
about some small businesses and women-owned businesses, 
especially mine in particular and the 1.5 million sellers also 
on Etsy, is that we do not necessary want to grow to get 
government contracts or to grow and have 100 people working 
under us. We have our own measurements of success, and for some 
of us that might be making enough money to take our kids on a 
vacation. Some of us might be to quit our day job. Some of it 
might be to gain more wholesale accounts and have our goods 
sold in shops across country or across the world, but it does 
not necessarily stack up with what other businesses may 
consider successful outcomes.
    Ms. ADAMS. Thank you.
    Mr. Zietz, when compared with federal efforts, do you see 
any limitations in the types of business assistance services 
that the private sector, such as incubators and other mentor 
programs, can provide to small firms, particularly minority-
owned firms?
    Mr. ZIETZ. I think it breaks down to access to information 
and experience. So businesses that have access to experienced 
people, to mentors, to people to guide them, have a far greater 
likelihood for success. Programs, even at the youth level, when 
I mentioned the young entrepreneur academy, what they have done 
is they have partnered these children up with mentors from the 
business community who have already been there and done that. 
And they provided that access through their experience so that 
those kids are successful, and a lot of them have created real 
companies that are employing people and are generating real 
revenue.
    Ms. ADAMS. Beyond SBA's business assistance services, there 
are a number of training opportunities and resources available 
to small businesses such as community college classes.
    Mr. Bartkiewicz, in your opinion, how effective are 
educational classes at the college level for young 
entrepreneurs, and is this enough to encourage more young 
prospective business owners?
    Mr. BARTKIEWICZ. I think it is a great question because 
college and community are two incredible ecosystems to nurture 
risk-takers and problem-solving. I think for the college 
environment, you have certainly universities that distinguish 
themselves by attracting entrepreneurs, both success stories of 
students that come out of those schools and, you know, it 
certainly began out more on the West Coast part of the country. 
There was a bit of a tech snobbery when I first went out there 
for capital raising on my company. I can tell you though, in 
the New York City area, Austin, Chicago, there now is a lot of 
energy around community events called meetups. And these 
meetups are going on in these cities probably every other day 
on subjects form writing code to gaining capital to web design. 
And I will say, they are largely organized around a lot of new 
technologies, so I think your influence certainly could be to 
create your own meetups in your own jurisdictions, invite in 
entrepreneurs and let a community college know that these 
entrepreneurs are going to be coming to your office, to your 
forum, to talk about entrepreneurship and how they might pursue 
this themselves.
    Ms. ADAMS. Great. Thank you. And thank you all for your 
testimony. I yield back, Mr. Chair.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    The gentleman from California, Mr. Peters, is recognized 
for 5 minutes.
    Mr. PETERS. Thank you, Mr. Chairman, and thanks to Ranking 
Member Velazquez for holding this hearing on National 
Entrepreneurs' Day and for including me. I am not typically a 
member of the Committee but as you heard, I am allowed to sit 
in today, and I am happy to do so. And it was an honor to work 
with the members of the Committee to help introduce bipartisan 
legislation that would support designating the third Tuesday of 
November as National Entrepreneurs' Day. And I want to thank 
the witnesses for being here to highlight the culture of 
entrepreneurs in the spirit of America's growth and for sharing 
your experiences.
    I am proud to represent San Diego, California, which was 
recognized by Forbes last year as the number one place to 
start--to launch a startup. And it is clear to see how much our 
region has embraced the entrepreneurial spirit that continues 
to grow in San Diego. And I just want to mention that the 
reason I was involved last term was I was inspired by a leader 
in San Diego's Research Committee whose name was Duane Roth, 
who passed away from injuries sustained in a bicycling 
accident, so this particular effort has become of some 
importance to the entire city. His commitment to promoting 
entrepreneurial spirit helped turn San Diego into a top city 
for innovation.
    I wanted to ask a question of Ms. Pepper about one thing 
that she mentioned, which was--I think it is now called the 
Remote Transactions Parody Act. It is my understanding that the 
various discussions of that kind of approach, which is to 
require online businesses to collect sales tax so that you are 
not undercutting brick-and-mortar stores who are selling the 
same things. There is typically a discussion about an exemption 
for smaller businesses, and I have heard the range of that to 
be $5 or $10 million of annual revenue. Is that the kind of 
exemption that would help you in terms of implementing this?
    Ms. PEPPER. I think a $10 million exemption would be 
absolutely the right thing to do.
    Mr. PETERS. Okay. So you would favor that level?
    Ms. PEPPER. Yes.
    Mr. PETERS. Okay. Well, that is very helpful for us. I hope 
that we will be taking that up. I think you can see at the very 
large level that there is a disparity between folks who are 
selling these big ticket items and then being undercut by 
online purchases.
    Ms. PEPPER. Absolutely.
    Mr. PETERS. Also, I just wanted to mention, for the benefit 
of the chairman, we have introduced a bill to cut red tape to 
allow startups or businesses with less than a million dollars 
in revenue to file their federal taxes annually instead of 
every quarter. This is typically a Ways and Means thing, but it 
is something that I think this Committee might be interested 
in.
    Chairman CHABOT. It sounds like an excellent idea to me, 
and I would be happy to work with the gentleman on that.
    Mr. PETERS. Great. Thank you.
    And then finally, although you mentioned you were not 
interested in federal contracting, I am a member of the Arms 
Services Committee. We introduced rules there to allow small 
