Innovation, Entrepreneurs, and Small Business

Jackelope_poster2.JPGLittle in the current economy gives one reason to be upbeat. Yet, the recent focus on entrepreneurial activities, innovation, and the best way to keep the country moving forward seems at least to focus on the best questions. What these new ventures look like and what they need to thrive varies from context to context. For example. Ann Bartow, Mike Madison, and I gave talks at West Virgina Law’s Digital Entrepreneurship: The Incentives and Legal Risks. We and several others looked at the different ways law can help or harm digital entrepreneurship. As Mike noted, Fordham just had a conference called When Worlds Collide: Intellectual Property at the Interface Between Systems of Knowledge Creation. And on April 24 the University of Wisconsin Law School is hosting a Creativity, Law and Entrepreneurship Workshop. As much as I love to talk about IP and innovation, two recent encounters reminded me that the law plays a huge role in business success in general.

In one case, a boutique gin distiller called Peach Street has made a damn fine gin called Jackelope. If you are in Colorado where the gin is made, the cost is about $30. If, however, you are lucky enough to buy it from a local store the price rises to around $45 per bottle. Now I will tell you that the gin is worth it. Nonetheless, facing competition from companies with better scale and larger distribution networks such as say Hendrick’s, Peach Street will have real problems. Hendrick’s is a favorite among gin drinkers and costs quite a bit less that Jackelope. I still say Jackelope is worth it. But getting people to try it at that price point is difficult. It may be that scale is Peach Street’s problem. It may have to find a way to lower its price and rely on volume to compete. If there is no way to lower the price point, Peach Street may be doing as well as it can for now. Yet, it could be that the Internet provides a lever that Peach Street would not have had ten years ago. The marketing is direct and sales could be handled online. That leaves distribution.

So could the Internet unleash the mighty not-so-mythical beast that is Jackelope gin? It is hard to tell but seems unlikely. Liquor laws and interstate shipping rules are complicated enough so that smaller companies have a difficult time navigating the wine rules which may or may not map to spirits. As a law, technology, and innovation problem, one would hope that we could reduce the country’s internal trade barriers on alcohol and stimulate more business. Microbrewed beer, local (i.e., non-Californian) wines, and artisan spirits are growing industries. Letting them reach potential markets across the country makes sense. So perhaps one area where the law can help entrepreneurs is working to navigate the current regulations on interstate alcohol sales and advocating for simpler regulations so that business is regulated but not strangled.

You may also like...

1 Response

  1. Ted Sichelman says:

    Nice post, Deven. Earlier this decade, I founded and ran a software startup and was confronted with hosts of laws that dampened our ability to grow–from intellectual property to securities to office health safety. I’m far from an anti-regulation type, but most regulatory laws are designed with big business in mind–whether because of lobbying or just the short-sighted governmental-media-educational focus on large cos.

    As you know, a group of us at Berkeley are looking at the role of patent law in startup company formation and growth. Mike Meurer at Boston University is starting a similar project, but expanding into other areas of the law. Both projects are funded by the Ewing Marion Kauffman Foundation. Anyone interested in the area should take a look at their “Grants” page: http://www.kauffman.org/KauffmanGrants.aspx.

    Fortunately, more of this research is being done each year, and hopefully the laws will better adapt to suit startups and smaller companies.