The Corridor

LI Capital - Finance and Human Resources issue

Vol. 2 Issue 03

BITCOIN

The Island Connection Interview with Tyler Roye

By Joe Penora

Long Island Globally Alcott HR Group Attracting Investors With Your Intellectual Property Portfolio Strategic Business Planning Crowd Funding Where Angels Fear To Tread Cornerstone Interview Dean Socci of Hofstra’s ZARB School of Business Roslyn Goldmacher “Where’s The Money?”

School-Business Partnerships of Long Island, Inc., a Over 100 partnerships were formed with the goal of developing LI’s future workforce and business & technology leaders.

Since 1999, more than 20,000 Long Island students have participated in SBPLI’s FIRST Robotics STEM-based programs.

Students who participated in FIRST Robotics Competitions in 2013 had access to over $16 million in college scholarships throughout the country. The students have described the robotics experiences as life-changing!

THE UL TIMATE

S TEM EX PERIEN

CE

Inspiring Students to Pursue Careers in Science, Technology, Engineering & Math

Sponsor the SBPLI FIRST Robotics programs and...

• Enhance your image by “giving back” to your community!

• Show your commitment to the future U.S. workforce!

• Help promote opportunities for young women and disadvantaged youth!

• Get recognition as a Major Sponsor in front of thousands of students, parents, businesses, educatorss, and politicians at the SBPLI Long Island FIRST Robotics Competition at Hofstra University!

Sponsorship opportunities still available for the 2014 FRC Regional Com petition, but you need to act quickly!

SBPLI Proudly Sponsors:

Grades 9-12

Now… isn’t this a program that YOU need to Support?

To get involved, support our programs with a donation and for more information, call (631) 627-8400 or visit www.sbpli.org.

Grades 4-8

Grades K-3

p.4 The Shape of Capital p.6 Editorial

Long Island Capital Alliance

p.7

Attracting Investors With Your Intellectual Property Portfolio

p.8

A Crash Course in Bitcoin

p.10

p.12 The Island Connection p.14 Crowd Funding

p.15 Observation of Angels

Barbara Kent Publisher/Editor-in-Chief Barbara@TheCorridorLI.com Vivian Leber, Editor Vivian@TheCorridorLI.com

Chris Kent, Creative Director Chris@TheCorridorLI.com Contributors Kirk Cronk George Likourezos Neil Kaufman Jeffrey Bass Roslyn D. Goldmacher Kate Laible Griff Hall

p.16

Employee as Owner

J.J. Penora Vivian Leber Karin Caro Katie Manzi

Long Island Global: Alcott HR Group

CEO Collaborative Work Space

p.18 p.20

p.21

Leadership for Executives

p.22

Cornerstone Interview: Dean Socci, Zarb School of Busines

p.24

Process to Profitability

p.27

Gamification

p.28

Where’s The Money?

Mark Fogel Cover Photo: James Gross Other Photography: Vivian Leber

Thank you Contributors for your expertise.

Thank you to our sponsors: The Alcott Group Carter, DeLuca, Farrell & Schmidt LLP Ruskin Moscou Faltischek, PC

This magazine may not be copied in whole or in part without the written consent of the publisher, Barbara Kent. Š The Corridor Journal of Strategic Alliances, 2014 POB2203 Halesite, NY/11743

www.TheCorridorLI.com

From the Editor’s Desk China is the great manufacturer for the planet, but pays dearly for the distinction. The Yangtze River is dead, and you cannot see the sky in Beijing or the outlying provinces until you reach Mongolia--presumably from the manufacture of plastic. China is not only the originator of plastics, but also the major market for our recycled plastics. Plastic waste has in essence become “capital” in China; previously manufactured merchandise or a non-financial asset used in the production of other, saleable merchandise that is eventually converted into cash--in this case, trash.

Barbara Kent Publisher/Editor-in-Chief

Recently, China has decided to literally “clean up” their act, their sky and hopefully even the Great Yangtze, by creating “Operation Green Fence”, launched in February of 2013.

Originally conceived as a10-month long initiative to prevent the importation of solid wastecontaminated shipments, China has since made it an ongoing effort. Operation Green Fence sets a limit of 1.5 percent prohibitive, or “allowable” contaminant in each bale of recyclable media, in an effort to keep trash out of China while continuing to remanufacture plastic items and re-import them world-wide. The good news is that this effort removes a percentage of plastic debris from the environment and provides a steady supply of material from which to make more goods.

We’ve brought together some provocative concepts of Capital on Long Island for this issue.

Some are traditional, like George Likourezos’ advice about including intellectual property in your portfolio, or Jeff Bass’s article about Strategic Business Planning; some a little edgy, like our Editor’s article about the Long Island Angel Network and then in the case of BITCOIN somewhat…over the moon.

A reasonably simplistic timeline in the evolution of currency might be food, shells and beads, then coins and paper, credit, stamps, coupons and now, Bitcoin. The difference between beads and Bitcoin is that beads have three dimensions. They have weight and occupy space and can be used as bodily decoration. They are “matter”. Bitcoins are virtual, and exist only online.

One Huntington entrepreneur, Tyler Roye, CEO of eGifter is the first Long Island retailer to accept Bitcoin. Read Joe Penora’s articles on Bitcoin and the Island Connection, our cover story. Hint: Local retailers can’t wait to take Bitcoin so they can avoid using credit cards.

While the mystery of an esoteric “currency” with no connection to the material world beyond buying power is intriguing, today, the heart of capital is growing, that is, human capital. The education, creation, protection and support of a competent, knowledgeable workforce with the ability to perform labor and produce economic value is critical for a robust economy. This workforce is created with education and managed with Human Resources. We’ve brought you a number of articles about both. Meet the founders of the Alcott Group, Barry Shorten and Lou Basso, who from their Long Island offices provide HR globally.

Our Cornerstone Interview is Dean Patrick Socci of Hofstra’s ZARB School of Business.

We’ve also included a piece about leadership and gamification to round out our value added educational efforts for this issue.

The Corridor mourns the loss of Dr. Pearl Kamer, Long Island economist from the Aerospace age until she retired from the LIA 8 months ago. Her wisdom, grace and presence will be missed.

Deepest condolences to her friends and family.

4

Your Employees Are Your Greatest Asset

(and greatest liability)

It’s no secret that being a business owner today is risky business.

In 2012 the Equal Employment Opportunity Commission (EEOC) collected more than $365 million in damages on EEOC charges, employees filed 7,064 wage and hour lawsuits and the Department of Homeland Security conducted more than 3,000 I - 9 audits. Running your HR department and protecting your business is a business in and of itself.

And, we haven’t even mentioned the implications of health care reform.

For more than 25 years Alcott HR has been helping Long Island business owners manage their human capital by reducing the administrative burden, increasing productivity, reducing employer liability and navigating through ever evolving federal and state laws.

Alcott HR services include: • Human Capital Management o Employee Life Cycle Administration o Policy and Procedure Development o Federal and State Regulatory Compliance o Leave of Absence Administration o Management Training • Unemployment Claims Management • Payroll and Tax Administration o Technology Solutions • Benefits Design and Administration o Healthcare Reform Management and Compliance • Risk Management o Claims Management o Safety Training o OSHA Compliance Assistance • Employer Liability Reduction • And much more…

Learn how Alcott HR can lessen your human resources burden so you can focus on what you do best, growing your business. Give us a call at 888-4-ALCOTT or visit us at www.alcottgroup.com.