businesses to be eligible to compete for some of that business, 
and we think that that is a successful model for throughout the 
federal government, and again, Mr. Chairman, I would love to 
show you what our ideas were on the defense side and maybe make 
that something that is available throughout the federal 
government.
    Chairman CHABOT. We would be happy to work with the 
gentleman on that, too. Thank you.
    Mr. PETERS. Thanks very much. I want to just say again, 
thanks very much. I wish you the best of luck. And we have 
another NYU law graduate I saw there, too. There are three of 
us in Congress, and we know it is expensive, so I am glad you 
were able to pay back those loans.
    Mr. ZIETZ. Thank you.
    Mr. PETERS. Good luck. Thank you.
    Chairman CHABOT. Thank you. The gentleman yields back.
    The gentlelady from Michigan, Ms. Lawrence, is recognized 
for 5 minutes.
    Mrs. LAWRENCE. Thank you, Mr. Chairman.
    It is great to be with you today as we recognize the 
National Entrepreneurs' Day here in the United States.
    Ms. Pepper, congratulations on your success. I want you to 
know, between 1997 and 2015, the number of women-owned small 
businesses grew over 70 percent, and that rate is 1.5 times the 
national average. So congratulations on contributing to that.
    In my hometown of Detroit, a very small but effective 
nonprofit called the Build Institute, is helping promote 
entrepreneurship, and since it was founded and have graduated 
over 600 students, 70 percent of those students are women, and 
60 percent of them identify with a minority group. So we know 
that the growth of our economy in the United States is really 
right now resting on the shoulders of women, and we are very 
excited about that.
    So with that, based on your experience of starting and 
running a successful small business, what advice would you give 
to women across American who want to start and run their own 
business? And how can we, Congress, help you?
    Ms. PEPPER. I think the advice is not to be scared, and 
there is so much support out there. Even in the local level 
there is SCORE that you can go to in so many cities that will 
help not only women but any small business, navigate the tax 
law and all of the paperwork that a person would need in their 
individual location to start a business. And it ranges so much. 
I personally just moved to a small town from another small town 
in Massachusetts, and just to get my little business license 
for the town, it was about a 10-page book, where the last town 
that I looked in was just a piece of paper that I filed and 
signed. But I think anything the government can do to just make 
it easier, and being self-employed is an opportunity. It is 
work, but it is so rewarding just knowing that everything that 
you make and do and all of the money you bring in is because of 
you and your mind and everything that you created.
    Mrs. LAWRENCE. Thank you so much.
    I just want to say this. As we talk about understanding and 
this Committee, under the leadership of our ranking member and 
our chair, focus on the challenges of small business, it is 
extremely important that the feedback and your experience, that 
we understand it, we incorporate that into our policies so that 
we can do exactly what you mentioned, and that is to make the 
road to entrepreneurship and the road of small businesses to be 
one that is productive, one that we, you know, sometimes people 
say government gets in the way. I am a firm believer we should 
not be in the way. We should be empowering you and giving you 
the resources so that you can do what you do. Thank you all so 
much.
    I yield back.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    And I would now like to----
    Mr. BARTKIEWICZ. Chairman?
    Chairman CHABOT. Oh, I am sorry.
    Mr. BARTKIEWICZ. I was just going to add one comment to the 
nature of the question. I apologize for the interruption.
    Chairman CHABOT. No, go ahead.
    Mr. BARTKIEWICZ. There is definitely something to be said, 
too, about the cofounders of companies who bring a balance, and 
there is no doubt in our case the cofounder of our company, 
Araceli Bosco, my wife, has brought a certain grace, composure, 
and style to how we have grown our company, that myself as an 
aerospace engineer would not have brought. And so when people 
see the visual beauty of letters, the fact that no letters ever 
look the same, whether you view them on the web or the mobile 
device, the currency of our company is to certainly bring 
letters to the world. We will sell mobile stamps, and back to 
the other question, we would love to not have stamps be taxed. 
You cannot buy a mobile stamp at any retailer, so it would be 
nonsensical. But even though the currency of the company is to 
grow and make money, it was decided by my wife early on that 2 
percent of our company would be owned and allocated to 501(3)c, 
called the Ltters Foundation, which is allocated to purely let 
any cause, educational or nonprofit organization use this 
technology in perpetuity for free. So it was through kind of 
the grace of a cofounder to think that way, and I am delighted 
that my wife is really the soul of our company.
    Chairman CHABOT. Thank you.
    Mrs. LAWRENCE. I always like to remind people that women 
are 51 percent of the population, so it is great that you have 
targeted that other half of the population.
    Mr. BARTKIEWICZ. Thank you.
    Chairman CHABOT. Thank you. The gentlelady's time has 
expired.
    The gentlelady from New York, Ms. Meng, who is the ranking 
member of the Agriculture, Energy, and Trade Subcommittee is 
recognized for 5 minutes.
    Ms. MENG. Thank you, Mr. Chairman. And thank you to our 
ranking member for holding this Committee. And I just really 
want to thank you and congratulate all of our entrepreneurs for 
being here and all that you have achieved.
    I just wanted to further get a sense of what your 
experiences have been like with federal agencies' initiatives 
in terms of what do you think we can do more effectively to get 
out the message? I know that, for example, in my home district 
of Queens, New York, a lot of our businesses are sort of the 
brick-and-mortar shops, and online resources do not necessarily 
help. But then when we have talked to a lot of MWBs, for 
example, and in New York, they complain of lack of 
consolidation amongst the city, state, and federal levels in 
