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| <title> - FLIPPING THE SWITCH ON RURAL DIGITAL ENTREPRENEURSHIP</title> | |
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| [House Hearing, 116 Congress] | |
| [From the U.S. Government Publishing Office] | |
| FLIPPING THE SWITCH ON RURAL DIGITAL ENTREPRENEURSHIP | |
| ======================================================================= | |
| HEARING | |
| before the | |
| COMMITTEE ON SMALL BUSINESS | |
| UNITED STATES | |
| HOUSE OF REPRESENTATIVES | |
| ONE HUNDRED SIXTEENTH CONGRESS | |
| FIRST SESSION | |
| __________ | |
| HEARING HELD | |
| MARCH 13, 2019 | |
| __________ | |
| [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] | |
| Small Business Committee Document Number 116-011 | |
| Available via the GPO Website: www.govinfo.gov | |
| ______ | |
| U.S. GOVERNMENT PUBLISHING OFFICE | |
| 35-340 WASHINGTON : 2019 | |
| HOUSE COMMITTEE ON SMALL BUSINESS | |
| NYDIA VELAZQUEZ, New York, Chairwoman | |
| ABBY FINKENAUER, Iowa | |
| JARED GOLDEN, Maine | |
| ANDY KIM, New Jersey | |
| JASON CROW, Colorado | |
| SHARICE DAVIDS, Kansas | |
| JUDY CHU, California | |
| MARC VEASEY, Texas | |
| DWIGHT EVANS, Pennsylvania | |
| BRAD SCHNEIDER, Illinois | |
| ADRIANO ESPAILLAT, New York | |
| ANTONIO DELGADO, New York | |
| CHRISSY HOULAHAN, Pennsylvania | |
| ANGIE CRAIG, Minnesota | |
| STEVE CHABOT, Ohio, Ranking Member | |
| AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member | |
| TRENT KELLY, Mississippi | |
| TROY BALDERSON, Ohio | |
| KEVIN HERN, Oklahoma | |
| JIM HAGEDORN, Minnesota | |
| PETE STAUBER, Minnesota | |
| TIM BURCHETT, Tennessee | |
| ROSS SPANO, Florida | |
| JOHN JOYCE, Pennsylvania | |
| Adam Minehardt, Majority Staff Director | |
| Melissa Jung, Majority Deputy Staff Director and Chief Counsel | |
| Kevin Fitzpatrick, Staff Director | |
| C O N T E N T S | |
| OPENING STATEMENTS | |
| Page | |
| Hon. Nydia Velazquez............................................. 1 | |
| Hon. Steve Chabot................................................ 2 | |
| WITNESSES | |
| Mr. Dana F. Connors, President & CEO, Maine State Chamber of | |
| Commerce, Augusta, ME, testifying on behalf of the Maine State | |
| Chamber........................................................ 5 | |
| Mr. Bill Ingersoll, Owner, Bikes, Trikes, and Quads, Sloansville, | |
| NY............................................................. 6 | |
| Ms. Afton Stout, Owner, My Dinosaur Dreams, State Center, IA..... 8 | |
| Mr. Jake Ward, President, Connected Commerce Council, Washington, | |
| DC............................................................. 10 | |
| APPENDIX | |
| Prepared Statements: | |
| Mr. Dana F. Connors, President & CEO, Maine State Chamber of | |
| Commerce, Augusta, ME, testifying on behalf of the Maine | |
| State Chamber.............................................. 31 | |
| Mr. Bill Ingersoll, Owner, Bikes, Trikes, and Quads, | |
| Sloansville, NY............................................ 36 | |
| Ms. Afton Stout, Owner, My Dinosaur Dreams, State Center, IA. 40 | |
| Mr. Jake Ward, President, Connected Commerce Council, | |
| Washington, DC............................................. 43 | |
| Questions for the Record: | |
| None. | |
| Answers for the Record: | |
| None. | |
| Additional Material for the Record: | |
| Connected Commerce Council SME Research...................... 47 | |
| FLIPPING THE SWITCH ON RURAL DIGITAL ENTREPRENEURSHIP | |
| ---------- | |
| WEDNESDAY, MARCH 13, 2019 | |
| House of Representatives, | |
| Committee on Small Business, | |
| Washington, DC. | |
| The committee met, pursuant to call, at 11:33 a.m., in Room | |
| 2360, Rayburn House Office Building. Hon. Nydia Velazquez | |
| [chairwoman of the committee] presiding. | |
| Present: Representatives Velazquez, Finkenauer, Kim, | |
| Golden, Schneider, Delgado, Houlahan, Craig, Chabot, Balderson, | |
| Hern, Hagedorn, Stauber, Burchett, Spano and Joyce. | |
| Chairwoman VELAZQUEZ. Good morning. The committee will come | |
| to order. | |
| I thank everyone for joining us this morning, and I want to | |
| especially thank the witnesses for being here today. | |
| In today's economy, there is no doubt that digital | |
| technology has revolutionized the way entrepreneurs are looking | |
| to build, grow, and manage a successful business. | |
| Whether it is utilizing the latest app to advertise a | |
| product or engaging in the sharing economy by renting out a | |
| work space online, these type of inventions have been a | |
| catalyst for small businesses in just the last decade. In fact, | |
| three out of four American small businesses utilize tech | |
| platforms for sales, according to industry estimates. And, an | |
| even higher amount use at least one digital platform to display | |
| products and services, as well as advertise. | |
| By harnessing the opportunities of digital platforms and | |
| marketplaces, many small businesses and entrepreneurs are | |
| experiencing growth and success. Look no further than the small | |
| businesses testifying here today. | |
| It is also no secret that some of our country's most | |
| innovative ideas and successful small businesses are hatched | |
| within our rural communities. Yet, in many rural areas | |
| throughout this nation, the absence of reliable broadband | |
| threatens to hold back an entire subset of entrepreneurs. | |
| Approximately 14 million rural Americans and 1.2 million | |
| Americans living on Tribal lands still lack mobile LTE | |
| broadband at speeds of 10 megabytes per second. Put another | |
| way, more than 30 percent of rural residents lack broadband, | |
| compared to just 2 percent of urban residents. Among rural | |
| tribal residents, the share increases to 66 percent. | |
| The stories behind these numbers are of real entrepreneurs | |
| whose ability to secure affordable capital, expand into new | |
| markets, and hire workers, are all jeopardized without reliable | |
| internet access. | |
| So, it is important that any technological leap to 5G or | |
| future investment in infrastructure from Congress secures | |
| access to reliable broadband, no matter where in the U.S. the | |
| next small business finds itself. | |
| We cannot, however, encourage small businesses to adopt | |
| today's digital platforms without simultaneously ensuring they | |
| have the training and resources necessary to protect themselves | |
| against cyberattacks and bad actors. | |
| Therefore, today's conversation about expanding digital | |
| opportunities for rural entrepreneurs must also consider how we | |
| as members of this committee, can work to make it easier and | |
| more affordable for the budding small business to not only | |
| utilize digital technology, but be smart about not exposing | |
| themselves to greater risks. | |
| Government policies should also keep pace with | |
| technological innovations and empower rural entrepreneurships | |
| to look beyond geographic boundaries. In order to access new | |
| markets and customers all over the world, small businesses need | |
| policies that encourage digital growth, not hinder it. | |
| Finding the right balance to expand the reach and | |
| capabilities of rural entrepreneurs while also keeping them | |
| safe is a priority for this committee. | |
| It is my hope that today's discussion can help identify | |
| ways to support and expand the number of businesses utilizing | |
| digital platforms, particularly for those that are in more | |
| rural communities. | |
| With that, I thank each of the witnesses for joining us | |
| today and I look forward to your testimony. | |
| I now would like to yield to the Ranking Member, Mr. | |
| Chabot, for his opening statement. | |
| Mr. CHABOT. Thank you, Madam Chairwoman, and good morning | |
| to all those that are here today. I want to thank the witnesses | |
| especially for taking the time out of their busy work day to be | |
| here with us. | |
| And before I get into my truly stimulating and emotional | |
| and inspiring opening statement on digital opportunities for | |
| rural entrepreneurs, I would like to introduce, we have got | |
| three students here shadowing me today, so if you three could | |
| stand up. These three are from The Ohio State University. So we | |
| appreciate them being here. | |
| So they have seen us discuss NATO in Foreign Affairs. They | |
| have seen us discuss VAWA, The Violence Against Women Act, and | |
| amendments on transgender issues and a whole range of issues, | |
| and so we are going to try to make the Small Business Committee | |
| just as interesting here today, and I am sure we will succeed. | |
| So I will get right into it. Here is my stimulating speech. | |
| The use of digital technologies, including access to high | |
| speed internet and online tools is gaining popularity in rural | |
| areas because of the opportunities they create for small | |
| businesses throughout the countryside. Increasingly, digital | |
| tools and platforms form the foundation of success for the | |
| modern day American small business. Small businesses that use | |
| digital tools are more nimble, resourceful, and able to reach | |
| more potential customers. | |
| It is no surprise that digitally-powered businesses earn | |
| twice the revenue and are three times more likely to create | |
| jobs. And that is, after all, what this Committee is about; | |
| trying to create more jobs for more Americans. | |
| Unfortunately, there continues to be a lack of data about | |
| the rural aspect of the small business economy. What we do | |
| know, however, is that 27 percent of rural residents still do | |
| not have access to a high-speed internet connection. In | |
| addition to this lack of infrastructure, rural areas lack | |
| skilled IT professionals to assist in the adoption of more | |
| advanced digital technology. That is why this new report from | |
| the U.S. Chamber of Commerce is so timely and important. The | |
| Chamber surveyed over 5,000 small business owners across rural | |
| American about the economic impact to the online tools and | |
| technology on their businesses. Among other findings they | |
| discovered that while the ecommerce ecosystem boosts sales and | |
| reduces costs for rural small companies, such firms are | |
| adopting digital tools at a pace much slower than their urban | |
| counterparts. | |
| The study also found that greater use of digital tools and | |
| technology could increase greater economic potential for rural | |
| small businesses across the country. With better access to | |
| digital tools and technology, the Chamber's analysis shows | |
| potential economic benefits in rural areas that is far | |
| reaching. For example, the study projects that gross sales for | |
| rural small firms could increase by more than 20 percent over | |
| the next 3 years, the equivalent of $84.5 billion per year. | |
| Such increases would also lead to an additional $46.9 billion | |
| to the U.S. gross domestic product and create over 360,000, so | |
| about a third of a million jobs. | |
| I am looking forward to today's discussion and a further | |
| examination of these numbers and hearing suggestions about how | |
| we can increase the utilization of digital tools and | |
| technologies. The goal, of course, is to unlock the vast | |
| potential that is out there in the rural small businesses. And | |
| again, Ms. Velazquez, thank you very much for holding this | |
| hearing. I know that was pretty stimulating, and I yield back. | |
| Chairwoman VELAZQUEZ. The gentleman yields back. | |
| And if committee members have an opening statement we would | |
| ask that they be submitted for the record. | |
| I would like to take a minute to explain the timing rules. | |
| Each witness gets 5 minutes to testify and every member get 5 | |
| minutes for questioning. There is a lighting system to assist | |
| you. The green light will be on when you begin, and the yellow | |
| light means that there is 1 minute remaining. The red light | |
| comes on when you are out of time, and I will ask that you | |
| please try to stay within the timeframe. | |
| I would now like to yield to Mr. Golden from Maine to | |
| introduce our first witness. | |
| Mr. GOLDEN. Thank you, Madam Chair. | |
| I would like to introduce, I am very honored and happy to | |
| introduce first Mr. Dana F. Connors. Mr. Connors is the | |
| president of the Maine State Chamber of Commerce, where he | |
| oversees a broad range of activities including advocacy | |
| efforts, economic and workforce development initiatives in the | |
| State of Maine, and a wide variety of member services for the | |
| business community. He is a Maine native who received a | |