The Shape of Capital

by Vivian Leber The CORRIDOR’s 2013 Energy & Environment Issue featured as the “Cornerstone Interview” Michael L. Faltischek, Senior Partner of Ruskin Moscou Faltischek, PC. We met again to talk about the post-recession state of capital investment on Long Island. What best ideas does he see now coming to the fore to spur the region’s growth−and what holds us back? Going into 2014, how can private and public capital sources mix to help businesses grow?

“Long Island business was never deeply impacted by the recession; it has a stable business community of small and medium size firms that helped it to weather the period better than many areas,” according to Faltischek.

Long Island’s steady-as-it-goes character also is a reflection of the overall conservative nature of its business and residential communities that are not quick to welcome change. “There is nothing on Long Island that moves fast, we can’t get out of our own way,” he says, and cites two examples: The new electric power generation plant in Yaphank, which “everyone recognizes was needed yesterday,” was selected in early 2013, years after it was proposed, and now is expected to open in 2018, delaying the cost benefits the new plant would provide.

Avalon Bay developments have been possible only after spending millions of dollars and extended periods of time, even when a contaminated brownfield site is the subject of the development. “There is a continuing fear, never rational, about reasonable density and that holds back a number of good multi-family development projects.”

On any given day, Faltischek may be steering a negotiation or structuring a deal in the energy and construction sectors, and then pivot to mentor, source capital and recommend a structure for a Long Island startup entrepreneur.

He is enthused about StartUp NY, announced

by Governor Cuomo in October, which will exempt for ten years from all state business and personal income taxes those companies, along with their principals and employees, that create or bring jobs to the state. Long Island startups and established companies that are expanding, as well as out-of-state firms that 6

relocate jobs here, are eligible. Space will be carved out for them on designated state and private college campuses.

“It’s a terrific idea that has been used effectively in other jurisdictions.” He notes that on the corporate level you need to be making a profit first, in order to offset that with tax exemptions, since there no longer is a market for transferring and monetizing tax credits as cash, except in the energy field. A client of his in Oregon utilized such a tax credit for an 1100 megawatt wind farm; this can work for smaller energy deals as well.

Faltischek wants to see Long Island companies take full advantage of government funding sources that can accelerate private capital. “In every sector where Long Island is competitive there are federal and NYS programs offering grants. Our message really is to look everywhere for opportunities.” A number of organizations on Long Island can assist in finding them. Not long ago he counseled a biotech researcher in need of $1 million, rather than seek investors, to apply for a grant through the Department of Health & Human Services, which was awarded.

In the energy space, NYSERDA, the US Department of Energy, Department of Defense (and each military branch separately) have significant capacity to fund projects, especially those promising greater efficiency. ThermoLift, a revolutionary residential HVAC technology that operates sans electricity, received earlystage funding from Long Island angel and venture capital groups as well as from the Department of Defense and NYSERDA (the state’s energy development agency). Hightech security-related companies likewise can turn for funds to several federal agencies such as the DOD and Homeland Security. He notes

that government agencies often compete with one another to be first to back a worthy project.

The bi-county Industrial Development Agencies are very helpful too in attracting and retaining Long Island companies and jobs, and Faltischek’s firm works closely with the Nassau IDA. “One of the things LI suffers from is that businesses that become successful here then get acquired and taken off the Island by one of the giants…it happened with several of my clients,” he says. While others maintain a presence on Long Island, they send their semi-skilled jobs to a lower-cost region because of LI’s relatively high cost for space, labor and power.

The IDAs can counter that by offering a cost savings package.

Mergers and Acquisitions activity is driven by macroeconomic trends and was quiet as of late 2013. “Capital has been riskadverse, unless something really terrific comes along,” he points out.

For Long Island’s small to mid-sized companies, another trend that Faltischek discerns is that many companies lack a succession plan, nor are they easily able to sell their businesses. Employee-buyout is an attractive option that allows a successful owner to monetize his investment under the federal tax code. “That is good for Long Island and its workforce… employees preserve their jobs here, without risking takeover by an out-of-state buyer that will relocate, and they vest over time in owning the company,” he explains.

(See related article in this issue.)

Another topic in the news is crowdfunding. The SEC recently sanctioned and set up the rules whereby average individual investors may be solicited over the Internet to take an equity stake in any of thousands of startups that have no track record. His perception is that it’s a way to get unsophisticated people to invest in ventures. “Many are going to end up being scams, I’m afraid. You don’t have due-diligence or any way to validate the people or the product, just fantasy financial projections and a website, with people thinking they will be able to spot the next Twitter. It’s worse than betting.”

As Chairman of the Long Island Angel Network, Faltischek is steeped in working with the region’s promising entrepreneurs.

So he may well be among the first to spy a company or technology that could be Long Island’s next Big Thing. The regions’ academic and research facilities, its technology enterprises, and the State’s more entrepreneurial focus, together may make 2014 a good year for driving Capital to Long Island businesses.

Michael L. Faltischek is a senior partner at Ruskin Moscou Faltischek, PC and chairs the firm’s Energy Practice Group.

He serves as an advisor, board member or counsel with various Long Island organizations, including AERTC at Stony Brook University, Hofstra’s Zarb School, Launchpad-LI, the Long Island Association, and is Chairman of the Long Island Angel Network. Contact him at mfaltischek@rmfpc.com or 516-663-6550.Visit http://rmfpc.com

Long Island Capital Alliance By: Neil M. Kaufman, Esq. The Long Island Capital Alliance, formerly known as Long Island Venture Group, is a non-profit organization that assists local companies in raising growth capital by hosting quarterly, industry-driven capital forums at which businesses at all levels of development have an opportunity to present their business plan to attendees. Attendees include venture capitalists, private equity firms, angel investors, investment bankers and wellconnected local professionals. LICA’s board of directors takes an unparalleled approach to coaching the presenting companies in preparing their presentations to include the information that is critical to investors. LICA directors also coach them on how to effectively and efficiently communicate the information in an 8-minute presentation. As a result, virtually every presenter graduates from the capital forum process well-equipped to engage with the financial community.

LICA’s capital forums attract about 100 attendees, coming from all parts of Long Island, New York, Pennsylvania, and Connecticut. With each capital forum, LICA gains more and more attendees.

In recent months, LICA has bolstered its leadership through the addition of three new directors with impressive backgrounds and professional accomplishments. This includes George Likourezos, a leading attorney in the field of intellectual property and patent law; Michael Lane, a highly experienced business executive with a track record of operational excellence, capital raising, and enhancing stakeholder value, and Ken Greene, with over 20 years of experience in private equity, venture capital, and capital markets.

LICA provides a venue for local companies to help them achieve their goals by making it possible for them to connect with the investment community. Each capital forum is customized to a particular industry, where investors with expertise in that industry participate in a panel discussion of the presentations shown at the forum. In addition, the panelists discuss the investment climate and trends in that industry and what types of transactions they are seeking. LICA also helps facilitate the introduction of experienced entrepreneurs, executives and service providers to growth companies which require their services to achieve their goals.

The Long Island Capital Alliance has helped dozens of companies raise more than $150 million in financing. Most recently, LICA facilitated the introduction at its September 2012 Cyber Security Capital Forum of A+ Technologies to an investment fund that invested $12 million of growth capital.