terms of paper handouts. So I just wanted to get your take on 
what do you think can be done more effectively to get the 
resources and information out? Anyone?
    Mr. ZIETZ. Well, you know, at the start it is less 
regulation, so making a business do what they do best. But 
promoting an environment for people to want to be 
entrepreneurs, and I think it starts at the lowest levels. I 
mentioned educating our children that this is a possibility, 
when they are young, that they can be an entrepreneur. They 
talk about wanting to be a doctor, wanting to be a lawyer, 
wanting to be an engineer. You know, we need to instill with 
them the belief that they would want to be an entrepreneur. 
Back years ago it was a dirty word. It was like, oh, you could 
not get a job. You became an entrepreneur. Well, that is not 
the case, and we have got people who have been very successful 
that you look out as role models and we want to let them all 
know. And it is not just we talked about why there is less 
women. You need to educate them at that same young age and let 
them be aware that this is a valid option for them. And when 
you do that--my daughter is a perfect example--then they do not 
see any limits and they can go on to be quite successful.
    Mr. OSTOICH. If I can jump in. I can give you some 
experience from the first company that I started. I did the SBA 
thing. I went to the SBA Office. I sat down with somebody and 
talked to them about what I was trying to build and where we 
were and current state of things, and that was not an option 
for us. And I think what the SBA is looking for in terms of 
grant making or loans, does not fit the mold or the model of a 
high-growth, high-tech company. However, where there is a huge 
opportunity I feel is that the SBA should be where small 
businesses go for information. I should not go to CincyTech or 
an investor who points me to the SBA. I should go to the SBA 
first and they should push me out to everybody. Even if they 
cannot make me a loan, or they cannot help my business 
financially, maybe they can connect me with someone who does.
    Mr. BARTKIEWICZ. My very mechanical view of the SBA was the 
SBA loan process. That application is really geared towards a 
very classic, physical asset company, inventory warehouse 
factory, cash flow, goods and services. So it is out-of-date in 
my view. There are a lot of companies who have created a lot of 
wealth and opportunity that do not fit that loan application 
box, which I think is a little outdated if I might make a 
suggestion.
    Ms. MENG. I know that Mr. Zietz, you mentioned children's 
entrepreneurship success. Are there certain programs or 
initiatives that you think local or federal government can do 
better to encourage entrepreneurship or foster necessary 
business skills among youth? And is there a demand for this 
even?
    Mr. ZIETZ. Well, you know, my children participated in a 
program called the Young Entrepreneur Academy. It was started 
in Rochester, New York, and it is about 140 locations right now 
and growing. I know they are trying to get the word out, so if 
anybody is listening, hopefully that is helpful to them.
    There are other programs out there that are similar to what 
they are doing, and there are other universities that are 
starting to not only develop programs and concentrations in 
entrepreneurship, but they are giving back to the community in 
bringing in students. And the earlier we can make them aware of 
these programs and provide this education, I know at my 
children's school I spoke recently with the principal about--
she asked me. You know, your kids are doing these wonderful 
things. How can we do that for all our children? And they are 
looking heavily into how to create a program for 
entrepreneurship there. And it is really access. When they know 
it is an option, then it is something that can be, you know, 
they can strive for.
    Ms. MENG. Thank you. I yield back.
    Chairman CHABOT. Thank you. The gentlelady yields back.
    We want to thank our panel here. I think you have really 
been excellent here today. Mr. Zietz, you mentioned about when 
people could not get a job and they became entrepreneurs it was 
maybe looked down upon back in the past. The kid I really feel 
sorry for is the poor kid in the GE commercials whose dad 
thinks he cannot pick up the hammer and whose friends ask him 
if he works on a train and all that kind of stuff. He is the 
one I feel very sorry for. GE Aviation happens to be 
headquartered in my district. But in any event, it is very 
obvious to me why each of you has been successful in a tough 
world out there. You are all very creative and quick on your 
feet, even though you are sitting down answering all our 
questions. I think you really did a commendable job here. And I 
would encourage folks to maybe consider these meetings are--if 
you go to the House Small Business website, these are all 
available, and if there are potential entrepreneurs out there 
all across the country who I think could really learn a lot on 
what took place here this morning and a little bit into this 
afternoon because you all had a lot of very wise things to say, 
and I think it would be great for the economy if they listened 
because a lot of people probably would be successful. Obviously 
not everybody, but some might be and hire a lot of folks and 
get the economy moving, and that is what both Republicans and 
Democrats on this Committee are all about. Right, Ranking 
Member?
    Ms. VELAZQUEZ. Let me just thank you for the important 
experiences you shared with us, and I hope that we could 
continue doing this at the local level so that other people--
because information is so important--are able to listen to you 
and do not make maybe the same mistakes people before them made 
or perhaps they gain the type of information that empowers them 
to go to the right places. One thing is certain--there is a 
network of support out there and we need to do a better job of 
communicating that information.
    Chairman CHABOT. Thank you very much. And again, we thank 
the very distinguished members of the panel for their testimony 
today.
    And I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, so ordered. And if there is no further 
business to come before the Committee, we are adjourned. Thank 
you very much.
    [Whereupon, at 12:25 p.m., the Committee was adjourned.]
                            A P P E N D I X