| bachelor's degree in public management from the University of | |
| Maine in 1965. And I would just say as someone who worked for 4 | |
| years in the Main state legislature, I worked closely with Mr. | |
| Connors and his business advocacy inside the statehouse. He is | |
| a class act. In an age that can sometimes be somewhat divisive | |
| in our political world, this is exactly the kind of guy that | |
| you want representing businesses before state legislatures and | |
| Congress. He knows how to keep the focus on the business, on | |
| the community, and in pulling people together. So just want to | |
| thank you for that. You have always been someone that I look up | |
| to very much, so thank you, sir. I look forward to hearing your | |
| testimony. | |
| Chairwoman VELAZQUEZ. I now recognize Mr. Delgado from New | |
| York to introduce our second witness. | |
| Mr. DELGADO. Thank you, Madam Chair. It is also my honor to | |
| introduce our second witness, Mr. Bill Ingersoll. He was raised | |
| in Sloansville in Schoharie County, which I just had a town | |
| hall in this weekend. He grew up racing motocross. As the son | |
| of a single mother, money was always tight. This led Bill and | |
| his grandfather and business partner to begin buying and | |
| selling ATVs and ATV parts to supplement the cost of racing. In | |
| 2008, Bill tragically suffered a severe spinal cord injury | |
| which confined him to a wheelchair. The accident marked a | |
| turning point in his life, catalyzing his eBay career and | |
| leading him to start an ecommerce business. Since 2010, Bill | |
| has been using his passion for motocross to sell ATV parts in | |
| his eBay store, Bikes, Trikes, and Quads. I look forward to | |
| hearing from Bill today. We had a greater conversation earlier | |
| in my office and he has a lot of wonderful insights as to what | |
| it means to be a business owner in a rural community like | |
| Schoharie and how critically important it is for us to focus on | |
| digital needs, particularly rural broadband. So thank you. I | |
| appreciate the time. | |
| Chairwoman VELAZQUEZ. Thank you, Mr. Delgado. | |
| Now, I recognize Ms. Finkenauer from Iowa to introduce our | |
| next witness. | |
| Ms. FINKENAUER. Thank you, Madam Chair. | |
| I am very excited to have an Iowan here today and introduce | |
| Ms. Stout. Ms. Stout makes paper flowers from her home in State | |
| Center, Iowa. She started her Etsy shop back in 2010 and began | |
| gaining traction a few years later after her son was born. | |
| Living with fibromyalgia, her creative business allows her to | |
| do her work on her own schedule, which has benefitted her | |
| family greatly. Ms. Stout sells through multiple platforms, as | |
| well as through her own website. She manages every part of her | |
| shop, and her husband helps out occasionally. She has many | |
| international sales and hopes to be able to hire an employee | |
| soon to give back to her community. We are very happy to have | |
| you here and really look forward to your testimony today. Thank | |
| you, Ms. Stout. | |
| And I yield back. | |
| Chairwoman VELAZQUEZ. Thank you. | |
| Now I would like to yield to the Ranking Member, Mr. | |
| Chabot. | |
| Mr. CHABOT. Thank you, Madam Chair. | |
| Today's final witness is Mr. Jake Ward, president of the | |
| Connected Commerce Council, or 3C, a membership organization | |
| for small businesses powered by digital. 3C works to provide | |
| small businesses with access to the market's most effective | |
| digital tools available, provides coaching to optimize growth | |
| and efficiency, and works to cultivate a policy environment | |
| that considers and respects the interests of small business. | |
| Jake is the cofounder and former CEO of Application Developers | |
| Alliance and Forward Strategies. We thank you for joining us | |
| here today and look forward to your testimony. | |
| And I yield back. | |
| Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. | |
| Mr. Connors, you are recognized for 5 minutes. | |
| STATEMENTS OF DANA F. CONNORS, PRESIDENT & CEO, MAINE STATE | |
| CHAMBER OF COMMERCE; BILL INGERSOLL, OWNER, BIKES, TRIKES, AND | |
| QUADS; AFTON STOUT, OWNER, MY DINOSAUR DREAMS; JAKE WARD, | |
| PRESIDENT, CONNECTED COMMERCE COUNCIL | |
| STATEMENT OF DANA F. CONNORS | |
| Mr. CONNORS. Thank you. Chairwoman Velazquez, Ranking | |
| Member Chabot, and distinguished members of the Small Business | |
| Committee. | |
| My name is Dana Connors. I am president of the Maine State | |
| Chamber of Commerce, and I thank you, Madam Chair, for the | |
| opportunity to appear before you today and for the privilege of | |
| doing so. This is an extremely important issue for the state of | |
| Maine, which is my perspective to this report, because it does | |
| show what we anecdotally have become aware of but puts proof | |
| behind the actual issue. And we are grateful for that | |
| opportunity. | |
| And while I am at it, I want to be sure to express my | |
| appreciation to the Chamber, to NDP Analytics, as well as | |
| Amazon and the team that came together to put this report | |
| before you and to show the importance, the impact, and frankly, | |
| the necessity that it creates for states like Maine that is | |
| predominantly rural and small business. So I thank them for | |
| that. | |
| My job is as the good congressman from Maine, which we miss | |
| in Maine and we are grateful that you are representing us in | |
| Washington, we do miss you in our state capital, you, too, are | |
| a class act, may I say. We, as you said, work hard to promote a | |
| positive business environment in Maine, and in doing that we | |
| represent a network of over 5,000 businesses of all sizes, | |
| representing all sectors, and from all regions of the state. We | |
| advocate on their behalf and we try to provide those types of | |
| programs and partnerships that allow them to do what they do | |
| best, which is to run their business and be successful at it. | |
| You probably are aware somewhat of Maine because many of | |
| you perhaps have vacationed there because we have 38 million to | |
| 40 million a year that come to our beautiful state, and that is | |
| probably the reason our license plates bear the name `` | |
| Vacationland.'' But I want you also to know that we are rich in | |
| history. We have vibrant communities and we are unparalleled in | |
| work ethic. And when people ask me about Maine and describe in | |
| one word I say it is quality. Quality of our people, our place, | |
| as well as our products. Our state is a fabulous place to | |
| vacation. It is also a fabulous place to live and work. | |
| You also need to know that our population is about | |
| 1,350,000 spread over 33,000 squares miles. And by the way, | |
| that is the size of the rest of New England. You also need to | |
| know that our population, 60 percent lives in the rural areas. | |
| That makes us the most rural state in the country. But when you | |
| look at the size of our business, you also need to take into | |
| account that the Federal level describes small business as | |
| under 500. Seventy-five percent of our businesses are under 10. | |
| And when you consider we have 35,000 businesses, only 64 exceed | |
| that 500. So we are the subject in so many ways of this report. | |
| And that is why this report is so important to us because it | |
| opens the door to opportunity, it provides a direction, and it | |
| creates a necessity for us to move on it. | |
| I would like to share with you that we have made progress. | |
| We are rural, we are small, but this state has been, as you | |
| have implied in your opening comments, moving in this | |
| direction. There is a lot left to do but we are moving in the | |
| right direction. | |
| I want to give you a couple examples to bear this out. The | |
| first is a woman who left New York City to come to Maine. She | |
| did not go to Portland where most of our population is. It has | |
| a great reputation as a foodie city. She chose our least | |
| populated county in the state, Washington County. When she came | |
| there about 10 to 14 years ago, there was no high-speed | |
| broadband internet connection. But she made it her priority to | |
| do just that. And today, because of that commitment in that | |
| rural, most rural part of our state, I will give you two | |
| examples to bear out. Cranberry Isle is a group of islands. | |
| There are 141 people that live there. It is also now the | |
| residence of a renowned artist who came there for vacation but | |
| loved it like so many people do and wanted to move there. This | |
| high-speed internet connection now provides him to sell his art | |
| throughout the world and to live and work on Cranberry Isle. | |
| There is another astrophysicist who lives on Roque Bluffs, | |
| another very small community, probably 250 at max. This aero | |
| physicist works with NASA, has connections to the University of | |
| Phoenix, established it as vacation, but he, too, is there. | |
| I can see I am running out of time and I barely got | |
| started. I am hopeful that during the questions that it will | |
| bear out how important this is, and the report builds the case | |
| that in Maine it very certainly applies. And I hope the | |
| questions will give me the opportunity to expand as I would | |
| like to do. Thank you. | |
| Chairwoman VELAZQUEZ. Thank you, Mr. Connors. | |
| Mr. Ingersoll, you are now recognized for 5 minutes. | |
| STATEMENT OF BILL INGERSOLL | |
| Mr. INGERSOLL. Chairwoman Velazquez, Ranking Member Chabot, | |
| members of the Committee, thank you for inviting me to | |
| participate in this important hearing on how digital tools | |
| improve rural entrepreneurship. | |
| My name is Bill Ingersoll. I own Bikes, Trikes, and Quads, | |
| a small business I started in rural Sloansville, New York. We | |
| sell motocross and ATV equipment on eBay to customers around | |
| the U.S. and increasingly around the world. I appreciate the | |
| opportunity to share my experience son some of the tools that | |
| make running my eBay business possible in rural America, | |
| including rural broadband access, universal and reliable Postal | |
| Service, and breaking down barriers through global trade. | |
| I grew up racing motocross in upstate New York. My entire | |
| life changed when I was injured in a motocross crash and left | |
| paralyzed in 2008. After the accident, I could no longer work | |
| construction or do many of the other things I had done | |
| previously, but I was determined to move forward with my life. | |
| My grandfather and I had always fixed up old ATVs as a hobby, | |
| so I was looking for a way to turn that hobby into a business. | |
| Not long after, I was trying to find some parts to modify an | |
| ATV we had so that I could get around our property more easily. | |
| I ended up tracking them down on eBay. The process was so easy | |
| and convenient for me as a buyer that I began to look into | |
| selling parts on eBay. We already had a large stock of parts | |
| from ATVs and dirt bikes from years of racing so we decided to | |
| give it a try. We opened our eBay store in 2010 and have been | |
| selling since. I now have three employees and run my business | |
| out of a warehouse on my property. | |
| I often look back today, 10 years later, and wonder what | |
| life might look like now without eBay and I really do not know. | |
| Being 23 years old with minimal education in a poor rural area | |
| never fostered good odds for an able-bodied person, let alone | |
| someone who was now disabled. EBay and being able to run a | |
| business online has given me a life that I may have not | |
| otherwise enjoyed. | |
| Living in rural upstate New York, I would not be able to | |
| use eBay if I did not have access to high-speed internet and | |
| affordable broadband. Unfortunately, broadband reliance and | |
| even phone connectivity continue to be constant issues for our | |
| company. Rural broadband is essential to ensuring that rural | |
| small business owners and entrepreneurs can take advantage of | |
| the latest technologies and reach customers around the world no | |
| matter where they live in our country. | |
| There used to be a few ATV dealers in my area who sold | |
| locally but were not online. Unfortunately, none of them are in | |
| business anymore. We need real investment in improving and | |
| expanding our rural communications infrastructure so that | |
| businesses like mine can take advantage of innovative tools and | |
| marketplaces like eBay. Even though my store is online, I still | |
| have to actually ship products to customers around the country | |
| and around the globe. I rely heavily on the U.S. Postal Service | |