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Intellectual PROPERTY PORTFOLIO DEVELOPMENT

STRATEGIES FOR ATTRACTING INVESTORS

BY GEORGE LIKOUREZOS, ESQ. You may be an individual inventor with an idea for the “next big thing” or an officer of a technology start-up developing a cleaner-running engine at one of Long Island’s incubators. Your long-term goal is to build a great company that manufactures and sells state-of-the-art products or technologies. To reach your long-term goal, unless you are personally financing your company’s operations, you will need capital to pay for research and development, to purchase equipment, to lease space, and to hire an engineering and management staff.

Typically for a young technology company, a bank loan is almost impossible to obtain. Other financing options include friends and family, crowdfunding, an angel investor, or a professional investment firm. The first two options may provide adequate funding to get your company up and running, but the funds are likely not going to be sufficient for payroll and inventory.

Most of today’s successful technology companies turned to angel and institutional investors to accelerate and/ or maintain their growth curve. Therefore, unless your company is the next big craze on the web, and users sign up on your website by the thousands each day, your company will need to proactively attract angel and institutional investors.

For many early-stage technology companies, their only significant collateral is their intellectual property (IP) assets: patents, trade secrets, and trademarks.

Therefore, your company’s future is dependent on the strength and value of these assets and how these assets are developed and mined, and your company’s ability to defend them from competitors.

If your company’s IP portfolio is lacking and not fully developed because management either intentionally or unintentionally focused on “more important issues,” your company’s valuation and its attractiveness to investors can be significantly affected. On the flip side, your management’s dedication to continuously foster an environment where your company’s IP portfolio is mined, developed, and protected will significantly help your company attract investors and obtain financing.

Several factors will now be described which investors consider when evaluating a company’s IP and discusses how management can address these factors to increase their company’s attractiveness to investors.

8

Who owns the IP? Your company may be in the process of developing, or even manufacturing, a disruptive technology. The IP is in the name of your chief engineer who invented the technology and incorporated the company before you and your colleagues were brought in to run the company.

This scenario may not raise any concerns at your company because everyone at the company holds the chief engineer in high esteem. However, it raises concerns to an investor regarding who controls or owns the IP. To ease the investor’s concerns, it is management’s duty to place the IP in the company’s control or ownership. Agreements should be drafted and signed, such as an exclusive licensing agreement whereby the inventor engineer licenses his IP on an exclusive basis to the company; an assignment agreement whereby the engineer inventor assigns his entire rights to the IP to the company; an employee agreement whereby the engineer agrees to assign all future IP related to the company’s technologies to the company; and/or a right-of-first refusal agreement whereby the inventor engineer agrees to offer his IP to the company first to gauge the company’s interest.

Does management have a policy of fostering and protecting its IP? Management must continuously foster an environment where engineers and developers feel a sense of belonging and importance to the success of the company. In turn, engineers and developers will feel it is their responsibility to disclose their innovations

to management with an eye towards protecting their innovations. Management should also have a written policy for their engineers and developers to record their innovations in writing, and preferably, fill out an invention disclosure form for submission and review by management, and eventually, to be used by a patent lawyer as a guide to draft and file a patent application.

Are the company’s trade secrets treated as trade secrets by company personnel?

Company personnel who have knowledge and access to the company’s trade secrets should be informed that these are trade secrets and be trained to maintain the confidentiality of the trade secrets. It will serve a company well from an investment and common sense perspective to mark all documents which disclose the company’s trade secrets as “Confidential.”

Has management provided ample resources to protect the products and technologies of the company? Prospective investors want to know whether protecting the IP was and continues to be a top priority for management. Questions usually posed by prospective investors are:

(1) are the inventors of the core products and technologies associated with the company (either as owners, advisors, consultants, etc.); if an inventor is not legally obligated to the company, the inventor may start a competing company or not disclose related inventions and future improvements of existing products to the company;

(2) how many patent applications or patents does the company own and do they provide a formidable barrier against copying by others; and

(3) has the company filed applications in countries other than the US and, if no, have the deadlines for filing foreign applications passed (a company’s ability to monopolize foreign markets is non-existent if there is no foreign patent protection and also affects the company’s valuation).

Did management consider the IP rights of others and steer clear from them? Prospective investors want to know whether there are “freedom-to-operate” issues regarding the company’s various products and technologies (e.g., in answering this question, prospective investors would seek the advice of their patent counsel to evaluate non-expired patents and determine if any pose a patent infringement risk to the company). It is a plus to investors if the company, preferably, at an early stage in the product development process, diligently determined whether its products are free and clear from the IP rights of others, and if they were not, that the company adequately “designed around” the IP rights of others.

Is the company’s core technology sufficiently shielded from potential and existing competitors?

Prospective investors are likely to be attracted to your

company’s technologies or products, especially if you have a disruptive technology. However, to get investors to commit their capital your company needs to have (or be in the process of developing) an IP portfolio that protects these technologies and products. Savvy technology investors are aware that your technologies and products are fair game to others, including potential competitors, if your company has a weak or non-existent IP portfolio to back them up.

Are the commercial products/technologies manufactured and sold by the company covered by the company’s patents? Your company may have several patents and many pending patent applications-this sounds attractive to prospective investors and typically leads to a due diligence investigation by their patent counsel. The due diligence investigation will determine whether your company’s patents protect the commercial products and technologies it is manufacturing and selling.

It may be that your company’s patent counsel amended the patent claims to distinguish your company’s innovations from one or more references cited against your patent application by the US Patent and Trademark Office. The amendments may have narrowed the scope of your patent claims and your issued patent may not protect the product your company is manufacturing and selling. This situation can be prevented by having a symbiotic relationship with your patent counsel.

Has there been a loss of IP rights? Prospective investors are well-served to investigate whether the company, due to management’s poor decision making or ineptitude, lost valuable IP rights.

From the investor’s perspective, a loss of IP rights, not only devalues a company, but it shows that management may be indifferent to protecting the company’s IP rights or not appreciative of the importance of these rights to the (continued on pg 29)

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A Crash Course in Bitcoin

by Joe Penora You would have had to be living under a rock in 2013 not to hear anyone utter the word Bitcoin. You might not exactly know what a Bitcoin is, but you know it is out there. Explaining it can be tricky and even a little intimidating to those who might not be tech savvy. Don’t fret, the New Year is upon us and Bitcoin is here to stay in one form or another.

Bitcoin 101: Bitcoin was created by an unknown person (or persons) going by the pseudonym Satoshi Nakamoto in 2009. To understand Bitcoin you need to understand that Bitcoin actually represents two entities. Bitcoin can represent the digital currency itself or the entire network used to confirm transactions.

Bitcoin the digital currency is the object of value that you exchange for goods and services. There is a fixed number of Bitcoins that can ever be created.

That finite cap of Bitcoins is hard coded in the software to be 21 million. The value of Bitcoin uses supply and demand. As more people want it, the value increases. You cannot hold a Bitcoin in your hand, it is neither a physical coin nor paper currency. It is simply programming code stored in a digital wallet.

A digital wallet is a program installed on your computer that houses your Bitcoin.

It’s the digital equivalent of having a safe at your home and storing all of your cash in it.