[GRAPHIC] [TIFF OMITTED] T7594.001

    Good morning. My name is Chris Ostoich - and I'm an 
entrepreneur. I'm on my third entrepreneurial tour of duty - as 
co-founder and marketing leader at LISNR, an internet of things 
and connected device company headquartered in Cincinnati, Ohio.

    I would like to thank Chairman Chabot personally and the 
members of the Small Business Committee for inviting me here 
today.

    I started my first company in Cincinnati in 2006. I started 
that company because of a pain I felt personally--the pain of 
being new in a city and in a job.

    I was new. I was disconnected. I was missing professional 
and social networks that mattered, and I'm not talking about 
the digital kind. I wanted to have a life that was full of 
meaningful relationships at home and at work--so I did what 
most rational people would do in this situation. AT 28 years 
old, I took every dollar to my name, moved into my parents' 
basement, got a job at night waiting tables for extra cash--and 
went to work building this company.

    What I found very quickly was this: in any successful 
entrepreneurial ecosystem, you will always have these three 
things:

           Entrepreneurs with scalable ideas
           Investors willing to back those ideas
           Customers willing to engage and buy products

    Cincinnati at this time was a little short on all three. It 
was clearly not the first place on earth one would think to 
build a tech company. We had no accelerators. We had no 
incubators. We had very little venture capital available to 
startups like mine.

    What I didn't know was that there was something very 
special in the works that was set in motion years before. There 
were things already happening that would soon make Cincinnati 
and the rest of Ohio flyover country no more.

    In 2002, the Ohio Third Frontier was established to change 
the trajectory of Ohio's economy. The $2.1 billion initiative 
provides funding to Ohio technology-based companies, 
universities, nonprofit research institutions, and other 
organizations to create new technology-based products, 
companies, industries, and jobs. It also set up regional 
investment entities in cities all over Ohio including 
Cincinnati, Columbus and Cleveland.

    By 2006 the Ohio Third Frontier was starting to reach local 
communities. Our regional investment arm of the Third Frontier 
was established in CincyTech--and they were about to begin 
making their first investments.

    My first company, BlackbookHR, was funded in 2008 by 
CincyTech and a syndicate of angel investors. By 2013, 
BlackbookHR had become one of the human resource industry's 
leading software solutions for employee engagement.

    In 2013, I started LISNR with my friend and P&G marketing 
veteran Rodney Williams. LISNR is a new communication protocol 
similar to Bluetooth; however, we are simply using sound to 
connect devices. In three short years, LISNR has grown to 40 
employees and will reach 80 by the end of 2016. Just last week, 
we announced our $10 million dollar Series B financing led by 
the one of the most successful corporate venture capitalists in 
the world, Intel Capital.

    CincyTech has participated in each company I've led and in 
almost every round of capital we have raised. Collectively, 
companies that I have started have raised more than $20MM of 
venture capital and, in total, companies that I have started in 
Cincinnati now employ 60 people at an average salary of 
approximately $70,000.

    And I am just one representative from this great community. 
There are hundreds more like me in Cincinnati and other cities 
in Ohio right now. In fact, many people are saying the MidWest 
offers the best opportunity for growing companies outside of 
Silicon Valley. The math behind their logic is fairly 
straightforward: the MidWest makes up 19% of the country's GDP, 
we generate almost 20% of its patents, we have some of the best 
engineering schools in the world and we have the largest 
concentration of Fortune 500 companies in the country, yet the 
region ONLY draws 5% of the country's venture capital.

    That's where State and Federal government comes in. As I 
mentioned previously, there are 3 things any successful startup 
ecosystem needs to be successful...entrepreneurs with scalable 
ideas, people willing to invest in them and companies willing 
to do business with them. We still do not have access to enough 
capital and would not survive without programs like the Ohio 
Third Frontier.

    Today the world has changed in Ohio and in Cincinnati 
specifically. Here are examples of the Third Frontier's 
influence.

    Since 2007, CincyTech has invested more than $25.5MM into 
59 companies in Cincinnati. Those companies have generated more 
than $509MM in follow-on investment capital. More than 760 jobs 
have been created and these companies have created almost 
$160MM in revenue.

    The Brandery, Cincinnati's top 10-ranked brand-focused 
startup accelerator, has accepted companies from 40 countries 
and 40 states into their accelerator program and has launched 
56 companies that have generated $120MM in follow-on funds.

    Cintrifuse is a network connecting the region's high-
potential, venture-backable startups to advice, talent, 
funding, and customers. With over 35 ecosystem partners, 50+ 
participating local corporations, 75+ mentors and advisors, and 
a $57MM Fund of Funds, Cintrifuse leverages the power of its 
networks to serve over 160 startup members and improve their 
chances of success.

    We've come a long way in less than a decade--and one 
thing's for sure, Ohio is flyover country no more.

    Thank you again for having me here today--it's been an 
honor.
    11-17-015 Zietz Testimony

    I am happy to be speaking before you today on National 
Entrepreneur Day. Entrepreneurship is what built this country 
through the likes of Rockefeller, Carnegie, Edison, Ford and 
many others, and entrepreneurship remains the only competitive 
advantage we have over the rest of the world. I am extremely 
passionate about Entrepreneurism and actually just came back 
two days ago from the EY Strategic Growth Forum where I was 
fortunate enough to be recognized as one of their Entrepreneurs 
of the Year. I have also had companies of mine appear on the 
INC 500 list of fastest growing privately held companies seven 
times and I am the incoming Chair of the Palm Beach Chapter of 
the Young Presidents Organization.

    My company, Touchsuite, is a financial technology company 
focused on the payment processing space. We provide businesses 
though out North America with the technology necessary to 
accept payment. I believe every great company needs to have a 
purpose greater than themselves and profit. At Touchsuite our 
purpose is to ``Help rebuild America, One Small Business at a 
time.'' Through the products we create we help other small 
business owners to compete with larger companies by giving them 
the same access to data, marketing and capital that Fortune 500 
and big box retailers have long enjoyed. As a result, they are 
able to increase their business, expand and provide for 
additional jobs and stimulate the economy.