| to reach my customers. Over 80 percent of our shipments go | |
| through USPS. I understand there are proposals that would make | |
| my package delivery to rural parts of the country like my | |
| hometown nonessential. I cannot imagine how anyone could | |
| consider small businesses like mine not essential by cutting | |
| access to Postal Services or raising prices for rural package | |
| delivery would be disastrous for rural small businesses. Most | |
| people do not know that private shippers charge surcharges to | |
| deliver to rural areas. If I had to rely only on private | |
| shippers or if package services went up dramatically, my costs | |
| would go through the roof. Like broadband, the U.S. Postal | |
| Service is essential for all Americans no matter where they | |
| live, and without it, rural small businesses will have a harder | |
| time competing with giant ecommerce companies that have their | |
| own warehouses and logistics networks. Small ecommerce | |
| businesses depend on reliable, affordable, and universal Postal | |
| Service. | |
| On top of selling to our customers in the U.S., selling | |
| globally has been key to our success. We have shipped thousands | |
| of orders globally to some countries where ATVs are their prime | |
| mode of transportation. Selling worldwide allowed us to reach | |
| customers and realize new opportunities that we would have | |
| otherwise not considered. These opportunities are a direct | |
| result of conducting business online and never would have | |
| existed before the internet. Small online businesses like mine | |
| across the U.S. in rural and urban areas need trade policies | |
| that cut red tape for low value shipments by supporting higher | |
| de minimis thresholds throughout the world. That way, small | |
| businesses like mine can truly take advantage of one of the | |
| best things the internet has to offer, hundreds of millions of | |
| buyers all over the world. | |
| On behalf of rural businesses across the country, thank you | |
| again for holding this important hearing. I look forward to | |
| your questions. | |
| Chairwoman VELAZQUEZ. Thank you, Mr. Ingersoll. | |
| And now, Ms. Stout, you are recognized for 5 minutes. | |
| STATEMENT OF AFTON STOUT | |
| Ms. STOUT. Good morning. My name is Afton Stout and I am a | |
| creative entrepreneur from rural Iowa. Before I begin, I want | |
| to thank everybody who has been a part of me being here today, | |
| my mom and my brother, and of course, my husband, Brian, and my | |
| 3-year-old son, Rhys. I also want to send a thank you to my | |
| dad, who passed away in 2006 because I know he would be super | |
| proud of me for being here today. Thank you, Chairwoman | |
| Velazquez, and Ranking Member Chabot, and members of the | |
| Committee for inviting me to speak with you today about my | |
| creative business. | |
| I was born and raised in eastern Montana, in an even more | |
| isolated area than I live in now. My dad was diagnosed with | |
| systemic lupus the year that I was born, and I believe that my | |
| family's struggles with poverty have been a huge part of who I | |
| am today. Growing up with limited means instilled a sense of | |
| restraint when it comes to money and spending it wisely. | |
| I have always been motivated by creating and selling, | |
| starting out in small craft shows in my hometown of Glendive, | |
| Montana. I can remember buying items from Etsy when I got my | |
| first bank card, which was pretty exciting. I had always | |
| planned to start a shop, despite being both intimidated and | |
| inspired by the success of others. I assumed that living in a | |
| small town would be a hardship for my creative ventures that I | |
| would have to struggle to overcome. However, I am certainly not | |
| alone in that space, as 27 percent of Etsy sellers are from | |
| rural areas like mine. After graduating from the local college, | |
| I worked two jobs and crafted on the side, selling through | |
| local online groups to keep my mother and me afloat after my | |
| Dad's life insurance ran out. | |
| In 2013, my Mom remarried and I was able to kind of rethink | |
| my life and decide what I wanted to do. My stepdad was a huge | |
| help in getting me settled in Iowa, which I am super grateful | |
| for. That same year, I met my husband and went on to marry him | |
| in 2014. And for our wedding I handmade all of the flowers from | |
| paper, which was kind of the spark that sent me on to my | |
| entrepreneurial journey. For the first year of our marriage, I | |
| made a few pieces of jewelry, some of which I did list on Etsy, | |
| and after my son was born in 2015, I decided that I would stay | |
| home with him and see if I could find a few more people who | |
| were interested in handmade flowers for their weddings or | |
| events. And from there, things just kind of took off. | |
| Thanks to the internet, I am one of 2.1 million sellers on | |
| Etsy, many of whom like me are able to run our creative | |
| businesses from home, despite living in a rural area. This has | |
| improved my quality of life immensely. I was diagnosed with | |
| fibromyalgia in 2012, an illness that I have been fighting | |
| since middle school, which ultimately led to me dropping out of | |
| high school. I did not allow it to hold me back. I took my GED | |
| a few months later and went to a local college to get my | |
| associate's degree, and like many creative entrepreneurs, I did | |
| not set out to become a full-time microbusiness owner, but I am | |
| very, very happy that I am able to do this. | |
| When I first started out, I started advertising on Facebook | |
| and listed custom-order handmade flowers on Etsy. My first year | |
| I had about $37,000 in sales, which I thought was absolutely | |
| amazing. At the end of 2016, I started working with wooden | |
| flowers and the business just kind of exploded from there. | |
| After posting some of those on Etsy, my sales nearly tripled. | |
| Starting out, most of my sales were online with roughly 10 | |
| percent being local, in-person sales. Since then I have had | |
| customers from all over the world, including France and | |
| Germany. With a platform like Etsy, I am able to ship beautiful | |
| flowers made in Iowa to international buyers that truly value | |
| my work. | |
| Today, the bulk of my business is wedding related. I custom | |
| dye and arrange wooden flowers to match wedding themes and | |
| other events. I am able to work with very, very many lovely | |
| people that I would never know or even reach without the | |
| internet or online platforms like Etsy. I am making a push for | |
| a bigger local presence, and even Etsy helps with that by | |
| showing search results with local businesses closer to the top | |
| of the search. I work 12-hour days during wedding season, but I | |
| love what I do and I get to work with people who are absolutely | |
| amazing. | |
| I am proud to say that I am projected to be 80 percent | |
| above where I was last year in views and sales, and I may have | |
| to hire my husband to help me run things once my 3-year-old | |
| starts preschool this fall. In 2016, my husband started staying | |
| home full time with our toddler so that I could work full time | |
| on my creative business. He has trauma-induced arthritis in | |
| both of his feet from an injury back in 2010, so being able to | |
| stay home has helped him out incredibly and vastly improved the | |
| quality of life of all of us. Like 97 percent of Etsy sellers, | |
| I run my shop from my home. In fact, we just finished building | |
| a studio onto our house to increase productivity. | |
| My creative business allows me to pursue my creative | |
| passions in the comfort of my home, surrounded by my family. | |
| And while my story is unique, this pathway to rural | |
| entrepreneurship is not. There are over 2.1 million Etsy | |
| sellers across the globe, and together, we sold $3.9 billion | |
| goods in 2018. | |
| And I am about to run out of time, so I would appreciate | |
| any questions to follow up at the end of this. Thank you. | |
| Chairwoman VELAZQUEZ. Thank you, Ms. Stout. | |
| And now, Mr. Ward, you are recognized for 5 minutes. | |
| STATEMENT OF JAKE WARD | |
| Mr. WARD. Good morning. | |
| Madam Chairwoman, Ranking Member Chabot, on behalf of | |
| digitally-empowered small businesses across the country, thank | |
| you for holding this important hearing. | |
| I am coincidentally also a Maine native, and I want to | |
| commend you for pulling together, though inadvertently, the | |
| most Maine-centric panel in the history of Congress. It is not | |
| often that small-town America gets a seat at the table, let | |
| alone two of them. I am grateful for the opportunity. | |
| My hometown of Greenville, Maine, is small. It is fewer | |
| than 1,500 residents small. It is everybody knows everybody | |
| else small. There are no chain stores or big companies. In my | |
| hometown, every business is a small business. And those | |
| businesses are the foundation of the town, the community, and | |
| the local economy. That is the rule in rural America, not the | |
| exception. | |
| It is true that much has changed in rural America. Small | |
| businesses are as important today as they have ever been. The | |
| digital age has brought its share of challenges, but also | |
| created many opportunities. Digital resources empower local | |
| businesses to rise above and grow beyond their geographic | |
| limitations and find customers around the world, where before | |
| the next county would have seemed a world away. | |
| I am here today to offer the support and help of the | |
| Connected Commerce Council as this Committee works to unlock | |
| the potential of America's small businesses. As the son of a | |
| small business owner in a rural total in a rural state, it is | |
| my hope that 3C can provide resources, education, and access | |
| that helps rural small businesses realize their potential. It | |
| is also my intention to work with policymakers anywhere, | |
| including and especially members of this Committee to | |
| accomplish our shared goal. | |
| As we have already heard from this panel today, the | |
| challenge of every small business is unique but their stories | |
| are universal. Unleashing the potential of rural America | |
| requires small businesses have access to four things--capital, | |
| affordable broadband services, talent, and finally access to | |
| affordable, secure, and scalable digital tools. It also | |
| requires that we understand that the digital economy is a | |
| different type of interconnected and interdependent economy | |
| where the investment of global platforms have direct, tangible | |
| local benefits that can be measured in new employees and | |
| increased financial security. | |
| In Congress and in many state capitals, debates on data | |
| privacy, cybersecurity, and competition policy are underway | |
| that will dramatically affect small businesses' ability to | |
| succeed or even survive. If our data privacy laws focus only on | |
| consumer protection and tech giants, they will fail to | |
| recognize and preserve the importance of data and analytics | |
| that enable small businesses to compete with larger, urban- | |
| based companies on quality and price, rather than proximity and | |
| size. | |
| Cybersecurity policy that focuses on only the biggest | |
| breaches and the gravest risks will leave small businesses in | |
| the crosshairs of ransomware predators and hackers. | |
| Competition regulators who focus only on company size will | |
| miss the benefits that digital platforms and marketplaces | |
| provide to 3C members and digitally-empowered small business | |
| nationwide. Frankly, I am concerned we may lose the forest | |
| through the trees and focus too much on the largest, most | |
| prominent companies to the detriment of small businesses that | |
| will ultimately pay the price if business models are | |
| dramatically changed, costly regulation is enacted, or access | |
| to essential tools is limited. | |
| The reality of the digital economy for 3C members and | |
| nearly 30 million small businesses like them is that they stand | |
| on the shoulders of large companies to reach otherwise | |
| unobtainable heights. Too often opportunity driven by | |
| innovation is assumed rather than promoted and protected. Too | |
| often we talk about small businesses rather than with small | |
| businesses. I know under the leadership of this Committee that | |
| will change. | |
| If the Committee wishes to unless the potential of American | |
| small businesses, you must make sure that this Congress and | |