One issue is, if your computer crashes or is stolen, or in the case of a Welshmen who accidentally threw out a hard drive with 4 million dollars’ worth of Bitcoins on it, you are out of luck. Those Bitcoins are gone forever.

That is why online digital wallet companies like Blockchain.info and Coinbase.com have launched.

However web-based wallets can be vulnerable to attack. Two well publicized Bitcoin heists occurred in November where Inputs.io had 4,100 Bitcoins stolen. At the time of the heist those Bitcoins were worth $1.18 million dollars ($3.9 million as I write this). Also BIPS the largest Bitcoin processor in Europe had 1,295 Bitcoins stolen (worth $1.2 million as I write this).

Bitcoin the network logs every single transaction in what is called the Blockchain.

The people who are constantly verifying the Blockchain, ensuring that all the information and transactions are correct are called 10

miners. Miners are rewarded with 50 Bitcoins for confirming these transactions and solving mathematical equations. These equations have become so complex that specialized computer hardware is now needed to earn those 50 Bitcoins.

Besides mining you can obtain Bitcoins via Bitcoin Exchanges that operate much like the currency exchanges at international airports.

The other way of obtaining Bitcoins is to provide goods and services in exchange for Bitcoins. Bitcoin is totally anonymous you cannot see the identity of the person who is either sending or receiving Bitcoins. You can merely see the number of Bitcoins one digital wallet sent to another, via the publically viewable Blockchain. This lack of identity verification is what has governments of the world concerned.

Bitcoin: The Dark Web Bitcoin has been used to purchase illegal goods, from weapons, human trafficking, drugs to mob style hits. Bitcoin has made these illicit transactions even easier, no need for a briefcase full of money with drop off points in dark alleys. Criminals can now commit these transactions from a coffee shop with free Wi-Fi, or at home in their slippers.

These criminal acts are a direct consequence of Bitcoin’s total anonymity. Total anonymity breeds fraud and crime, since there is no accountability for your actions.

The FBI shutdown illegal goods market place, and arrested the alleged creator of The Silk Road in October 2013. Weeks later the Silk Road was reopened by another individual and is still running today. Another website called “The Assassination Market” was launched that allows users to donate a la Kickstarter style to help fund the assassination of political appointees and politicians. With these scary uses of Bitcoin the burning question is who uses Bitcoin?

Bitcoin: Philosophy A Libertarian, a tech early adopter and an anarchist walk into a bar. Libertarian’s like Bitcoin because it is a free market solution to the continuing devaluation of the world’s currencies. Many Libertarian’s will boast that if we were to compare the dollar today to the one in 1800, because of inflation and failed monetary policies, we would need nearly 100 of today’s dollars to equal the buying power of one dollar in 1800.

Early tech adopters are intrigued of the notion of a universal currency without borders, and just having “the next big thing” before anyone else. How easy would it have been, if when you backpacked across Europe pre-Euro zone everyone accepted Bitcoins. Merchants who are early tech adopters are reaping the benefits of low or no fees at all on Bitcoin transactions.

Now there is always someone that ruins the party.

Some of the most outspoken Bitcoin supporters are also some of the most radical in their way of thinking. They claim to be anarchists, but anarchism at the basic level simply means a ruler-less self-governed society. These Bitcoin fanatics look at Bitcoin as some sort of political protest. Where they can combat everything from a tyrannical government to Capitalism as a whole, to a way of tearing down a society that they feel has wronged them. This is the 500 pound gorilla in the room, which must be addressed but is often ignored by legitimate users of Bitcoin.

Bitcoin: Path to Legitimacy Bitcoin is a true pioneer much like the digital music sharing programs of the late 1990’s - early 2000’s, it’s not all doom and gloom. However let’s face it, in order for Bitcoin or any other digital currency to be adopted by the masses the first thing that has to be confronted is public perception.

This is the issue plaguing Bitcoin, and those startup companies utilizing it, need to solve this. Their actions or inactions will either help or completely destroy its longevity. From stabilizing its value, taking a proactive stance when it comes to regulation and user security, as well as attracting merchants to trust and accept Bitcoin.

This is either the end game or true genesis of Bitcoin. Only time will tell, but one thing is for certain, an independent nationless currency will become the norm in the next ten years.

Joe J. Penora is the co-founder of Verify Anybody a Long Island based big data company focused on identity verification. He can be reached at jjpenora@verifyanybody.com

Bitcoin

The Island Connection

by Joe Penora

Bitcoin is being touted as the currency of the future, or is it just the economic equivalent to the ‘Tickle Me Elmo’ doll craze? Only time will tell. With every new technologic advance, gadget or gizmo, there are those who see real world applications and those who develop gimmicks. Bitcoin is no different. As legitimate companies look to implement the use of Bitcoin, you have individuals trying to steal the limelight. With offerings like the Kanye West themed Bitcoin alternative called ‘Coinye’. As well as people trying to sell their homes, cars or boats for Bitcoin, knowing they’ll get national media recognition.

One of the companies that are actually taking a legitimate approach by accepting Bitcoin is Long Island based eGifter. eGifter is a web and mobile social gifting app; that enables users to give eGift Cards to friends, family, and even themselves. I sat down with eGifter’s CEO Tyler Roye to discuss how Bitcoin fit in with their offering.

JP: When did eGifter.com launch and when did you begin accepting Bitcoin?

TR: Bitcoin has been on the roadmap since day one.

We launched eGifter in mid-2012 and added Bitcoin in mid-2013.

JP: Why did you decide to accept Bitcoin?

TR: We love being at the forefront of technology, and providing a great experience for our customers, so Bitcoin fits right in. As we became more involved with Bitcoin and the community, we became very excited with its possibilities and have become advocates ourselves.

We felt there was an underserved demand for places to spend Bitcoin and realized that our broad array of eGift cards would all of a sudden give the Bitcoin community a lot of options on where to spend their Bitcoins.

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JP: If I were to go on eGifter.com now, how does it work?

TR: If you are simply buying an eGift Card for yourself, you can choose a card, set the amount and checkout. The card is then sent to your eGifter Wallet - on your computer and Mobile device. Many brands even allow users to simply present the card in their eGifter Wallet on their mobile device when checking out in their brick and mortar stores. Gifting them on social networks and inviting others to contribute is also very easy and even more fun!

JP: So I’ve picked my eGift card, how do I actually pay for it in Bitcoins?

TR: We do not accept Bitcoin directly. We use a Bitcoin processor called Coinbase that is connected to our payment page. They accept the Bitcoin and convert them to cash so that we never have to touch the Bitcoin or figure out what to do with them. This shields us from the market fluctuations and other risks associated with taking Bitcoin as a payment option.

JP: What kind of eGift cards can I purchase from your site with Bitcoin?

TR: You can purchase more than 150 national brands on our site. When we first announced that we were accepting Bitcoin as payment for our over 150 brands of Gift cards, like Amazon, Home Depot, CVS, Gamestop and American Airlines, the response from the Bitcoin community was great. We heard from a lot of different directions that the community wanted an easy way to buy the essentials. We got right on it. We are constantly adding new brands to the app.

This is just the beginning. We anticipate having over 200 brands end of Q1 2014. People can go on our site and see an entire list of brands they can choose from at egifter.com/giftcards

JP: You mentioned you’ve been listening to the Bitcoin community on what eGift cards to offer. Have you seen an increases in sales specifically from the Bitcoin community?