    However, I am most proud of the amazing Entrepreneurs that 
my wife, Sheila, and I raising. My oldest daughter Rachel is a 
passionate lacrosse player and saw a need for improved practice 
equipment and started her own company, Gladiator Lacrosse, when 
she was just thirteen years old. She participated in the local 
chapter of YEA, Young Entrepreneur Academy, which is a thirty 
three week program for students after school where they learn 
how to start a business, write a business plan, receive 
mentorship and ultimately pitch investors for funding. She is 
now fifteen, and is generating over one million in revenue, is 
the top seller on Amazon, has created multiple jobs and was 
recently recognized by Governor Scott with Florida's Young 
Entrepreneur Award. My son Jordan also participated in the YEA 
program last year and won the local competition, the regional 
competition and finished third in the nation out of 
approximately 4,000 students. With the help of programs like 
YEA, there is not only an amazing future for my children, but 
this can be the future for our next generation which can 
continue the rich history of entrepreneurism we have had in our 
Country.

    Entrepreneurs make something out of nothing. We take a 
chance, work hard and follow our dreams. Sometimes we are 
successful and when we are we are typically handsomely 
rewarded, other times we fail, but even in failure we have 
benefited with an education, albeit an expensive one, that can 
be applied to our next venture, thus increasing the likelihood 
of success.

    I grew up in a blue color neighborhood outside Detroit and 
even though I did not have much, I recognized there was 
opportunity for everyone regardless of the position you started 
in life, unlike so many other countries. I always wanted to be 
an Entrepreneur but figured you needed one of two things, money 
or know how. I did not have any money so I figured I better go 
get some know-how and went to law school. After law school I 
was fortunate to work at Skadden, Arps, one of the largest law 
firms in the world. The great thing about working at Skadden 
was every year you were there they gave you three years of 
experience! However, this helped foster my work ethic.

    My wife had it far worse than I did. She was born in Cuba 
and came to this country when she was thirteen not speaking the 
language but managed to work hard and I was fortunate enough to 
meet her in law school. My wife and I joke that if we had 
started with nothing it would have been a huge head start 
because we were both saddled with six figure loans from law 
school.

    In 2001, with two young children and a high paying job, I 
took a leap of faith and followed my dream of starting my own 
business. I could have continued being an attorney and cashing 
a very nice pay check. But, I took a chance and bet on myself 
and what I thought I could build. As a result, today there are 
approximately one hundred people with high paying jobs that 
they love. I made it against the odds because of my legal 
background and the people I met along the way. If you want to 
make a decision at the governmental level that will increase 
the odds for others and make their journey easier, than I would 
suggest you take the following four actions.

    ACCESS TO CAPITAL

    First, make the capital markets available to everyone not 
just large corporations. If small business had access to 
capital there are a million ways they could effectively deploy 
it to obtain amazing returns for their business. Empower banks, 
particularly Community Banks, to make loans, their acquisition 
costs would be significantly lower since they already have the 
primary relationship with these customers. Banks by their very 
nature are not entrepreneurial as they want to avoid as much 
risk as possible, however, if the government were to insure 
part of the loan by charging a premium on every loan (similar 
to a PMI insurance in the real estate industry), the premium 
could go a long way towards offsetting the increased losses 
that would have to be paid out. Not only would this drive 
additional revenue through the premiums (i.e. increased 
interest rate, 2% or so), but by deploying capital into small 
business will create additional jobs, taxes, capital 
expenditures, etc. I believe that the Community Banks would be 
in the best position to make these types of loans as they know 
the local business owners in their community and with a more 
entrepreneurial underwriting process can allow them to think 
outside the box and make loans that make sense in their 
community.

    LESS REGULATION

    The cost of compliance is very high. There are many valid 
instances where regulation is necessary; however, we need to be 
able to remove as many obstacles as we can for businesses to be 
successful. A perfect example, of anti-business regulation was 
Operation Choke Point. Additionally, the different levels and 
requirements of regulations by each state make it impractical 
for small business to compete with larger companies that can 
absorb those unnecessary costs. Across the board private 
enterprise has always been more efficient that government in 
execution. Less involvement of government in small business 
affairs equals stronger small businesses, which equals more 
jobs.

    FAVORABLE TAX ENVIRONMENT

    With the upcoming election we are hearing about different 
tax plans and I am not here to give you another, however, we 
need to create a favorable tax environment so people will want 
to invest. We need to encourage those with money to invest and 
like any good business person they will run a risk reward 
analysis on any potential investment that takes into account 
their after tax return. That return needs to be high enough or 
they will sit on the sidelines and not deploy their capital. 
The recent perception in this country is ``tax the rich'', 
``CEOs are making too much money'' but that is not the correct 
question. Instead ask ``how many jobs were created?'', how much 
total tax revenue was generated''. Instead of vilifying these 
individuals and corporations we should be riding their coat 
tails. Who cares that they got more, look at what they created 
and at the end of the day they are the ones who took the chance 
and risked everything in hopes of the reward they received for 
executing.

    PROMOTE ENTREPRENEURSHIP IN THE NEXT GENERATION

    As I discussed earlier, Entrepreneurship is our only 
competitive advantage and we need to continue to foster that in 
the next generations. Entrepreneurship is as important as any 
core curriculum and needs to be taught to our children. We need 
to empower the future generation with the tools to succeed. 
Technology is rapidly changing at unprecedented levels and that 
will only continue to speed up. We cannot train them for the 
jobs of the future since we don't know what they will be or the 
skills that will be required. However, we can prepare them with 
the mindset necessary to be successful. The basics of 
Entrepreneurism are the same today as they were one hundred 
years ago; all that has changed is the products, technology and 
platforms utilized.