| state legislators do not limit access to the tools they need. | |
| We must take great care to ensure that policies focused on the | |
| largest companies do not inadvertently undermine small | |
| businesses' opportunities. Your contribution to unleashing the | |
| potential of all small businesses, including those in rural | |
| America, can be your vigilant defense of small businesses' | |
| access to the technology they need to succeed. | |
| Thank you, again, for your attention to this important | |
| subject and for security a seat at the table for America's | |
| small businesses. I look forward to your questions. | |
| Chairwoman VELAZQUEZ. Thank you, Mr. Ward, and all the | |
| members, all the witnesses for sharing your stories and showing | |
| us the challenges and the great potential that exists in | |
| promoting economic opportunities in rural America. And that is | |
| our responsibility. So I am very grateful for your testimony. | |
| Mr. Connors, can you elaborate on the economic cost to | |
| rural communities of not having high-quality, reliable | |
| broadband? | |
| Mr. CONNORS. Certainly, Madam Chair. I would not express | |
| that in terms of dollars---- | |
| Chairwoman VELAZQUEZ. Is your mic on? | |
| Mr. CONNORS. Thank you, Madam Chair. I would be pleased to | |
| give that a response, not so much on the specificity of the | |
| actual numbers of dollars. I mean, the report bears out very | |
| effectively that with adequate access, $84 billion, 360,000 new | |
| jobs is pretty significant, which represents a 20 percent | |
| increase in business, that would certainly apply to us. We have | |
| found that in our state advancements have been made but there | |
| still remain 83,000 that do not have access. And that is based | |
| upon the FCC standard of 25/3, at which there may be even more. | |
| And I think what we are finding is that in our state, the | |
| opportunities to address the two most important issues in our | |
| state, and this is borne out by a report, an initiative that | |
| was based upon a collaborative between three organizations, one | |
| of which was a research organization, that 8 years ago we came | |
| together and have continued that initiative. But 8 years ago | |
| when the business community was surveyed and a poll was taken, | |
| the response was--and the whole initiative called Making Maine | |
| Work was to actually provide for the administration the | |
| priorities. At that time we were in a recession, so you can | |
| imagine it was all about tax incentive, those types of issues. | |
| Today, the issues that are most important that will serve our | |
| state and particularly the rural community is workforce, skill | |
| and education, and broadband. They are our top two issues. The | |
| business community has adopted and so has---- | |
| Chairwoman VELAZQUEZ. Mr. Connors, I would like to hear | |
| also from Ms. Stout and Mr. Ingersoll. | |
| Mr. CONNORS. Yep. I am sorry. | |
| Chairwoman VELAZQUEZ. But we will have a second round. | |
| Mr. CONNORS. Thank you. | |
| Chairwoman VELAZQUEZ. And I just want to discuss the | |
| workforce IT skills. | |
| Ms. Stout and Mr. Ingersoll, can you speak to how broadband | |
| limitations in rural communities have either stifled your | |
| ability or your community's ability to grow and adapt to | |
| digital commerce? | |
| Mr. INGERSOLL. Even though that we have access in my area | |
| to high-speed internet, the speeds are never accurate. They | |
| claim a 7 megabyte service. We will average 4 to 5 megabytes. | |
| But the other side to that is there are periods where I am | |
| getting 1 megabyte and it is very difficult for my business to | |
| operate like that. To call and set up a service call or | |
| something to that degree, to get a repair person out, they will | |
| give me a 2 week wait time to get the internet looked at. And | |
| during that period I have to do things like, you know, I can | |
| tether off of my cellphone occasionally. Cell service has | |
| improved in my area to the point where that is viable but I am | |
| already paying for a service that is not performing and it has | |
| got a direct cost to my business. | |
| Chairwoman VELAZQUEZ. Thank you. | |
| Ms. Stout? | |
| Ms. STOUT. Pretty much the same things that he touched on | |
| are what I deal with also. We do not have a very reliable | |
| service, and we do not have very many options where I live. So | |
| you just kind of pick the best one that you can get and go off | |
| of it. I end up using my cellphone also to maintain my business | |
| contacts because I have to answer messages pretty frequently | |
| because I work with brides who worry a lot, so I always need to | |
| be in contact with people. And that is my main concern. | |
| Chairwoman VELAZQUEZ. Thank you. | |
| Mr. Ingersoll and Ms. Stout, have you had any type of | |
| interaction with any of the programs of the Small Business | |
| Administration, whether helping you put together a business | |
| plan or helping you access lending? | |
| Mr. INGERSOLL. I have had no contact. | |
| Chairwoman VELAZQUEZ. Yes, Ms. Stout? | |
| Ms. STOUT. I also have had no contact with them either. | |
| Chairwoman VELAZQUEZ. Okay, thanks. | |
| And Ms. Stout, as an entrepreneur--well, my time is almost | |
| up so I will now recognize Mr. Balderson, Ranking Member of the | |
| Subcommittee on Innovation and Workforce Development, for 5 | |
| minutes. | |
| Mr. BALDERSON. Thank you, Madam Chair. But as the | |
| Chairwoman, you can keep on going if you want to, so please do | |
| not let me take that away from you. | |
| Thank you, panel, for being here. | |
| Mr. Ingersoll, this will probably be the first time this | |
| has ever happened. I am sorry what happened to you. I raced | |
| motocross. Just got done with the GNCC series. Then I decided | |
| to run for Congress so my motorcycling racing days, both KTMs | |
| 450 and 200 have been sold and gone. But like you, the Madam | |
| Chair talked about one of the questions I had for you. | |
| Do you remember flex bars? | |
| Mr. INGERSOLL. Mm-hmm. | |
| Mr. BALDERSON. I was the first guy in the country to start | |
| selling those online and going all over and that was back in | |
| 2005-2006 range. And I had a really challenging time. I live in | |
| Appalachia, which is in rural Ohio is where I am actually from. | |
| But I was going to ask you, you know, you had no hard time | |
| getting access to broadband of any sort, or Ms. Stout? Because | |
| I am shocked by that. | |
| Mr. INGERSOLL. At the time of my injury was the first time | |
| that we had access to broadband internet. That was 2008. You | |
| know, it has improved over time to where it is more function | |
| now, but I would say from 2008 until about 2015, it was very | |
| difficult. It had a direct impact to my business because there | |
| were days where we could not process orders because the | |
| internet was down and I had not found workarounds for that. | |
| Mr. BALDERSON. Okay. And you talked in your opening | |
| statement about your United States Postal Service. And I | |
| totally agree with you. Folks do not know about the private | |
| carriers and what we had to do with that, and I am sure most of | |
| you do but I attest to that also. They were very important to | |
| me. | |
| Ms. Stout, this question is for you. I mean, you had no | |
| inconsistency or lack of broadband when you first started out, | |
| or any issues at all? | |
| Ms. STOUT. I do not really remember having a lot of issues | |
| getting internet. It is mostly the reliability that is an | |
| issue. Like I said, ours cuts out quite frequently, kind of on | |
| a schedule almost. Like they almost plan it. So I kind of work | |
| around that with my cellphone. But yeah, it was pretty easy to | |
| get it. I am fairly new though so, I mean, 2015-ish, so. | |
| Mr. BALDERSON. Okay. Madam Chair, I yield back the rest of | |
| my time. Thank you. | |
| Chairwoman VELAZQUEZ. The gentleman yields back. | |
| And now we recognize the gentlelady from Iowa, Ms. | |
| Finkenauer, Chairwoman of the Subcommittee on Rural | |
| Development, Agricultural Trade, and Entrepreneurship. | |
| Ms. FINKENAUER. Thank you, Madam Chair. | |
| And this question is for Ms. Stout. Again, thank you so | |
| much for being here today. Really happy to have you. And my | |
| short time in Congress so far, just the last couple of months, | |
| this Committee and myself have really been focused on reducing | |
| barriers for entrepreneurs and looking at ways to ensure that | |
| we have an environment where small businesses, especially in | |
| rural areas, can create good paying jobs and also take care of | |
| their families. One of the things I want to do is plan a | |
| listening session within the district and talk to young folks | |
| all across the district, figuring out ways that we can get, | |
| again, more entrepreneurs. Make sure we are cutting down on | |
| those barriers so that they are able to have what they need to | |
| start and create good paying jobs so that we can keep Iowans in | |
| Iowa and also bring some back home, which is incredibly | |
| important to me as well. | |
| One of the things though that I have already started to | |
| hear when it comes to barriers for a young person to even start | |
| a business and want to become an entrepreneur has to do with | |
| some things like paid family leave and those issues where it is | |
| incredibly important right now. You know, I know there are a | |
| lot of ideas out there, and I will not take this Committee to | |
| debate those, but I will say from my understanding they are | |
| incredibly important from folks in Iowa and across the country, | |
| and we need to make sure that our entrepreneurs are able to | |
| have leave policies to be able to, again, start their business, | |
| but also take care of their family. | |
| And one of the things I also wanted to touch on, too, I | |
| understand there are other barriers we look at with the | |
| emergence of the digital economy that, you know, pros and cons | |
| that go along with it with our cities and towns, also other | |
| things, you know, health care, retirement benefits, student | |
| loans, and broadband, for example, that folks are dealing with. | |
| What are some of the barriers very specifically for you, Afton, | |
| to becoming an entrepreneur and then what would you like to see | |
| happen to encourage more young people to get involved and also | |
| be able to take that next step to be an entrepreneur | |
| themselves? | |
| Ms. STOUT. Okay. That is a good question. A long question | |
| and a lot of answers. | |
| I would say first off my biggest issue so far has been | |
| health care, which is very important for both my husband and I, | |
| because we both have health issues. Luckily, we were on | |
| government assistance previously before business started doing | |
| so well. My husband was a barista and I was a pharmacy | |
| technician and I quit to stay home with my son. But looking at | |
| the healthcare marketplace was very overwhelming. I know there | |
| is a lot of work that needs to be done with that. It was not | |
| very realistic the quotes that I was getting for what I would | |
| need to pay out of pocket to get insurance for my family. I did | |
| look into other options outside of the marketplace then because | |
| it just was far too expensive. | |
| Another issue that has come up has been taxes to different | |
| jurisdictions in different areas where now I know that Etsy | |
| collects state sales tax for Iowa, so I do not have to worry | |
| about that, which is very helpful. If we were to have to | |
| collect, I know there are some bills that may require after a | |
| certain threshold that they collect, we collect sales tax for | |
| those outside states that we ship to. I think it is $100,000 or | |
| so. But if we had to do that, that would make it very, very | |
| hard for us to keep track of as a small business since I do all | |
| of my own paperwork and everything. Next year I am actually | |
| paying somebody to do my taxes for the first time. So exciting. | |
| But yeah, I do all my own paperwork otherwise. So if I had to | |
| keep track of taxes, otherwise I would definitely have to hire | |
| somebody else, which is also another set of paperwork and | |
| everything. So those are the two main things. | |
| Things that would help, of course, are the internet issue, | |
| making sure that we have reliable internet. Health care. Making | |
| sure that health care is more affordable. And paid leave. | |
| Luckily, I am in a very lucky situation where my husband has | |
| gotten to stay home and take care of my son because otherwise, | |