TR: We have been experiencing significant growth and believe that Bitcoin has attributed to as much as 20% of this growth.

JP: What is the largest Bitcoin payment you’ve received on an order since accepting the currency?

TR: We sell closed loop gift cards and limited the top value to $2,000 so this has been the largest transaction.

JP: What are the perceived advantages and disadvantages of both accepting and paying using Bitcoin?

TR: One of the biggest advantages to paying with Bitcoin right now is the fact that its value has skyrocketed. In many cases people are getting hundreds of dollars in value for something they got for pennies. Another advantage to accepting Bitcoin is that it has attracted a whole new market of early adopters to our app. This community is eager to find new and creative ways to spend their Bitcoin and they have really gotten behind our app. One last advantage we have is that Bitcoin via Coinbase give us a secure, fraud free transaction at a cost of only 1% compared with over 2% for credit cards.

Given the risks for online merchants relating to ‘cardnot-present’ fraud, this is a very attractive alternative.

By being an early adopter, our advantage is, we have tapped an open market and capture market share.

JP: Do the wild fluctuations in Bitcoin’s value bother or worry you at all?

TR: No, in fact we are excited by it. The incredible climb in value validates our choice to accept Bitcoin. Again, with Coinbase we have no exposure to the fluctuations.

Through my research eGifter.com is the first Long Island based company to actually accept Bitcoin. Their success could urge other Long Island businesses to accept Bitcoin as payment. The more merchants that begin to accept Bitcoin via payment services like Coinbase, will demystify and make alternative currencies much more approachable. Whether Bitcoin ends up being the digital currency of choice or just the digital currency transaction platform of the future, only time will tell.

More so companies like eGifter.com and early adopting merchants like them, are the true pioneers on the Oregon Trail of a future universal currency. It is companies like these which will help shape and legitimize the future of what we call money.

Crowd Funding Where Angels Fear to Tread In these difficult financial times, with the Initial Public Offering of stock slowed down to a crawl and investment “Angels” reluctant to make new commitments, the person with a new product or business idea might wonder what they need to do to get capital.

If a Thomas Edison wanted to get seed money for a new invention that would record the human voice and music, he would never be able to get backing at his local bank. Luckily Edison found his angels to help him get started, or we would have lost the voices and music played for the last century.

According to a currently active Angel, “ It’s no silicon valley yet and the funding takes a while to raise but there are Angels on Long Island and I am raising a seed round from a number of them now. Although there is an Angel Network, most Angels invest in someone they already know. Relationships are key.”

What do you do if you don’t have an Angel? Here on Long Island, the Tesla Science Center launched a crowd-funding effort in 2012 via Indiegogo.com that raised $1.37 million dollars, with an amazing $400,000 coming in just 20 hours.

The funds are being used to buy the former site of Nikola Tesla’s laboratory and to establish a museum. Tesla was the inventor of alternating current and the main competitor to Thomas Edison, who was the lead advocate of direct current.

by Kirk Cronk

projects, but other sites will post any effort regardless of purpose.

Perhaps the most well known crowd funded project was the pedestal of the Statue of Liberty, which was paid for by the public through individual contributions after the “New York World” newspaper started a campaign that raised over $100,000 in six months…mostly in one dollar contributions.

More recently the JOBS Act was signed into law by President Obama in April 2012, which enables equity-based crowdfunding, when it is conducted by a licensed brokerdealer or via a Funding Portal registered with the Securities and Exchange Commission. The goal of the legislation was to ease online capital funding and at the same time protect investors.

The law places limits on the value of securities issuer may offer and individuals can invest through crowdfunding broker-dealers. Up to $1,000,000 of its’ securities per 12 months can be offered, and, depending upon their net worth and income, investors will be permitted to invest up to $100,000 in crowdfunding issues per 12 months.

Social networks have, in a large part made this possible, and by 2012 there were over 450 web-platforms available for those who want to give it a try. Many of the companies who sponsor the websites specialize in certain types of

A great website for more info is http://www.gofundme. com. Let us know about your experiences! Write Kirk@ TheCorridorLI.com and we will incorporate it into a future issue later in the year.

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Crowd funding, also known as “crowd financing”, “crowd equity”, “crowd sourcing” and “equity crowdfunding”, is not just for non-profits. It helps if you have a catchy idea that will grab the imagination and, most important, the capital of investors.

Additional Accounting requirements are an added cost to the offerings and make a cost benefit analysis an important question when deciding the amount of capital to be raised.

An independent financial statement review by a CPA firm is required for raises $100,000–500,000 and a more extensive independent financial statement audit is required for raises over $500,000.

Do you have a dream, but not the dollars to make it happen? Take a look at crowd funding: They rush in where Angels fear to invest. It is a brave new world for equities and fundraising.

Observation of Angels Investors Seed LI Start Ups

by Vivian Leber “Valuation is a touchy thing. People think their idea is worth millions. You must meet somewhere on a value that you can defend,” according to Michael Faltischek, who chairs the board of directors of the Long Island Angel Network (LIAN). He has a passion for seeing entrepreneurs succeed on Long Island, and also knows a thing or two about valuation, having worked with dozens of promising startups and like-minded angel investors.

He credits Stony Brook University with providing the spark to create the investor group six years ago. Stony Brook had then started to made strides (and now has an event bigger footprint) to become the Stanford or MIT of Long Island and beyond. He recalls a conversation with Dr. Yacov Shamash, Stony Brook’s Vice President for Economic Development, along the lines, “We can throw out great ideas, but we need to have angels here to develop those businesses.” That is exactly what LIAN does, thus far with impressive results.

“LIAN is on the right track,” said Faltischek, and noted that it invested in three companies in 2012 and two in 2013. During its first two years, he explains, LIAN had to experiment until they discovered the right structure, brought more people on board and improved its vetting process. The concept of LaunchPad-LI coalesced during this maturation process. LIAN has been an anchor tenant and sponsor since LaunchPad opened a year ago in downtown Mineola. He also plays a key role as an Advisor, and Ruskin Moscou Faltischek, PC, the law firm where he is a senior partner, is a contributor. More than just seed money and coaching, LaunchPad provides co-working space and services – a LI version of the booming incubator hives of downtown Manhattan.

LIAN has a board of 18 and has 30 accredited investors as members. It participated in the first investment round of $1.3 million for eGifter, the online social-gifting tool launched in 2012 (see related article in this issue), with additional participation by LaunchPad and its co-founder, Andrew Hazen. eGifter, led by co-founder Tyler Roe, has just relocated to the new LaunchPad location in downtown Hungtington. In December of last year it was readily able to secure an additional $1.7 million, led by another LIAN Director, Bob Brill of Newlight Management, a Long Island VC firm. When eGifter presented at a LIAN meeting before completing that second round, several audience members jumped in to offer capital. “eGifter is well on its way,” Faltischek declares, and a dozen major national retailers have contracts for its service.

LIAN fits into the hierarchy of raising capital by providing early seed money, coming in after an entrepreneur first has tapped into personal savings and “family and friends.” An individual angel may want to invest from $25,000 to $100,000, an angel fund somewhat more. However, LIAN may also play a role with more sophisticated and proven entrepreneurs such as Roye and may join later in the startup’s lifecycle. For typical startups, once the entrepreneur credibly presents the business plan and substantiates the funding request, LIAN vets the business, mentors it and if they go in, LIAN would place a board member-- usually the lead investor and someone who has expertise in the same field—on the startup’s board.