    CLOSING

    Our government needs to continue to support what built this 
country and foster an environment that is pro entrepreneurism. 
It is my belief, that through the planting of the seeds 
necessary to foster Entrepreneurship in this country we can 
harvest everything we need to regain our greatness. A strong 
culture of Entrepreneurship in this country will solve most of 
our problems, will create jobs, will help the GDP rise and 
shrink the deficit. Much in the same way that we rely on the 
brave men and women of the armed forces to fight for us and 
protect us, we need to remove the restraints we have placed on 
our small business community and allow them to win the global 
economic war we are fighting.
   Testimony of Drew Bartkiewicz, CEO of lettrs TM

            Before the U.S. House of Representatives

                    Small Business Committee

                       November 17, 2015

    Chairman Chabot, Ranking Member Velazquez and Members of 
the Committee:

    I am delighted to be here today to tell you the story of a 
brand new method of communicating meaningful messages--of 
reimagining, reinventing and reviving the national pastime of 
letter writing... all in a new mobile medium to capture the 
imagination and insights of the next generation.

    It is the story of using cutting-edge, up-to-date mobile 
platforms for people who care about more substantive and 
lasting communication. It is a story being written today by a 
group of entrepreneurial veterans who think we need a way to 
preserve the thoughts that we share with our friends, family, 
customers, elected representatives and, in some cases, total 
strangers who may become tomorrow's pen pals.

    This is the story of ``lettrsTM'' 
(www.lettrs.com) the company I founded because I believe that 
expressing our sentiments in 140 characters, or through a 
temporal e-mail does not value the preservation of our 
thoughts, is insufficient. As a father of three, I realized 
that we needed to harness technology to power deeper, broader 
and more nuanced language than those short-form snippet-
services allow. In essence we needed to reimagine the personal 
letter for a new world.

    There are times when it is important to step out of the 
flow of our functional, minute-to-minute communications to 
compose ``messages that matter.'' I am a student of letters, a 
product of their power and fervently believe that deep 
personalization of messaging--of mobile letter writing--is a 
new frontier, distributed across mobile, social, email and 
native messaging. In today's world of fast social media, the 
art of communicating in a personal, expressive, and impactful 
way is being lost...until now.

    By way of background, I graduated from West Point in 1989 
and served as an Army Lieutenant in the 82nd Airborne during 
the first Gulf War. What I learned during my military 
experience directly shapes my entrepreneurial approach today.

    Like every small business, especially a technology start-
up, leadership is essential. The Army taught me how to build 
and lead a team of diversely talented people without the 
benefit of perfect market intelligence and under very 
constrained budgets. I know how to lead in a climate where our 
adversaries--competitors, if you will--are determined, adaptive 
and patient.

    My Army unit in Northern Italy and then in Iraq was a hub 
of necessary innovation, rapidly reacting to a changing threat 
and demanding adaptive actions to persevere and succeed. The 
skills I learned then I apply to many of the decisions our 
company makes today.

    I am convinced that military education and service can be a 
magnificent way to learn how to be an entrepreneur. It 
certainly helped me graduate with an MBA from the Yale 
Management School in 1994 and served as the foundation upon 
which I have built my private sector business experience--a 
pathway that has taken me all across the globe. It is where I 
learned that no matter what language people speak, they have a 
common desire to communicate with others, especially with the 
hope of having communications that leave a lasting impression.

    Letters were in fact the very foundation of my relationship 
with my wife, Araceli, whom I met in Madrid, Spain in 1994. 
When I shared those letters with our three teenagers a few 
years ago, I was stuck by a force that was as compelling as it 
was contrarian: to save social messaging from itself. I quit my 
day job and started on the mission to design and deploy mobile 
technology to bring letter writing to the writing tolls my kids 
were using...their smart phones.

    So we have been on this journey for 2.5 years, powering 
more deliberate and expressive communications. We have filed 4 
non-provisional patents as a proud LLC, won a Google Play Best 
App Award in 2014 and recently won the trademark for our name 
``lettrsTM'' from the USPTO. And we are just 
beginning. We are becoming an expression network for all of the 
world's letters that may have otherwise never been written.

    Freedom of expression is a very powerful motivator for 
human beings--it is timeless in fact--and making it easier for 
people to convey personalized and lasting thoughts is at the 
core of what is driving the adoption of the lettrsTM 
app.

    Today our mobile social messaging and media platform allows 
personalized expression using letter-writing elements, such as 
calligraphy, stationery, stamps and even mobile signatures more 
than any other mobile messaging application. We are an award 
winning, original content management network for branded 
messages, fan mail and social media messaging.

    We provide the ability for every person attending this 
hearing to write a stamped, signed, and original letter which 
can then be delivered immediately to a cell phone number, an 
email address, and even through other social networks. We are a 
small business doing something different, as all small 
businesses must do, to craft their way to growth.

    Our unique network literally powers hand-signed mobile fan 
mail (what you might call constituent communications) that 
fuses people, pictures, prose and personality. It allows for 
communication that is automatically translated into 80 
different languages with a pen pal network spanning 170 
countries. LettrsTM allows for personalized, mobile 
social stamps to promote an idea, a brand, a social cause or a 
commercial product.