| I could not do what I was doing or what I am doing. So those | |
| things are very important to me, and I am sure to others. Thank | |
| you. | |
| Ms. FINKENAUER. Well, I look forward to working on them. | |
| And I look forward to having this conversation continuing. But | |
| I know my time is about to expire and again, thank you so much, | |
| all of you, for being here today, truly. | |
| And with that, I yield back, Madam Chair. | |
| Chairwoman VELAZQUEZ. The gentlelady yields back. | |
| And now we recognize the Ranking Member, Mr. Chabot. | |
| Mr. CHABOT. Thank you, Madam Chair. And I want to apologize | |
| for having to leave. We are marking up the VAWA, the Violence | |
| Against Women Act in Judiciary and I had an amendment that was | |
| being called up so I had to go over and take care of that. So I | |
| apologize. | |
| Mr. Ward, let me start with you if I can. You mentioned the | |
| importance of cybersecurity for small firs, at least in your | |
| written testimony. I assume you probably talked about it in | |
| your oral testimony as well. And I really could not agree more. | |
| Would a nationwide network of counselors that are trained in | |
| cybersecurity measures help small firms prepare for | |
| cyberattacks? And additionally, would it be beneficial to offer | |
| some sort of safe harbor to small firms that have been | |
| victimized by a cyberattack so they are free to share that | |
| information with the Federal Government to help strengthen the | |
| Nation's entire cybersecurity network? | |
| Mr. WARD. The short answer, sir, is yes, but this being | |
| Congress I will give you the longer one. | |
| The cyberattacks for small businesses are extinction-level | |
| events. They will put companies out of business. The burden of | |
| reporting is complex. Often, too complex for very small | |
| businesses, for microbusinesses as it currently stands. I think | |
| a national network is a really good idea. I think that safe | |
| harbor is an essential idea. I want to congratulate you and | |
| Madam Chairwoman for the introduction of 1648 and 1649, two | |
| bills that are bipartisan in this environment is remarkable, | |
| but also, they really go to the heart of the issue. They are | |
| simple solutions to an otherwise complex burden. 3C is fully | |
| behind both of those. In fact, we would be more than happy to | |
| be part of the solution for 1649 and the network of training | |
| that you have proposed. | |
| Mr. CHABOT. Thank you. Well, in the spirit of | |
| bipartisanship, the Chairwoman and I heard testimony about you | |
| just mentioned it can be an existential event to a small | |
| business if they have a cyberattack. Many literally go out of | |
| business as a result of that. They go under. And so this | |
| legislation should really help. And it is H.R. 1648 and H.R. | |
| 1649 as you mentioned, and Ms. Velazquez and I introduced it | |
| together. So hopefully, we are going to make progress on that | |
| in a bipartisan manner and maybe actually be able to help the | |
| small business community tremendously. | |
| Mr. WARD. Wonderful. We would love to help. | |
| Mr. CHABOT. Thank you. | |
| Mr. WARD. Thank you. | |
| Mr. CHABOT. Mr. Ingersoll, I will go to you next if I | |
| could. | |
| Could you tell us about how your business kind of grew over | |
| time? Was it to areas in New York, for example, and then maybe | |
| across the country and then followed by, I guess, exporting | |
| around the globe, I guess through eBay? Or did it more or less | |
| all come at once? Or how did it unfold in your particular | |
| instance? | |
| Mr. INGERSOLL. Initially, I mean, being online you are | |
| going to get a variety of customers to begin with. Certain | |
| areas of the southwest, you know, and the southeast, they are | |
| the primary areas that our sales come in from. The traffic that | |
| eBay brings to my business and the visibility worldwide, it | |
| allows me a lot of opportunities in these different markets | |
| that if I was stuck to just my state or my county or my town, | |
| those opportunities would not be there. So I was able to grow | |
| my business completely off of the volume of sales I was getting | |
| from eBay. | |
| Mr. CHABOT. Very good. Thank you. | |
| Ms. Stout, you mentioned that the minute you got on Etsy | |
| your whole world changed. So what is next? Small businesses are | |
| always at the forefront of what is next because they have to be | |
| in order to compete with the larger companies that you compete | |
| all the time with. Are there new technologies out there that | |
| you see on the horizon or that you are already anticipating | |
| that will allow you to continue to grow your business in the | |
| future? | |
| Ms. STOUT. Honestly, I am at a point in my business where I | |
| do not want to grow any bigger. | |
| Mr. CHABOT. Okay. | |
| Ms. STOUT. Because I would have to hire help, and I do | |
| not--I am happy being able to support my family and give back | |
| to my community where I am at. | |
| As far as new technology, I am not really sure. I have been | |
| sticking with Etsy and Facebook pretty much and they have | |
| helped me out a lot. They reach a very, very large audience of | |
| people. | |
| Mr. CHABOT. If it ain't broke, do not fix it; right? | |
| Ms. STOUT. Right? Yeah. So I am happy where I am. | |
| Mr. CHABOT. Excellent. | |
| Ms. STOUT. So I have not really looked. | |
| Mr. CHABOT. I am glad to see somebody happy where they are | |
| at. | |
| Ms. STOUT. Yeah, thank you. | |
| Mr. CHABOT. Okay. And finally, Mr. Connors, it is tough to | |
| get more rural than some parts of northern Maine. And I have a | |
| two-part question. I will try to get it real quick because my | |
| time has almost run out. | |
| Do you happen to know the percentage of northern Mainers | |
| that have access to high-speed internet and those that do not? | |
| And secondly, with the advent of 5G technology and the way it | |
| is transferring the way we all communicate, do you happen to | |
| know what percentage of Maine has access to the 5G or 4 or 3 | |
| for that matter? | |
| Mr. CONNORS. I am from northern Maine originally where I | |
| was a city manager for years. I mentioned earlier in my | |
| response that there are 83,000 individuals that do not have | |
| access to broadband, and those are in the rural area | |
| predominantly of our state. And when you go north, there are | |
| pockets. That is the irony of this issue. Within that 83,000 | |
| without access, you will find that in certain places where you | |
| least expect it, there is adequate service for that character | |
| of whether it is the business or the individual. But I would | |
| say a large percentage would be in my part of the state where I | |
| came from. | |
| Mr. CHABOT. Thank you very much. | |
| My time has expired, Madam Chair. Thank you. | |
| Chairwoman VELAZQUEZ. Yes, the gentleman's time has | |
| expired. | |
| And now we recognize Mr. Golden from Maine, Chairman of the | |
| Subcommittee on Contracting and Infrastructure. | |
| Mr. GOLDEN. Thank you, Madam Chair. | |
| You know, Mr. Connors, I am sure that you have members back | |
| home in Maine who run businesses very similar to Mr. Ingersoll | |
| and Ms. Stout. | |
| Mr. CONNORS. Yes. | |
| Mr. GOLDEN. I see you nodding your head as they talk about | |
| some of the opportunities and challenges that they face working | |
| what they do. | |
| You were commissioner of the Department of Maine | |
| Transportation for a number of years. And through my time in | |
| politics I have traveled around and talked to businesses. I | |
| think we both agree normally I hear their top concerns in | |
| Maine, infrastructure, workforce, high energy costs, and then | |
| regulation falls into the mix. Just thinking about the way that | |
| we fund our roads and bridges, which I know you are very | |
| familiar with, I mean, we have got Federal highway, state | |
| highway fund. We do some municipal stuff. Throw that into the | |
| mix. Some bonding in Maine as you know. Would you agree that | |
| broadband, or even access to faster internet in a lot of rural | |
| areas of Maine has essentially become the economic highway of | |
| the 21st century? | |
| Mr. CONNORS. Absolutely. | |
| Mr. GOLDEN. Just as critical? | |
| Mr. CONNORS. Yeah, I mean, thank you for that opening | |
| because I was commissioner for 11 years and I used to go around | |
| the state preaching the gospel that highways and bridges and | |
| transportation are the foundation of our economic system. And | |
| the following comment would be, it costs a lot to build and | |
| maintain but it costs a lot more not to. And you know what? The | |
| very parallel between transportation and this issue is striking | |
| because frankly, it has many of the same features, both in | |
| terms of its impact, but it also has many of the similar | |
| features in terms of how we resolve it. Those 83,000 that do | |
| not have access, that answer is going to come about when we | |
| share responsibilities, like when the Electrifying America took | |
| place we were all at the table. When we are looking at this | |
| issue, we need to be all at the table. And priorities will be | |
| given to usage and those types of things, but I think your | |
| point is spot on that I would say that in my opinion, while | |
| infrastructure overall is extremely important to our state as | |
| well as any state, broadband, high-speed internet connection is | |
| the key to our future. It is borne out in this report. To me it | |
| is parallel with transportation and does not deserve any other | |
| priority than a top priority. | |
| Mr. GOLDEN. Thank you very much. Knowing how important it | |
| is to our economy and all the members of the Maine State | |
| Chamber of Commerce, I am sure if you had the capital, if your | |
| members could afford to build that infrastructure themselves | |
| they would do it; correct? | |
| Mr. CONNORS. Absolutely. And I think that is a point to be | |
| made, is that our providers have done well. Bearing in mind the | |
| characteristics of our state, how rural we are, how small | |
| business we are and that type of thing, that they want to do it | |
| but the return on investment is simply not there. And that is | |
| why we need that partnership to develop it. When we do and when | |
| we deal with the digital literacy, because not everyone is | |
| aware of the incredible potential that exists, the value that | |
| it brings. It has expanded fast and that is good, but there is | |
| more to do. And I think the answer lies in all of us coming | |
| together. And as you know, our governor has teed this up with | |
| an expectation of major bond issues this year and the next | |
| several years. | |
| Mr. GOLDEN. And so as the state of Maine looks to put a | |
| little bit of skin in the game---- | |
| Mr. CONNORS. Absolutely. | |
| Mr. GOLDEN.--and taxpayers show us that they are willing to | |
| make those investments in infrastructure, some Federal help | |
| would be important? | |
| Mr. CONNORS. Yes, it would. And I think that is the | |
| relationship that we need to fix this issue. | |
| Mr. GOLDEN. Thank you. | |
| Mr. CONNORS. To address the issue. | |
| Mr. GOLDEN. I appreciate that very much. | |
| Just shifting gears very quickly with the last minute I | |
| have left, since Mr. Ward is from Maine, I have to ask you a | |
| question as well. | |
| You touched on this a little bit. As Congress is looking | |
| into privacy matters pertaining to the digital world and some | |
| of the people that you work with, your business included, and | |
| this includes in state legislatures. I am sure that you | |
| probably are advocating on these issues around the country. As | |
| we look into privacy regulation, would you support small | |
| business exemptions? And if so, where is the trigger? At what | |
| size does a company grow so large that we have to have some | |
| regulation to make sure that consumers are being protected in | |
| terms of their privacy in data and information? | |
| Mr. WARD. Thank you, Congressman. | |
| We are talking about data privacy. 3C generally opposes | |
| carve out exemptions of any kind because frankly this is very | |
| important. It is important that we get this right. Data has | |
| been in the news a lot over the last several years, obviously. | |
| But if you are able to put a small business exemption or carve | |
| out into a piece of legislation, you are doing it because you | |
| believe the burden is too high. That the compliance burden is | |
| too high. And you are saying that the size of the company or | |
| the size of their user base matters more than the privacy of a | |