The next steps along the capital spectrum are Venture Capital funders, who, with a somewhat more structured investment set a higher bar. LIAN considers its exit strategy from the outset. In the startup world, it takes an average of six to seven years, but anywhere from 3 to 10 for a profitable exit. Biotech tends to be risky and capital-intensive, requires the original angel investor to maintain its position through a number of capital rounds, which makes this one area—despite being one of LI’s hottest--that LIAN tends to leave to others.

LIAN also continues to be involved with ThermoLift, whose founder Paul Schwartz is a seasoned businessman and a scientist. The two men met at a Stony Brook University class for entrepreneurs where Faltischek lectured.

Indeed the University’s research centers and programs continue to work with LIAN, each playing a key role in launching new tech on Long Island.

SolarCool, another technology incubated at Stony Brook, makes a solarpowered portable cooler for the consumer, which began with a win of a $10,000 prize. It has now built up to about $1 million in angel funding and has started production. Faltischek is currently working with founder Ryan McGann on the commercialized business model.

Each month LIAN vets a group of startups, and has several already in the pipeline for 2014. The Stony Brook incubators continue to provide great opportunities, and LIAN is considering other revolutionary technologies, both nascent and mature.

Visit LIAN’s website at http://www.liangels.net. The administrator can be reached at 631-631-7006.

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Employee Stock Ownership Plan A Conversation with Irvin Brum and The Editor Business owners, while weaving dreams of retirement, may not have an evident successor. Their children have moved to distant states or pursued other careers. For closely held companies the dilemma may be especially acute when only one of several principals wants to exit. There is only one realistic strategy which allows Owner A to retire, while Owners B and C stay in control, without selling the company outright—that is the Employee Stock Ownership Plan (ESOP).

Nested within the Employee Retirement Income Security Act of 1974 (ERISA), the ESOP is a vehicle for the business owner to cash out his share of the company in a staged and tax-advantaged manner, and for the wage earner to participate in the American Dream by acquiring an ownership stake, gain assets for a secure retirement, and promote continuity of the firm. Its creators in the US Congress wisely imbued the law and subsequent IRS code changes with rich and flexible tax incentives that served to powerfully motivate business owners to embrace the model.

Today more than 11,000 such plans exist in the US, covering approximately 13 million employees. Publix Supermarkets, with 150,000 employees, has one. Avis once had an ESOP and during that period ran the iconic TV commercial extolling its employee-owners’ “We Try Harder” mentality. Davis & Warshow and Personal Touch are two metro-NY companies that recently became ESOPs. The CORRIDOR explored the ESOP with Irvin Brum, who regularly counsels clients in the formation of ESOPs and other exit strategies.

ESOP benefits must be offered to all employees who work 1,000 or more hours, except for unionized employees. Brum characterizes it as a highly flexible tool available for successful companies whose owners are seeking liquidity and investment diversification without necessarily selling their entire ownership of the company. At the same time ESOPs also provide an extra layer of compensation, which serves to attract, retain and motivate top-flight employees.

For an interested client, Brum starts by sizing up the ESOP model’s suitability, does some “back of the envelope calculations,” and may recommend a feasibility study, before pursuing one of several pathways for the ESOP structure. In Brum’s view, a viable candidate is a company with revenue of $10 million or higher, or possibly a bit less if its profit margin is robust, a strong balance sheet with manageable debt, and reliable cash flow.

If there is a green-light, two sets of attorneys paid for by the company, with one representing the employees, set up the governing Trust. “The Trust becomes a friendly, cooperative partner as the new owner, “Brum explains.

“The process is not adversarial, yet it is a real negotiation.” An appraiser determines the company’s value. An outside trustee acts as fiduciary to protect employees’ interests. In subsequent years an internal fiduciary, such as the CFO, may substitute.

When the fit is right, the ESOP strategy serves to protect companies from the pitfalls it would encounter if it were instead to shop for a strategic buyer or joint venture partner, Brum points out. Similarly, it avoids having to give up control to outside private equity investors.

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The company makes annual contributions to the trust which then allocates benefits to employee accounts in proportion to compensation. Unlike the 401(k), it is a pure benefit, with no employee cost-sharing. Employees who leave the firm typically sell back their shares to the company or the ESOP. Most ESOPs, Brum notes, are “leveraged” to maximize the tax advantages.

If one owner is exiting, the company might take a standard bank loan and directly or indirectly lend the proceeds to the trust, which then pays the departing owner. Exiting owners can also provide financing in the form of notes that are subordinate to the bank but carry a higher interest rate. The company makes annual contributions to the trust sufficient to repay the loans. By cycling the loans through the trust, not only the interest on the loan, but also its principal becomes fully tax deductible to the company.

“The leveraged ESOP is unique in that Uncle Sam ends up underwriting much of the company’s payments to the trust which funds employees’ retirements and buys out the owner, ”Brum explains.

Another tax advantage, available to C–corporations, allows business owners to defer and potentially avoid paying taxes on the sale of their stock to the ESOP. This benefit is so valuable that business owners often convert their S-corps to C-corporate status right before implementing an ESOP. After the loans used to fund the buyout of the owner’s shares are paid back, these companies will usually revert to their S-corporate status. As S-corporations, the portion of the company that is owned by the ESOP will be income taxfree. If the entire company is owned by the ESOP, no income taxes will be paid, giving the company a huge competitive advantage.

One more instance where the ESOP works its magic is when a company is pursuing a strategic acquisition. As the acquirer, the ESOP firm can confer all its tax advantages on its target, which sweetens the deal for both sides by allowing the acquirer to outbid other suitors on an after tax basis while actually paying less to buy the target.

“While ESOPs are not suitable for every company, under the right circumstances ESOPs can prove to be a homerun. Any business owner contemplating a sale of his or her company should absolutely consider the ESOP as a liquidity alternative,” Brum says.

Brum wishes to dispel certain myths: ESOPs do not give employees decisionmaking power over company policies, nor do employees get to view “the company books.” Employees receive only an annual statement showing the number and fair market value of the shares in their account. Nonetheless, it is to the owners’ benefit to form committees to educate employees about their ESOP. Then, beyond the minimum legal requirements, it is solely at the principals’ discretion whether or not to share business information with employee-owners or to confer further voting rights.

With capital gains tax rates up, Brum foresees ESOPs becoming more popular. With baby-boomer retirements soon to crest, the flexible ESOP may be worth a closer look.

Irvin Brum is a Senior Partner of Ruskin Moscou Faltischek, PC and Chairman of its Corporate & Securities Department. Contact him at: ibrum@rmfpc.com or 516-663-6610; visit http://rmfpc.com.

THE PARTNERSHIP OF INNOVATION AND LAW

Michael Faltischek Energy

Kim Malerba Digital Media

Douglas Cooper Vivian Breier , International

Andrew Hazen Emerging Companies

“Keeping ahead of the times to meet our client’s needs.”

— Mark S. Mulholland, Managing Partner

For 45 years, Ruskin Moscou Faltischek, a sixty member professional firm, headquartered in Uniondale, New York, has built a reputation as one of the region’s leading providers of innovative legal services. Its attorneys are practical, experienced advocates who measure their success by their clients’ success. Cornerstone groups in all major practice areas of the law are represented at the firm, including: corporate & securities, financial services, commercial litigation, digital media, energy, intellectual property, health care, real estate, employment and trusts & estates. Clients include large and mid-sized corporations, privately held businesses, institutions and individuals.