    Our vision is catching on across the world. As of last 
week, our social stamps have received over 950 million views 
since we introduced them this year. Vint Cerf, the ``father of 
the internet,'' recently conducted what he called the 
``Internet letters initiative'' and using the 
lettrsTM application the network powered over 1,000 
letters from 32 countries, helping to drive a new writing desk 
version on the web.

    Our fastest growth market is Indian where 
lettrsTM is giving over a quarter million people a 
voice in letter writing that they would not otherwise have. And 
while we are still compiling metrics, in the aftermath of the 
Paris terrorist attacks this past Friday, we are already seeing 
hundreds of passionate letters expressing sympathy and a global 
desire for resilience and resolve for sanity.

    Our story is one few would have ever seen coming. Just when 
the world thought letters were dead, a relic of the physical 
past, we have made them come to life again with passion, 
purpose, and personality. From our small offices in Brooklyn, 
New York, we touch people around the world. Through popular NBA 
celebrities, accomplished writer Paulo Coelho of The Alchemist, 
and eager millennials in a developing economy, the 
lettrsTM platform invited people to communicate with 
each other in a meaningful way. Not in the tradition of paper-
based writing but with the ease and expressive capabilities 
that a modern mobile device now offers.

    As a veteran-founded small business, we have created the 
world's largest database and cloud platform of signed digital 
letters from across the world--that now has led to a new book 
publishing concept with National Geographic, an emerging 
vintage stamps partnership with the Smithsonian and a long term 
partnership with the National Society of Collegiate Scholars to 
power the next generation of letters--from high school and 
college students who know they can and should ask more of their 
mobile communications. To my amazement, there are already more 
than 77,000 love letters on our network that inspires and 
invites a truly positive movement in the use of social 
technologies.

    We are not naive, but we honestly believe we have the right 
social platform to change the world for the better and I am 
proud to say that 2% of our company is already allocated to the 
lettrsTM Foundation (www.lettrsfoundation.org), 
having created charitable stamps and campaigns for the United 
Way, Wounded Warrior Project and the Sundara Fund. This is our 
effort to unlock mobile letter writing for free for any school 
or non-profit organization wanting to elevate their message 
that matters.

    During National Entrepreneur Week our panel today 
represents but a nano-fraction of the small business owners who 
are trying to pursue their dreams by creating business 
opportunities. It is not enough to have a good idea. 
Entrepreneurs need access to capital--human and financial--and 
I spend a lot of time ensuring that we have what we need. It is 
not an easy task.

    We did not even attempt to approach the Small Business 
Administration. Their application and approval process is quite 
tedious and is really designed for companies with physical 
collateral that can be pledged as a loan guarantee. Our 
collateral at lettrsTM--in contrast--is not physical 
but digital. We have been growing social and mobile assets, and 
we collect those powerful emotional expressions from 
individuals who have invested over 116,000 hours in writing 
deliberate words just in the last month alone.

    I funded lettrsTM the old fashioned way, through 
diligent personal efforts, persistence, sacrifice, managing 
early stage business risk and building incremental trust with 
our investors through large leaps in innovation. Individual 
investment in lettrsTM has come from many who are 
veterans themselves. Service Academy graduates, and also from 
individuals formerly of Amazon, Apple, Google, and 
salesforce.com, all who have faith in a veteran-founded 
technology company.

    Through some of my West Point classmates, I was introduced 
to a group of angel investors who focus on companies started by 
graduates of the military service academies. In addition to 
investing seed money in lettrsTM to help us get 
started, they have invested in other small businesses, 
including one started by my friend, Andrew Kemendo, an Air 
Force Academy graduate, who is sitting behind me this morning. 
Andrew's company, called Pair, has developed an augmented 
reality technology that is just remarkable and I hope you will 
have a chance to look at it after this hearing concludes. I 
would also like to show you how to download the 
lettrsTM app and personalize your own account to 
compose and sign your more deliberate and passionate 
communications, thereby inviting and inspiring your 
constituents to do the same. And I would like to show you how 
we personalize lettrsTM stamps, including some 
unique images that might even look familiar.

    In closing, I want to say thank you to my country to which 
I proudly served, the United States. I am grateful for the 
opportunity to testify this morning. It is an honor to be here.

    I look forward to your questions about my experience in 
building my company www.lettrs.com and how we plan to power the 
world's next generation of lasting communications.

    Drew Bartkiewicz, CEO lettrsTM

    [email protected]

    http://about.lettrs.com/

    Messages That Matter, Messaging 2.0.

    Featured in TIME, BBC, WSJ, BusinessWeek, and NPR

                               ##########
   U.S. House of Representatives Committee on Small Business

          Testimony on ``National Entrepreneurs' Day''

                         Presented by:

    Jennifer Pepper, Owner, Peppersprouts & The Chatty Press

                       November 17, 2015

         ------------------------------------------------------

    Good morning, my name is Jen Pepper and I'm a creative 
entrepreneur from the North Shore of Massachusetts. Thank you, 
Chairman Chabot, Ranking Member Velazquez, and members of the 
Committee for the opportunity to share my story with you.

    I opened my first Etsy shop, Peppersprouts, in 2008, where 
I make nature inspired home decor. For those of you not 
familiar with Etsy, it's an online marketplace where you can 
buy handmade and vintage goods from artists, designers and 
collectors around the world. When I started selling on Etsy, I 
was working as a full-time design director in a marketing and 
branding firm in New York City. Peppersprouts was a creative 
outlet for me. I sold some paper cut illustrations and a few 
greeting cards, but I wouldn't have considered it a business.