| smaller number of people, which frankly betrays the motives of | |
| the regulation in the first place. | |
| As a former Capitol Hill staffer and somebody who has been | |
| doing this for a little while, my advice to both Congress and | |
| to the state legislators would be to write a better bill. Do | |
| the job. Write legislation and regulation that applies to | |
| everybody. That raises the standard and the practice for | |
| companies large and small but has a compliance burden and a | |
| requirement of administration low enough that a two-person shop | |
| could do it. If we can do that with our own taxes, we can do it | |
| with data privacy. | |
| Chairwoman VELAZQUEZ. The gentleman's time has expired. | |
| And now I recognize the gentleman from Oklahoma, Mr. Hern, | |
| Ranking Member of the Subcommittee on Economic Growth, Tax, and | |
| Capital Access for 5 minutes. | |
| Mr. HERN. Thank you, Madam Chairwoman. | |
| I appreciate the opportunity to speak to you all today and | |
| ask you questions, and thank you all so much for being here. | |
| Especially thank you, Mr. Ingersoll, for your story, for what | |
| you have done, how you have been successful, and truly you | |
| realized the American dream. It is different for all of us, I | |
| think you would agree. | |
| As a business owner and job creator for over 34 years, I | |
| know firsthand how difficult it is to quantify broadband access | |
| into our rural communities and how valuable this access can be | |
| to our small business. Again, as a lifelong small business | |
| person, my goal is always try to keep government out of my way | |
| so I can do the things that, you know, truly compete with one | |
| another. | |
| I only have one question, and I would like to ask each of | |
| you the same question. So obviously the person who goes last | |
| can get a real opportunity here. But when it comes to | |
| broadband, all of us on this Committee are probably getting | |
| asked whether this should be a government-driven project or a | |
| private industry-driven project. Could you give me your | |
| thoughts on that? | |
| We will start with you, Mr. Connors. | |
| Mr. CONNORS. In our state it has been privately driven. We | |
| are at the point today where government at the state level has | |
| recognized its value and the need to participate. And we would | |
| look forward to having the Federal Government be a part of that | |
| answer. I think it involves all of us. But to date, let me be | |
| clear, it has been privately d riven almost entirely. | |
| Mr. HERN. Okay. Mr. Ingersoll? | |
| Mr. INGERSOLL. Where I am from, you know, it is private, | |
| but I believe they are controlled monopolies. So the | |
| telecommunications company that I deal with has really no | |
| incentive to send someone to rural areas when they are having | |
| issues with higher population centers. I see the internet as a | |
| public utility, so whatever is going to provide the best | |
| service to the people, I am all for it. I really do not have an | |
| opinion one way or the other aside from that. | |
| Mr. HERN. My assumption is being an entrepreneur yourself | |
| that you would like to see two people compete in the area for | |
| the same business of some sort? | |
| Mr. INGERSOLL. Yeah. For sure. | |
| Mr. HERN. To drive down cost and to drive up access? | |
| Mr. INGERSOLL. More than anything, improve the quality of | |
| service. | |
| Mr. HERN. Sure. | |
| Ms. Stout? | |
| Ms. STOUT. Very similar to Mr. Ingersoll. I have a couple | |
| of options for internet in my town and it is public driven. I | |
| think the government could help. But yeah, definitely having | |
| more competition would help and increasing the reliability, for | |
| sure working on that, making sure there are certain standards | |
| and they have to stick with what they say they are giving you | |
| would help. Thank you. | |
| Mr. HERN. You are welcome. | |
| Mr. Ward? | |
| Mr. WARD. I guess I have the advantage because I get to go | |
| last? | |
| Mr. HERN. Sure. | |
| Mr. WARD. I think that a public-private partnership is | |
| really the only solution when you are talking about both | |
| controlled monopolies and natural monopolies. The technological | |
| feasibility of the last mile is hard enough. It is even worse | |
| when it has to go through 20 miles of forest to get to two | |
| people. You cannot make that math work in an open market | |
| purely. There has to be a partnership. | |
| Mr. HERN. Very good. | |
| Well, I thank each of you for this. I have listened to all | |
| your testimony obviously since I have been here. Again, I | |
| apologize, like the Chairman, there are so many Committee | |
| hearings going on today. But thank you all so much, and it is | |
| great to see, especially what you did from figuring out a way | |
| to be successful, and that is an awesome story. And there is | |
| nothing greater in this country than to have the opportunity to | |
| start a job. I would challenge you to hire somebody though | |
| because the world changes when you have employees. | |
| Thank you so much. I yield back. | |
| Chairwoman VELAZQUEZ. The gentleman yields back, and now we | |
| recognize Mr. Delgado from New York for 5 minutes. | |
| Mr. DELGADO. Thank you, Madam Chair. | |
| Mr. Ingersoll, thank you for taking the time from your | |
| business in Sloansville to testify here today. It is great to | |
| hear all that you have accomplished in the face of tragedy. The | |
| Committee appreciates you sharing your story. | |
| It is clear that reliable internet access is critically | |
| important for someone like you to get online and reach your | |
| customers, and I really agree wholeheartedly with the way you | |
| framed the issue in terms of being a public utility. We know | |
| that about 40 percent of rural Americans lack broadband | |
| internet access, and 25 percent of my home district does not | |
| have a broadband subscription. Clearly, we need rural | |
| investment in broadband services, but it also strikes me, and | |
| you spoke about this in your testimony, that like broadband, we | |
| need universal, affordable Postal Service that ensures that | |
| rural businesses can reach their customers. And so we spent a | |
| bit of time talking a lot about the rural broadband piece, and | |
| I would love to hear from you a bit more on the impact on rural | |
| communities if the Postal Service was privatized. | |
| Mr. INGERSOLL. I have concerns about it being prioritized | |
| just because like right now with UPS, FedEx, and these other | |
| carriers that are private companies, they charge rural | |
| surcharges, fuel surcharges, and all these sorts of things to | |
| deliver it to these rural areas. The post office makes it very | |
| accessible, and if you want to keep the barrier of entry low | |
| for ecommerce in general, the Postal Service is the only one | |
| that is really going to provide that service where you can be | |
| competitive with larger companies that have their own logistics | |
| networks and their own deals with carriers to compete with a | |
| bigger advantage over someone who is just starting out. So I | |
| would say privatizing it would be a big concern to me because | |
| rural America is going to be cut out of the deal. Or at the | |
| very least you are going to increase the cost for people who | |
| are already struggling. | |
| Mr. DELGADO. So it would specifically hurt your business? | |
| Mr. INGERSOLL. Yeah, it would specifically hurt me. | |
| Mr. DELGADO. In terms of the overhead and the cost | |
| increases. | |
| You talked about controlled monopolies. Another insight | |
| that I agree with. And the need to figure out how government | |
| needs to play a role, whether it is in partnership with private | |
| actors or otherwise, and specifically, given the fact that | |
| rural communities time and time again, particularly as we lurch | |
| toward privatization in almost every public sector, is leaving | |
| specifically rural communities behind because they do not have | |
| the population centers to incentivize private actors to make | |
| the investment. And so while we might have access and have had | |
| access for some time, as you note, since 2008, we see the | |
| disproportionate disadvantages that the rural communities are | |
| struggling with. | |
| Could you speak a bit more about how the quality, or lack | |
| thereof, of your broadband access has really impacted your | |
| ability to conduct business? | |
| Mr. INGERSOLL. Well, as ecommerce has evolved, buyer | |
| expectations have increased. So it is much more of a priority | |
| to process orders quickly and things like that. If your | |
| internet goes down and you have no other way to process those | |
| orders, it is going to negatively impact you. And as ecommerce | |
| continues to grow, competition increases, people in more urban | |
| areas with better access to internet are having a big advantage | |
| over their rural competitors because of that. I think it is | |
| essential to even the playing field in that regard. | |
| Mr. DELGADO. Excellent. Thank you very much. | |
| I yield back. | |
| Mr. INGERSOLL. Thank you. | |
| Chairwoman VELAZQUEZ. The gentleman yields back. | |
| And Mr. Stauber, the gentleman from Minnesota, is | |
| recognized for 5 minutes. He is the Ranking Member of the | |
| Subcommittee eon Contracting and Infrastructure. | |
| Mr. STAUBER. Thank you, Madam Chair. And to the witnesses, | |
| thank you for your testimony. | |
| I, too, am a small business owner for 28 years in rural | |
| northern Minnesota, and so I understand what you are going | |
| through and some of the concerns. One of the things, we talk | |
| about broadband being deployed. What I have said is high-speed, | |
| dependable internet is not a luxury anymore. It is an absolute | |
| necessity. And rural America seems to be put on the back | |
| burner. | |
| Mr. Ward, I appreciate your comments about it has to be | |
| that public-private partnership. Rural Minnesota, rural America | |
| is left behind and it is not acceptable anymore. And so I hear | |
| my colleagues from Colorado and Iowa saying the same thing. We | |
| have a lot of support for deploying that broadband, and I love | |
| the fact that you all have nodded your head when you understand | |
| that competition is good for deploying that because competition | |
| is good for the consumer and we know that for a variety of | |
| reasons, dependable broadband is absolutely needed. | |
| We can go in some of our rural areas that are just miles | |
| apart the same value of a home, a resale of a home is going to | |
| go higher when it has a dependable broadband and high-speed | |
| service. | |
| Mr. Ingersoll, you talked about the Postal Service and I | |
| really appreciate that. In a time when everything is online and | |
| digitalized, I think we forget how many people and industries | |
| depend on dependable Postal Service, which make our experience | |
| as consumers possible and help expand small businesses like | |
| yours. | |
| I have recently cosponsored a number of resolutions to | |
| maintain important aspects of the Postal Service, such as door | |
| delivery and 6-day mail service so that we can continue to | |
| support small rural businesses across this Nation. | |
| As Congress continues to discuss postal reform, what are | |
| some of the biggest challenges you foresee should the Postal | |
| Service become limited in rural areas? And please give me an | |
| estimated annual cost to your business if the Postal Service | |
| does not continue the 6-day service or limits its rural | |
| delivery and pickups. | |
| Mr. INGERSOLL. It would be tough for me to speak to an | |
| exact number on that just because I do not know exactly what | |
| percentage of my customers are in a rural area. Typically, the | |
| nature of my business, you are going to get more of a rural | |
| customer base than an urban customer base just because people | |
| are not riding ATVs in cities. | |
| But, I mean, overall, if you limit that, I am going to have | |
| to stop using the Postal Service and, you know, spend more to | |
| go with FedEx, UPS, someone that is going to offer delivery | |
| that a customer is going to expect. Unfortunately, I do not set | |
| the precedent for what a customer expects. Larger companies do | |
| that negotiate their own deals with carriers. So it puts me at | |
| a big disadvantage in comparison to---- | |
| Mr. STAUBER. Well, can you just give me an idea of the | |
| amount of product you sell and send? Give the Committee an | |
| idea, just a rough guess what it would cost if you had to add | |
| those additional charges from other competitors. | |
| Mr. INGERSOLL. Well, first off, we use a lot of the | |
