What Do Drones, Bitcoin And Football Helmets Have In Common?

By May 7, 2014Bitcoin Business
Click here to view original web page at www.forbes.com

What Do Drones, Bitcoin And Football Helmets Have In Common?

Lawyers, Lobbyists and Legislators.

Any major invention, from electricity, to genetic engineering, is inevitably followed by lawyers, lobbyists and legislators or as I like to call them, the 3Ls . The 3Ls react to, prevent, alter or shape the invention in an effort to serve what they perceive as the interests of society.

First, let’s take drones.

On December 17, 1903 the Wright brothers gained credit for the first ever heavier-than-air flight. The 3Ls woke up 12 years later and passed the Air Mail Act of 1925 followed by the Air Commerce Act of 1926 that set up foundation for what eventually became the Federal Aviation Administration (FAA). The FAA then established the concept of commercial airspace, established safety rules for planes and pilots and establishing flight paths and tracking mechanisms to ensure planes don’t collide—all in the interests of society.

Fast forward to December 2013, Jeff Bezos made headline news that drones are coming to deliver packages to doorsteps with half hour shipping via Amazon prime air.

But there are rules governing the use of unmanned aircrafts for commercial purposes—or at least the FAA holds that commercial drone flights are prohibited until the agency establishes rules to govern their use.

Things are happening quickly these days and people are closely watching the recent case of FAA vs. Raphael Pirker—Pirker was fined $10,000 for reckless flying after using a drone to shoot a promotional video, he recently won dismissal. The judge ruled the FAA had no authority over small unmanned aircraft. The decision, which the FAA is appealing brings up a host of questions: The FAA doesn’t really control airspace below either 700 or 400 feet anyway. What is the difference between a drone and a model plane?  Commercial and personal use? Can a personal drone fly over a fire and send pictures to CNN?  Can 10 personal drones do the same thing?

Following the decision, San Francisco based startup QuiQui announced its plans to use drones to deliver pharmacy items to residents of the city’s Mission District. The Huffington post jokingly reports, “If a toothbrush falls on your head in San Francisco, don’t be alarmed.”

Certainly the lawyers have already woke up smelling potential lucrative sources of revenue, as many big US firms have already established drone law practice groups. It is clear there are a host of regulatory and legal issues that need to be resolved such as privacy, noise, safety, insurance and the like, before commercial drones can be deployed in any meaningful way. In Europe, the Joint Authority for Rulemaking on Unmanned Systems (JARUS) retains the notion of a pilot remotely flying the drone. The US may go in a different direction with more autonomous drones. Think Google Cars but with a third dimension and no roads.

At least I know if a toothbrush falls on my head, I will know there are lawyers ready to help me with damages.

Now, Bitcoin?

Recently I saw a panel of Bitcoin startup CEOs trumpet the power of a self-regulating digital currency that enables international transactions outside the control of central governments. They touted its successes for many investors and its growing mainstream prominence—MIT is supporting the Bitcoin Project to give $100 in bitcoins to all undergraduates, and the city of Seattle recently received its first Bitcoin ATM.

The problem is most governments I know like to do a few things themselves: collect taxes, prevent tax evasion, take money from people who violate their laws, and print money – which is exactly why the 3Ls are out in force trying to understand Bitcoin. Regulators from New York to China are announcing governing rules and the IRS recently determined how the currency will be taxed—as property.

Like any innovation, it will take time to figure out what can be kept and what society will reject. I do hope something comes of this as I am not a fan of governments who can run their own printing presses. I just don’t know how to gain an advantage in predicting how and when the 3Ls will work with Bitcoin and create something for the masses as a cheaper alternative to the banking system.

But I do wish them good luck, they will need it.

So, what about football helmets? 

Artiman Ventures

The history of the non-leather football helmet can be traced back in part to advances made in protecting WWII soldiers. Since that time, especially recently, there have been calls for safer helmets to protect children and professional athletes from brain injury.

Sports, however, are undertaken by volunteers presumably for recreation or to make a living. As a society, we want to have it all—our kids should be able to play football but if they get hurt we immediately ask who can we blame?

Why not Riddell? The maker of the Revolution Football Helmet widely adopted by the NFL, college and high school athletics programs. This helmet was supposed to reduce the risk of concussion and had a company-sponsored 2003 University of Pittsburg Medical Center study as support. That study has come under intense attack from the legal system claiming it was flawed and the company’s resulting was advertising false and misleading.

I am not here to judge the merits of the lawsuit, but if you are a startup trying to make a better helmet to protect your kid from injury you better ask for a lot of working capital to fund your legal team.

Bringing it all together, the challenges drones, bitcoin and helmets face are often not the underlying technology but the society in which these advances are released into. The 3Ls that follow major advances in science are society’s antibodies swarming to protect us from ourselves and our inventions—all in the presumed best interest of society. This process is often fragmented, political, messy and very hard to predict.  That is why it can take years for a new invention to become mainstream, and why many VCs focus on investing into sectors that don’t have these attributes. Timing is everything in this business and part of the art is to judge your exposure to society’s antibodies.

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