Prior results do not guarantee a similar outcome.

516.663.6600 • Uniondale • www.rmfpc.com

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Lou Basso and Barry Shorten

ALCOTT HR GROUP

Conquering the one task that never creates revenue but must always be done right!

by Vivian Leber Most Long Island small businesses want to do the right thing for employees.

But these days the business owner’s intuitive sense of “right” bumps up against hydra-headed complexity and risk in an ocean of regulations, even more so now, with the rollout by fits-andstarts of the Affordable Care Act. He or she does not have the time− let alone the training− to manage the intricacies of employee health care benefits, wage and hour law, anti-discrimination rules, OSHA regulations, tax compliance, or one employee’s family crisis and another’s maternity leave. Possibly the business was recently fined for a violation of some kind.

Whatever the trigger, the entrepreneur finally throws hands up in frustration and makes that phone call to a Professional Employer Organization (PEO). On Long Island or in New York City, the call may well be answered by Louis Basso, President, or Barry Shorten, Executive Director, co-founders of the Alcott HR Group. In Farmingdale since 1987, Alcott is New York’s original PEO and possibly Long Island’s leastwell known large employer, given that it is the “employer of record” for 250 businesses on and off LI and manages every aspect of the human resources function for an aggregated 5,000 to 6,000 employees.

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One client with Alcott from its start to the present is Gary Krupp, an entrepreneur who once owned medical imaging and kidney dialysis centers locally and nationally.

Krupp sold those businesses and now devotes himself fulltime to running Pave the Way Foundation, an international nonsectarian organization in Wantagh that aims to improve inter-religion

relations. “Compliance today is nearly impossible. Every business is violating some law. Alcott takes that headache away at very little cost,“ Krupp says.

“Alcott also offers wonderful provisions for employees, everything from pre-tax benefits to adoption services.”

When Alcott presents its business proposition to the prospective client’s principals, “It’s not a spreadsheet sale, it’s a value sale. We are a predictable one-stop vendor and smart business owners get it,” Basso explains. “If you want to be successful making or selling something, you see that your time is robbed by managing HR yourself, when you just don’t have the scale.”

Autumn is Alcott’s business-acquisition season. Many clients prefer a January 1 start date for transferring all HR responsibility to the PEO. The typical Alcott client has 20 to 30 employees but size ranges from 4 to 400, and those workers currently are situated across 37 states.

When a new client signs up and Alcott gives both owners and staff an orientation, employees are reassured that their boss will still be their only boss. Only now they may pick up the phone and speak confidentially with their own HR representative.

“Employees love that, and so do their spouses, who call us too,” Shorten says. When uncomfortable discussions and worker complaints arise, they are going to be addressed properly and unemotionally. All wage and benefit information is accessible online directly too by owners and employees.

Alcott shops for benefit plans as a single large entity by combining

several hundred small business clients and thus can offer a menu of big-company benefits including “125 Plan” Flex-Spending, a better 401(K), and, of course, better medical plan pricing and options. “We were an health care exchange before there was an Exchange by offering affordable choices,” Shorten says, though he adds that no health plan today comes cheap.

“We eat our own cooking,” Basso points out; Alcott’s principals and employees are covered alongside its clients by one of the major plans.

Nonetheless, Alcott may not be right for every company, according to Basso.

Prospective clients are those who desire a stable workforce with good retention, which means offering benefits, and the client should have a reliable cash flow.

Alcott uses fully compliant software packages and has a high-level Chief Information Officer on staff. In-house legal counsel and a risk manager also serve clients at no extra charge, inasmuch as all services fall under the flat-per-employee fee structure.

“We’ve saved jobs,” Basso claims.

“During layoffs we’ve even placed employees with another client.” He says that Alcott also has stopped business owners from firing someone without forethought in ways that put them in legal jeopardy, coaching them instead to follow correctly sequenced steps or to seek an alternative to termination.

Another long-term client is Dr. Harry Jacob, a general internist in New Hyde Park who also is Chief Medical Officer of a Medicare Accountable Care Organization. “I’d give Alcott an A+ rating as professionals,” Dr. Jacob says. “The cost-to-benefit ratio for their service is exceedingly good. And Alcott just handled the short-term disability of an employee with a humane response and great tact,”.

During the sharp downturn of 200911, Alcott’s principals acted on a longstanding principle: “Get ahead of the curve.” When clients were folding or downsizing, Alcott was keeping money in the business and hired a new business development executive , Shorten says. Most of Alcott’s staff of 45 is in Farmingdale, with a contingent in Buffalo, and a new office in Europe to

aid U.S. clients doing business abroad and foreign firms who hire stateside.

They clients in Canada and Latin America as well.

Shorten first heard about the “employee leasing” concept (as it was then called) during a 1987 trip to California.

Certain businesses, including medical practices, he learned, were firing and then selectively “leasing back” employees in a discriminatory fashion, Shorten explains. “There were bad actors out there and the IRS clamped down on certain abuses.” The PEO has matured over time. Yet even today, only a minority of such firms are accredited, bonded and audited, as Alcott is.

Basso helped to establish and worked with the industry association to set standards. He served as past president of the National Federation of Independent Business (NFIB) and remains the president of the New York Chapter of the National Association of Professional Employer Organizations.

He was appointed in 2012 to the Long Island Regional Advisory Committee for the New York State Health Benefit Exchange (which guided the State’s implementation of “Obamacare” with its own website and system, one that started more smoothly than the federal Exchange). Shorten has long served as a board director with the Long Island Forum for Technology (LIFT).

Basso and Shorten formed their first business together 37 years ago as headhunters that recruited electronic engineers for nearly all the major aerospace firms then on Long Island.

Barry had trained to be an engineer, but found that he really was drawn to and excelled at getting things done on the business end. Lou had been an HR manager. Their partnership thrived, until those prime aerospace firms started leaving the Island. The partners found themselves starting over with the fledgling PEO model. Alcott owns its 10,000 square-foot building from the early days. Over the front door hangs a “71” address sign ̶​̶​̶ fashioned from Grumman aircraft steel.

Alcott HR Group may be reached at (631) 420-0100 or info@alcottgroup. com.

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Making it Work Under One Roof

How Unrelated Businesses Work Together

by Karin Caro

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When Caro Enterprises began to grow we realized the next step was to house them all in one building. The Caro Executive Offices in Smithtown, referred to as The CEO Building, is home to a number of disparate businesses that often work together. They’re not in related fields yet each is part of the same corporation.

Each is a different company with different licensing, overseen by different government agencies. Each company pays it’s own rent, including our own 7 companies.

In such an environment, the ability to connect ideas and business where a connection is not immediately evident is essential for innovation, productivity and success for all.

Harold German, managing partner at BluChip SEO explains, “The benefits of partnership ring loudest when difficult challenges arise and diverse skill sets are quickly summoned to save the day.”

Another teammate, Donna Drake explains, “A benefit of working for a company which is housed at Caro Executive Offices is the experience of being part of a community. There is a hub similar to college commons, complete with a kitchen and arcade games. We greet other team members with warm and genuine hellos in the hallway. On a day-to-day basis, the individual companies share resources and materials. There is also an underlying vibe that no matter what our specific job duties are, all of the companies at CEO have a direct impact on helping our clients and the community at large live a better and more productive life.”