| priority and regional boxes, which are supplied by the Postal | |
| Service. We send about 8,000 shipments a year with the Postal | |
| Service. So the average cost of a box is around $1 if I had to | |
| buy it, so there is $10,000 in costs. The next nearest carrier | |
| that offers a comparable service to USPS and the flat rate | |
| program is FedEx, and they are on average about $5 more per | |
| shipment than Priority Mail. So five times $10,000 plus, you | |
| know. | |
| Mr. STAUBER. It would be a significant increase? | |
| Mr. INGERSOLL. Yes. | |
| Mr. STAUBER. Thank you very much. | |
| And with my last 30 seconds here, Mr. Ward, you talked | |
| about you have worked on The Hill, and you made a statement to | |
| both the House and Senate, `` Then make a better bill.'' I can | |
| assure you that is exactly why I ran, to make sure that rural | |
| America, rural Minnesota, we matter. And I appreciate those | |
| comments, and we are going to work that. And with your | |
| testimony, your expertise, it helps us also. I want to thank | |
| you all for taking your time and giving us your stories. And we | |
| appreciate it. | |
| Madam Chair, I yield back. | |
| Chairwoman VELAZQUEZ. The gentleman yields back. | |
| And now we recognize the gentlelady from Pennsylvania, Ms. | |
| Houlahan, for 5 minutes. | |
| Ms. HOULAHAN. Thank you. Thank you, Madam Chair. | |
| My name is Chrissy Houlahan. I am a small business and | |
| entrepreneur person as well, and I have grown a lot of | |
| businesses from the beginning and did online sales back in the | |
| early 2000s of footwear and apparel, so I know the trials and | |
| tribulations of trying to start up a business and trying to get | |
| things into a box to where they are going across the country | |
| with all of its ancillary problems. And my questions I guess | |
| have to do a little bit for Mr. Ward, your conversation and | |
| your testimony both orally and written, that had to do with an | |
| emphasis on public and private partnerships for small | |
| businesses to worry about things like cybersecurity and | |
| cyberspace. And I was wondering if you could put a little bit | |
| more meat on the bone of what you mean by a public and private | |
| partnership and how those small businesses can be tapped into | |
| being able to be safe and secure online. | |
| Mr. WARD. Certainly. Thank you. I appreciate the question. | |
| It is amazing how many small business owners are members of | |
| Congress now, is it not? I think there is something that has to | |
| do with the experience of starting your own business and | |
| dealing with a myriad of problems at the same time. | |
| It is beyond the pale to also ask small businesses to | |
| consider how to pay the bills, how to deal with the logistics, | |
| how to have a good idea, how to deal with their staff, and to | |
| become IT experts. Right? And far too often the burden of | |
| running a small business can become overwhelming if you do not | |
| have answers. If you do not have somebody to turn to on | |
| guidance. | |
| On the issue of cybersecurity, I think most small | |
| businesses would feel very alone indeed. One of the issues is | |
| that ransomware, hacks, breaches, data theft generally, they | |
| put small businesses completely out of business. They are | |
| extinction-level events because they cost so much, but also | |
| because the compliance required is far over the head of most | |
| small business owners. | |
| Ms. HOULAHAN. But what does a private-public partnership | |
| look like? | |
| Mr. WARD. So if the SBA, for example, were given more | |
| resources and more guidance on how to make training available | |
| and how to make the tools and resources available for small | |
| businesses, we would be more likely to use them. Additionally, | |
| there needs to be a safe harbor. There needs to be a place, a | |
| way for small businesses to report hacks and breaches that does | |
| not feel like it is going to be the end of their business. The | |
| next piece I think that is essential is we have to find a way | |
| to better fund prosecution of these hacks and data breaches. I | |
| do not have the numbers directly in front of me but I believe | |
| it is something like 1 percent of all cyberattacks are ever | |
| reported, and less than 10 percent of those are ever intervened | |
| or prosecuted. There are no deterrents. And without the public | |
| enforcement, there is no private incentive. And so there needs | |
| to be a better understanding between small businesses and the | |
| SBA, Department of Commerce generally, DHS specifically, on how | |
| they can work together to harden the target that is small | |
| business datasets. Because cumulatively, that is valuable data, | |
| but too often we pay attention to the large breaches--hotel | |
| chains, retail stores--because it is bigger. It is more data. | |
| Cumulatively, there is just as much data in the small business | |
| community. | |
| Ms. HOULAHAN. Thank you. And I appreciate your feedback. | |
| And I have one question. I hate to keep coming back to the | |
| USPS, the Postal Service thing because it is intriguing to me | |
| as somebody who is in charge of operations and shipping and | |
| logistics. But can you try to quantify the impact if you needed | |
| to go to DHL or to FedEx and you were on longer able to use the | |
| USPS as 80 percent of your shipments are going out of the USPS, | |
| would you be able, Mr. Ingersoll, to talk about the impact on | |
| the bottom line? | |
| Mr. INGERSOLL. The effect that would have, it would make | |
| what I do, it would not be a viable option any longer. The | |
| problem is it is a lot of reproduction, Chinese parts, whereas | |
| I sell OEM parts that are coming over, and they are already | |
| within competition to us but the problem is if my costs | |
| increase it would price me out completely. My customers are | |
| typically lower income and they will not spend extra money for | |
| the same thing they were used to purchasing before. | |
| Ms. HOULAHAN. Thank you. And my last question has to do | |
| with kind of the impact of women-owned businesses, and I am | |
| interested in trying to understand from you, Ms. Stout, if you | |
| can tell me a little bit about--I know the question was about | |
| family leave, and I think you came back around appropriately to | |
| health care as being probably the biggest issue. What would it | |
| look like to feel like you were supported to be able to have a | |
| small business in terms of access to healthcare quality, | |
| affordable, accessible healthcare? What are the pressure points | |
| for you right now as a small business owner? | |
| Ms. STOUT. Thank you for the question. It is pretty in | |
| depth, I think. | |
| Ms. HOULAHAN. And I have 8 seconds left. | |
| Ms. STOUT. There is a lot that goes on with it. I think | |
| just having better options. It was very hard for me to navigate | |
| when I was searching and looking for things to help support my | |
| family once I realized that I was going to need to find another | |
| solution. | |
| Ms. HOULAHAN. And maybe what I can do since I am over time | |
| is afterwards I can find you. | |
| Ms. STOUT. Yes. Yes. Please follow up. | |
| Ms. HOULAHAN. And learn from you. Yeah. | |
| Ms. STOUT. I would love to answer. | |
| Ms. HOULAHAN. I appreciate your time, all of you. | |
| Ms. STOUT. Yes, of course. Thank you. | |
| Ms. HOULAHAN. Thank you so much. | |
| Chairwoman VELAZQUEZ. The gentlelady's time has expired. | |
| And now we recognize Mr. Burchett from Tennessee. | |
| Mr. BURCHETT. Thank you, Chairlady. And I appreciate you | |
| all being here. I, myself, have done a little eBay. I think I | |
| had over 1,000 transactions on eBay. Last week I sold a pair of | |
| jeans, and I know when my daughter watches this when she gets | |
| home from school that that money will probably be back out in | |
| the economy before I can get home. So I am looking forward to | |
| that. | |
| As a matter of fact, when I was in the legislature in | |
| Tennessee, I carried legislation for eBay. I did not profit | |
| from it. It was not that type of a situation. It was just some | |
| clarification in the law of where they were. But all the | |
| questions really have been asked that I had, but this is sort | |
| of a catchall, and I am always asking folks this, and I would | |
| like just an honest answer. We can start down at the end. | |
| Mr. Ingersoll, I ride a few bikes myself. Mine are all old | |
| kick starters though. They are not electric starts or anything | |
| quite as fancy as what you deal with. But I guess my catchall | |
| question is, would you all be willing to explain any burdens | |
| that you see that government is placing on small businesses | |
| right now that if you could have changed overnight you would? | |
| Yeah, go ahead. I want everybody to answer that, too, if they | |
| could. | |
| Mr. INGERSOLL. As far as the Federal Government, aside from | |
| some of the tax policies not being formed around sales tax, the | |
| thing about bringing opportunity to these rural areas is | |
| keeping the barrier of entry low. And when you need to keep | |
| track of 50 different sales tax, it becomes a real problem | |
| because if you are starting out with $20,000 or $30,000 in | |
| sales just trying to make a living or something like that and | |
| you need to keep track of all that, you have to hire an | |
| accountant, you may have to implement software to track it all. | |
| And you do not want to make it more difficult than it needs to | |
| be for someone to go out there and compete because if you are | |
| going up against someone like Amazon, they have the resources | |
| to handle that. A small company does not. | |
| Mr. BURCHETT. Do any of the websites that you sell--I guess | |
| you just sell primarily on eBay. Do they currently now take the | |
| sales tax out for the states that are not brick and mortar in | |
| your state or however? | |
| Mr. INGERSOLL. I believe anyway that it is a marketplace | |
| nexus. | |
| Mr. BURCHETT. Okay. | |
| Anybody else have problems? | |
| Mr. WARD. I have several problems with the regulatory | |
| burdens. But I think the primary burden that both state and | |
| Federal Governments currently are placing on small businesses | |
| that we can talk about today is uncertainty. Uncertainty for a | |
| small business is fatal. Not knowing what the market looks | |
| like, not knowing what access to tools or talent or broadband | |
| will look like in 18 months makes it incredibly difficult to | |
| plan. For large businesses, market uncertainty can be an | |
| opportunity. For small businesses it is incredibly detrimental. | |
| We need to figure this out sooner than later in order to | |
| restore some level of sanity to the marketplace. | |
| Mr. CONNORS. I would add to that, uncertainty clearly is an | |
| issue, particularly as it relates to this effort. But for most | |
| businesses, the companion piece would be predictability. There | |
| is not a problem for most businesses to recognize you need to | |
| be regulated, you need to address certain issues, but when | |
| those areas or when those issues change or the regulations | |
| around those issues change, that becomes a real problem. So | |
| with uncertainty would also be the need for predictability | |
| within any regulation. | |
| Mr. BURCHETT. Right. I think something that troubled me was | |
| you would find out after the fact. | |
| Mr. CONNORS. Exactly. | |
| Mr. BURCHETT. And it is very tough to retroactively pull | |
| that back. | |
| Mr. CONNORS. Yes. | |
| Mr. BURCHETT. And it hurts the small businesses. Big | |
| businesses, they have accountants and lobbyists and lawyers up | |
| here and they can tell them exactly. | |
| Mr. WARD. Something has happened over the last 5 to 10 | |
| years where we have developed in terms of a digital tool stack | |
| for small businesses. Right? You can get your email through | |
| Gmail. You can use Infusion Soft to do your CRM. You can use | |
| Amazon as a marketplace or eBay as a marketplace. And some of | |
| these other logistics groups. The price point for those tools | |
| is as low as it is because of math that has been done at the | |
| larger level. If you change that business model for larger tech | |
| companies or even platforms generally, you also change the math | |
| for the small business. So most of that burden is inadvertent. | |
| Right? Nobody was aiming for small businesses. But if you aim | |
| at the top of the interconnected digital economy, you are going | |
| to hit the bottom. | |
| Mr. BURCHETT. Thank you, all. I am out of time. And I | |
| appreciate you all's entrepreneurship and being willing to roll | |