    A few months in, I received a discount code through an Etsy 
contest to try laser cutting for the first time. I illustrated 
a design for a set of coasters, as interior decorating has 
always been a passion of mine, and I had them laser cut. After 
posting a photo of the finished product online, I began getting 
encouraging responses from friends, strangers, and even a blog. 
With that positive encouragement, I started selling the 
coasters on Etsy.

    That's when PepperSprouts took off. All of the sudden, my 
coasters were featured in national magazines, sold in museum 
gift shops, and most importantly, treasured by people all 
across the world.

    In 2010, I decided to open another Etsy shop called The 
Chatty Press, selling stationery and address stamps. I ran this 
shop in addition to working as a full-time graphic designer and 
continuing to manage my first shop. The Chatty Press grew 
slowly and steadily. After another successful holiday season in 
2012, my fiance and I agreed that I would quit my day job after 
our wedding that summer, and try to make my Etsy shops a full 
time gig.

    Unfortunately, the catalog I was working for went under in 
March of that year, which expedited our plans. Although my move 
to full time entrepreneur happened a bit sooner than we 
expected, it is the best thing that could have happened. This 
spring will mark my fourth year as a full-time creative 
business owner, a milestone I am incredibly proud of. 
Creativity runs through my blood and so does the 
entrepreneurial spirit. My businesses give me the opportunity 
to pursue both of these passions.

    And my experience is not unique. There are over 1.5 million 
sellers on Etsy, and together we sold $1.93 billion in goods in 
2014. Most of those sellers are from traditionally 
underrepresented populations. For example, 86% of Etsy sellers 
are women, and they are twice as likely than traditional small 
business owners to be under the age of 35. Many sellers are 
parents with children at home and 17% of sellers have an annual 
household income under $25,000.

    For many, Etsy acts as a starting point to creative 
entrepreneurship by eliminating the barriers and risks to 
starting a business. It costs just twenty cents to list an item 
on Etsy, and the platform takes just 3.5% of every transaction. 
It's not surprising that nearly half of all Etsy sellers sold 
their goods for the very first time on Etsy, just like me.

    Some might be inclined to write off the Etsy sellers as 
amateurs or hobbyists, but we are small business owners in our 
own right. 76% of all Etsy sellers label their shops to be 
businesses, and for 30% of sellers, their creative business is 
their sole occupation. For the rest, their creative businesses 
provide an important source of supplemental income.

    Every part of my business stems from my heart and my own 
hands. Like the vast majority of Etsy sellers, I run all 
aspects of my shop on my own, working out of my home. I write 
my own copy, design my own ads, photograph my own products, 
draw my own designs, stain and sand every set of coasters, and 
typeset every address stamp that is sold through my shops. It 
is through my personal connection to each handmade good, that I 
am giving back to the world.

    While operating as a business of one has been truly 
liberating, it has comes with challenges that policymakers 
could help address.

    First, I have serious concerns with proposed legislation 
that would require sellers like me to collect and remit sales 
tax in every state. In particular, I am concerned about the 
Remote Transactions Parity Act (HR 2775), which would require 
sellers who use online platforms to collect and remit sales tax 
in every state, regardless of how big they are. I sell my items 
at craft shows in multiple states, and work hard to make sure I 
comply with the local rules wherever I go. But there are over 
9,000 tax jurisdiction in the United States--it would be nearly 
impossible for me to manage these new requirements without 
hiring additional help. The Remote Transparency Parity Act 
would increase barriers to entrepreneurship and stifle creative 
micro-business owners like me, who would simply not have the 
time or resources to comply.

    Second, policy makers could help businesses like mine by 
reducing the barriers we face when shipping goods across 
borders. Right now, around 15% of my sales are to people in the 
UK, Australia, and Canada. While it's rewarding to imagine my 
products in homes across the world, it can be a frustrating 
process to ship them there. Customs and duties requirements 
vary by country, and tracking often stops at the border. To 
successfully export my goods, I have to work much harder than 
larger businesses, which have the means to navigate complex 
shipping challenges and trade rules. Policymakers can help 
creative micro-entrepreneurs like me by prioritizing a higher 
de minimis customs exemption in trade negotiations around the 
world. I'm thankful for the provisions in the customs bill 
increasing the US de minimis to $800 and encouraging USTR to 
prioritize this issue in future trade negotiations. I encourage 
lawmakers to quickly pass this important piece of legislation.

    Finally, creative policymakers can help build new systems 
to ensure economic security for self-employed people like me. 
As a business of one, it can incredibly difficult to manage 
periods of slow sales, save for retirement, or even take a sick 
day. My IRA has barely seen a few new dollars since I began 
working for myself full-time. And, I have a weekly doctors 
appointment that takes me away from my studio for half a day. 
When you are a business of one, there are no co-workers filling 
in when you are sick. Time away from the studio means money 
lost, and increased stress upon return. More people are earning 
income outside of the employer-employee relationship and 
working in the broader gig economy. I encourage policymakers to 
consider new portable benefits models that ensure everyone has 
access to economic security, regardless of the way they earn a 
living.

    I am deeply appreciative of the opportunity to share my 
story with you, and hope that I have shed some light on the 
challenges creative entrepreneurs face today. Like 90% of Etsy 
sellers, I wish to continue to grow my creative business. I 
hope this coming year brings more success, and more customers 
so that I can hire an employee, and perhaps even move into a 
studio space, rather than continuing to work out of my 
wonderfully decorated spare bedroom. My dream is not only sell 
my work, but also create a lasting business that is bigger than 
myself. I welcome the opportunity to work with you to help make 
that dream a reality.

                                 [all]