News Column

Entrepreneurs' Next Creation May Be New Laws

December 9, 2013

Laura Baverman

Entrepreneurs such as Elon Musk to change traditional business models.
Entrepreneurs such as Elon Musk to change traditional business models.

On the payroll at the Orange County, Calif., start-up Ghost Group are two full-time lobbyists, a policy writer, a public relations firm and marketing agency.

They have an annual budget of $1 million and a single mission: to do whatever is possible to get states and the federal government to legalize marijuana. Leading the team is the company's co-founder, Justin Hartfield, a man with a passion for the substance and no qualms about spreading the word about the opportunity that surrounds it.

Hartfield has a lot to gain from the big spend and hours he has spent presenting his case. Ghost Group is a marijuana technology holding company, and its business is called WeedMaps. A listing and review site for doctors, dispensaries and retailers (in Colorado starting Jan. 1, and Washington state in mid-2014) that sell pot legally, it is dependent on marijuana's projected growth.

But he's also symbolic of a new breed of start-up CEO that's not just sitting in Silicon Valley building a cool new technology. He's among the many entrepreneurs entering government chambers to defend new ways of doing business or to overturn laws that never considered the types of business models deployed today.

"The reason a lot of start-ups succeed is because they target niches and areas ignored by regulators," says Dane Stangler, director of policy and research at the Ewing Marion Kauffman Foundation. "It's only when they threaten the big guys' bottom lines or enter an industry dominated by private cartels that regulation starts to enter the picture. And that's happening today."

Examples are plentiful. There's Tesla Motors CEO Elon Musk, who is lobbying in several states for permission to sell vehicles directly to consumers rather than through dealers.

Brian Chesky of Airbnb has had a visible fight in New York, where the attorney general has tried to shut down the room- and home-sharing site, under pressure from hoteliers. He's fighting in other cities for updated legislation that legalizes short-term online property rentals.

Travis Kalanick of Uber, the company that transformed the taxi and private-car industry with its car-hailing mobile app, has been accused of breaking laws by not being licensed as a taxi or limo company. He argues in many cities that he's a technology provider; he owns no cars to license.

Start-up CEOs building companies around unregulated online currency Bitcoin are making a case for why they shouldn't be subject to federal oversight. Other start-up CEOs have joined The Internet Association, a lobbying group formed in 2012 by tech companies to stand for Internet freedom, innovation and economic growth. Mark Zuckerberg's political action committee FWD.us has the biggest names in Silicon Valley fighting for reformed immigration laws.

Most of those efforts come down to the ability of CEOs to communicate, and Hartfield is a passionate advocate for legalized marijuana. That includes talking about his own experience with the substance.

"I know what strains to use at what time. I know where it's been grown, and everything I smoke has been tested in a laboratory," he says. "It's not for everyone, but for me, it works really well and has shown me a whole new world of opportunity and success."

Hartfield expects his lobbying efforts will pay off in eventual sales once states approve new marijuana laws. He says WeedMaps should earn $30 million this year, and Ghost Group will invest up to $25 million more in marijuana-affiliated businesses. He also owns the domain name Marijuana.com, a site he hopes to make the Amazon.com of weed after legalization.

He sees another benefit to his association with new laws, which will help him stay ahead of competitors.

"We're going to be that brand associated with legalization," Hartfield says. "And that will have inherent value and a cool factor that is unable to be replicated."

Laura Baverman is a Raleigh, N.C.-based business journalist covering start-ups and entrepreneurship for regional and national publications. She previously covered entrepreneurship for the Cincinnati Enquirer, a Gannett newspaper. Baverman can be reached via e-mail at lbaverman@gmail.com or; Twitter @laurabaverman.


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Source: Copyright USA TODAY 2013


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