| the device. | |
| And ma'am, if you had been here, all these people got tax- | |
| free status for a year but since you walked out you missed your | |
| opportunity. | |
| Thank you, Chairlady, for an excellently run meeting. Thank | |
| you, ma'am. | |
| Chairwoman VELAZQUEZ. The gentleman's time has expired. | |
| We now recognize the gentlelady from Minnesota, Ms. Craig, | |
| for 5 minutes. | |
| Ms. CRAIG. Thank you so much, Chairwoman. And thanks to | |
| each of you. Sorry, I have been in and out, too, but I am also | |
| on the Transportation and Infrastructure Committee, so we are | |
| working hard to have those conversations about how we can bring | |
| rural broadband, high-speed internet to every single part of | |
| America to help us revitalize and allow you to continue to | |
| build those small businesses. | |
| So a lot of the questions certainly have been asked today. | |
| And Mr. Ingersoll, I wanted to just start with you. You have | |
| talked about that rural broadband being essential to ensuring | |
| the success of your small business. In our hearing here last | |
| week, we focused on the relationship between broadband and the | |
| potential larger infrastructure package that we are going to be | |
| considering we certain hope. Such a package is likely to | |
| support our existing Federal Recreational Trails Program, and | |
| that helps fund the development and maintenance of many trails, | |
| including ATV trails, which is very popular back in my home | |
| state of Minnesota as well. | |
| My question to you is then, what do you see as the most | |
| viable path forward to get broadband out to our rural | |
| communities and make that a reality? And if we are unsuccessful | |
| in some of those areas, what does that do in terms of affecting | |
| your business? | |
| Mr. INGERSOLL. Well, I mean, anyone that does not have | |
| access to the internet that they can, you know, if they cannot | |
| easily navigate it or it is consistently down, they are not | |
| going to feel comfortable shopping online. They are going to | |
| look for other outlets for whatever they are trying to search | |
| out because a lot of these rural communities, you have groups | |
| of people who are not familiar enough with the internet yet to | |
| have trust in it. They do not understand aspects of it. So I | |
| think that reliable service would be the foundation of that. | |
| And I think the future is ecommerce. So ensuring that everyone | |
| has access to it in a similar manner is essential for any | |
| business to grow in the business. | |
| Ms. CRAIG. Thank you. | |
| I worked for a big business for about 2 decades, two | |
| different big businesses. And after that I ended up becoming a | |
| senior advisor before being elected to Congress to a small | |
| startup company. So I just want to say how much harder it is to | |
| work for a small business than it is a large business in this | |
| country. And I applaud you, Ms. Stout, for the work that you | |
| did to build your business. It is wonderful. | |
| Let me ask this question of both of you though. What would | |
| you do different if you had to start this all over again? What | |
| mistakes did you make and is there any advice to entrepreneurs | |
| and small businesses? And how can we take that into account as | |
| we look at either regulation or infrastructure decisions? | |
| Mr. INGERSOLL. I would say initially I underestimated the | |
| potential that marketplaces like eBay have. I was thinking much | |
| smaller initially than I should have and long term it would | |
| have benefitted me to realize that opportunity earlier. Outside | |
| of that, there is not really much I would change as far as how | |
| I operated and grew my business. The one thing though that | |
| needs to be considered I think with policy is businesses have | |
| shifted from being larger retail outlets to being very low | |
| revenue, one to five person operations. And if policy is not | |
| formed around that it is just going to push that opportunity to | |
| larger companies and unless you want to work in a fulfillment | |
| center, there is not going to be opportunity in these areas | |
| that are going to be impacted. | |
| Ms. CRAIG. Ms. Stout, do you have anything to add? | |
| Ms. STOUT. Similarly to what Mr. Ingersoll said, I would | |
| have started sooner if I would have known what I know now. | |
| Things went a lot better than I expected also. And also, yes, | |
| gearing more policy towards smaller businesses and not assuming | |
| that we all want to be large businesses because some of us do | |
| not. Some of us want to just support our families and | |
| communities. And that would be very, very helpful. Thank you. | |
| Ms. CRAIG. Thank you both for your story and for your | |
| commitment to small business and the country. Thank you. | |
| Madam Chairwoman, I yield back my time. | |
| Chairwoman VELAZQUEZ. The gentlelady yields back. | |
| And now we recognize the gentleman from Illinois, Mr. | |
| Schneider, for 5 minutes. | |
| Mr. SCHNEIDER. Thank you. And I want to thank the | |
| Chairwoman for hosting this hearing, and as always, to thank | |
| the witnesses for (a) your perseverance in staying here until | |
| the end, and I appreciate you waiting, but more importantly, | |
| for sharing your perspectives and experiences is critical. | |
| We are talking about unlocking the potential of digital | |
| economy in rural communities. I am also on the Ways and Means | |
| Committee. Last week we had a hearing on infrastructure. And I | |
| represent the northern suburbs of Chicago. Not a lot of rural. | |
| But I understand how important rural broadband is and I made | |
| the point there that we need to absolutely make rural broadband | |
| part of whatever infrastructure conversation we have to empower | |
| and make sure that not just small businesses but rural | |
| communities can compete. But I also know from my experience | |
| working with businesses large and small how important and how | |
| wonderful small businesses are. I happen to think that I prefer | |
| the small business world. I prefer being my own boss. And I was | |
| thinking, Mr. Ingersoll, you mentioned with bigger, and coming | |
| from Chicago I thought of Daniel Burnham, and I just looked up | |
| the quote to make sure. But it is `` Make no little plans | |
| because they otherwise have no magic to stir the soul.'' This | |
| is what is about, is hopefully your businesses do stir your | |
| soul, and in so doing, you and millions of others, 29 million | |
| small businesses in the country, that is what can drive and | |
| always has driven our economy. But we need to make sure we have | |
| that access, the access to technology and the new successes. | |
| But with those new successes there is also going to be | |
| challenges. And one of the challenges which I know we have | |
| talked about a bit is cybersecurity. Last Congress I was | |
| fortunate, I was able with my colleagues to introduce the Small | |
| Business Cybersecurity Enhancement Act, which will help | |
| businesses address their gap in cybersecurity needs from | |
| enhanced technology defenses to security awareness training. | |
| And it is key because as you said, while maybe a smaller | |
| business, it can be a gateway to a bigger breach. I do not care | |
| if it affects millions or me alone, me alone is a big impact. | |
| And for everyone who is affected that is true. | |
| To our business owners, my question to you is what degree | |
| do you keep cybersecurity concerns in mind as you look to | |
| expand your business as you think about those big plans? How | |
| are you addressing those vulnerabilities? And for Mr. Ward in | |
| particular, how are groups like 3C working with members to | |
| shore up these vulnerabilities and ensure everything from | |
| payment platforms to consumer information are protected? | |
| Mr. INGERSOLL. Me? | |
| Mr. SCHNEIDER. Anyone? Yeah. | |
| Mr. INGERSOLL. Using eBay is a big advantage because I do | |
| not have to deal with storing that data or even handling it. | |
| They are controlling that completely so that burden is entirely | |
| off me. It is not even a concern. | |
| Mr. SCHNEIDER. Great. | |
| Ms. Stout? | |
| Ms. STOUT. Very similar to Mr. Ingersoll, again. I mostly | |
| work through Etsy and PayPal invoicing so I do not see any | |
| secure information. It is all taken care of for me which is | |
| very, very helpful. I would not want to have to deal with it. | |
| Thank you. | |
| Mr. SCHNEIDER. Before I go to Mr. Ward, Mr. Connors, | |
| anything you want to add? | |
| Mr. CONNORS. Well, I would add that it is a real concern to | |
| businesses, needless to say. And we have tried to bring as much | |
| information through Federal agencies and so forth to our state | |
| to help educate and inform our businesses as to the | |
| vulnerability, but also the things you can do to help address | |
| it. | |
| Mr. SCHNEIDER. Right. Great. | |
| And Mr. Ward, I will give you the last word. Because we | |
| talked earlier with the question of the public-private | |
| partnerships. This is where I do believe industry, government, | |
| educational institutions, groups like yours, can work to raise | |
| the bar and give the security our small businesses need. So I | |
| will leave you with the last word, the last minute. | |
| Mr. WARD. I agree with that. So in reverse order, 3C is | |
| relatively new to this space. We launched less than a year ago | |
| but are growing pretty rapidly and cybersecurity training and | |
| resources are at the top of the list we would like to deliver | |
| to our small business members. Working with SBA and state | |
| governments to hone those materials would be a welcomed | |
| opportunity. | |
| The biggest, the most often utilized tool for cybersecurity | |
| is what you just heard here. It is the platforms that offer | |
| secure data management, resources, and sort of take that burden | |
| off the small business. What I am worried about particularly in | |
| state legislative proposals right now, the California Consumer | |
| Privacy Act, for example, takes away some of that protection by | |
| classifying small businesses that cross over into compliance | |
| requirements at 50,000 installs, for example. They then become | |
| responsible for data sets. So if you are a realtor that has | |
| 50,000 names entered into a database, it does not matter that | |
| you are storing it in a Google doc. You are now responsible for | |
| that data and you cannot rely on a platform to hold your hand | |
| through that process. So the long answer is--I am sorry, the | |
| short answer is we are eager to help our members. Do you want | |
| the long one? | |
| Mr. SCHNEIDER. Thank you. I appreciate that. And before I | |
| yield back, Madam Chairwoman, what I would like to add is we | |
| are at the frontier. These are new opportunities. Our small | |
| businesses are always at the frontier, whether it was the | |
| Industrial Revolution or today with the digital revolution. But | |
| there will always be unexpected surprises along the way. There | |
| will be unintended consequences. Together, working together, | |
| industry, policymakers, we have to find a way to ensure data | |
| security, create the opportunities through rural broadband and | |
| other digital access, and make sure that we are providing our | |
| entrepreneurs, American businesses, the chance to grow the | |
| American economy. | |
| With that I yield back. | |
| Chairwoman VELAZQUEZ. The gentleman's time has expired. | |
| I want to take this opportunity to again thank all the | |
| witnesses for taking time out of your busy schedule to be here | |
| and share your stories, to bring to the halls of Congress the | |
| importance of including small businesses, but especially rural | |
| America. This is a bipartisan issue, and hopefully we all come | |
| together and build a consensus around an important issue that | |
| will unlock economic opportunities across the country. | |
| Whether it is purchasing transnational flights or providing | |
| distant telehealth services, the internet has completely | |
| changed our society. Most of all, digital platforms have | |
| changed the way entrepreneurs reach new and existing customers. | |
| But without reliable broadband, these new opportunities and the | |
| economic activity associated with them is severely hampered. | |
| That is why we must ensure digital tools reach every American | |
| wherever they call home. | |
| I 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. | |
| [Whereupon, at 1:06 p.m., the committee was adjourned.] | |
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