The informal discussions that take place in the common areas often lead to new ideas, friendships and helpful advice. Crosspollination between industries as diverse as Healthcare Staffing, Home Health Services, Security, Marketing, SEO and Web-TV

production combine resources and create teams that are able to assist one another with various tasks.

One way to build morale and keep a focused team is to foster friendships and create associations. Another way is to encourage innovation. When you ask artists, musicians and writers where they get their inspiration, they often say, “from others.” That’s the type of unified culture we encourage here at CEO. Shared inspiration, ideas and hopefully, long-lived relationships.

Steve Jobs, the late cofounder and CEO of Apple, amplified this sentiment in 1994 when he said that the key to creativity is to “expose yourself to the best things that humans have done and then to bring those things into what you are doing.” Later he went on to say that what made Macintosh great was that the people working there were from all areas who also happened to be the best computer scientists in the world. Apple took inspiration from their knowledge of these diverse fields to create something that was completely novel. We would like to think that we are creating the same kind of environment.

Innovative companies know that diverse culture and cross pollination of a team with diverse skills will influence the development of their businesses. We hire people with passion, great team-work and ethic with ideas beyond their job description. That guarantees a bright and skilled team. This often results in random conversations between employees during lunch, and even in the hallways. Shared interests surface, and the web of people becomes more intertwined and these unplanned conversations lead to more productivity, creativity, care for their job and the work that they do. Sometimes, it’s like family.

Value Added Employment

Leadership Training for Executives

By Kate Laible and Griff Hall

We live in an era of accelerating change. Business must adapt or die and recognize that the game itself is changing.

Visionary leaders complemented by skilled managers remain critical, yes, but their dance is evolving. As the tempo rises it becomes harder to see where one ends and another begins. Today’s climate requires capacities beyond simply dictating and executing centralized plans. We must train and empower full teams to embrace visions, to think critically about challenges and opportunities, and to collaboratively advance our enterprises toward shared goals.

The Hay Group is a global management company that works with leaders to transform strategy into reality. For eight years it has sought to systematically identify and learn from those organizations with the best leadership practices. More than 18,000 individuals from over 2,200 organizations took part in its 2013 study. A primary question was how the top 20 balance operational excellence with the constant drive toward innovation. They found that 73% of that 20 reported “giving everyone at every level of the organization the opportunity to develop and practice the capabilities needed to lead others, compared to only 47% of all other companies.”

Effective leaders have lots to learn if they are to maintain success, or be surrounded by others who can complement their drum beat. Leadership is lifelong personal development – communication, perspective building, skills, and expertise. It is lifelong interpersonal development – team building and delegation, identifying and collectively navigating toward shared goals. The best leaders understand their context, advance effective stewardship, and are trusted, responsible community members. The most effective leaders learn to lift as they climb.

One of the Hay Group’s Top 20 is Ford Motor Company.

What makes its place on the list most spectacular is that in 2006 Ford was about to post a $12.7 Billion loss. Then Alan Mulally became CEO. The company has posted a profit every year since 2009, representing one of the greatest corporate turnarounds in history.

In a recent McKinsey&Company interview, Mulally explained his “One Ford” leadership philosophy. It emphasizes accountability and inclusive problem solving, modeling positive behavior, and creating a culture of mutual support for the complete human beings – members of families and communities -- who comprise the company. A primary component is “Business Plan Review” meetings that engage the entire global team.

Another is remembering to have fun.

Before Mulally led Ford, he was an engineer who advanced to Executive Vice President at Boeing. During his journey Mulally found the opportunity to participate in a community leadership program called “Leadership Tomorrow” in Seattle. Among testimonials praising that organization is this:

“The strength of a local, regional or global community comes from people who work together to craft a vision, based on diversity, harmony and shared values.

Leadership Tomorrow fosters the sense of stewardship that helps ensure a balance in the voices and approaches to community problem-solving and supports that vision with integrity, meaning and great fun.” - Alan Mulally, LT’85, President and CEO, Ford Motor Company

He sounds like someone worth following.

Katheryn Laible is President of Laible and Fitzsimmons, Inc. where she serves as the Acting Director of the Leadership Huntington Foundation, an organization committed to Developing, Connecting and Engaging active members of the Huntington community. klaible@verizon.net Griff Hall held three chief executive positions before founding Griff Hall Strategic Leadership in 2007. He is past chair of the Association of Leadership Programs and teaches leadership and strategy at the Johns Hopkins Carey School of Business.griff@griffhall.com 21

CORNERSTONE INTERVIEW

Dr. Patrick Socci, Dean, Zarb School of Business

by Vivian Leber “In my generation, we were allowed one midlife crisis. Since they will live longer and the world is changing faster, today’s students can expect to face two or three,” remarks Dr. Patrick Socci, Dean of Hofstra University’s Frank G. Zarb School of Business. “So we give them the tools to handle that. From freshman year, we teach not only the content, but the whole process of self-discernment, how to learn your strengths, likes and dislikes. We further advise students always to stay five years ahead, thinking strategically of opportunities and being ready. ”

The Zarb School (named for an alumnus and former chairman of NASDAQ) enrolls more than 2,600 students.

Designed around the principle that 21st century careers call for continual reinvention through education, the School offers the B.B.A. undergraduate degree and the 36-credit M.S. degree, each in five major areas; the 48 credit M.B.A. degree in 11 areas; a part-time M.B.A. degree in eight areas, which has big enrollment numbers; the online M.B.A., which deliberately maintains a small enrollment; the Executive M.B.A. degree, which has an average class size of 12; joint degree programs with the Law, Engineering, Health Sciences & Human Services, and Education schools; plus advanced certificate programs. New majors and minors such as Supply Chain Management and Strategic Health Care Management have been integrated into undergraduate and graduate programs.

Hofstra University’s national profile and stature have grown during President Stuart Rabinowitz’s tenure, in part owing to the Presidential debates that Hofstra has hosted for the past two election cycles and to the Hofstra-North Shore/LIJ Medical School, which first seated students in 2011 and is still building.

Hofstra’s economic impact on the Region is significant, as a large employer, an academic partner for Long Island’s knowledge-based industries, and a producer of graduates filling jobs and advancing to top positions in the region’s foremost industries, including finance, professional services, technology, and healthcare. “We’re inextricably tied to the LI economy and are going to do everything we can to help make it more robust,” Dr. Socci says.

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Photo: Zachary Lane, Hofstra University

President Rabinowitz is the co-chair of the LI Regional Economic Development Council, while Dean Socci sits on an Industrial Council, where he helps steer initiatives aimed at launching new businesses. He also oversees the Zarb School-sponsored speaker series at Launchpad-LI.

Largest Trading Room of Any University The Zarb School boasts the Martin B. Greenberg Trading Room, which has 34 dual-panel Bloomberg Terminals identical to those on Wall Street, more than any other U.S. university. They provide students with real-time access to equity, fixed income, foreign exchange and derivatives market data and news, and the opportunity to conduct trading simulations and analysis. The Zarb School’s strategic relationship with Bloomberg L.P. extends to its training Zarb School professors who in turn test new software. Students may become certified in using the Bloomberg technology through a series of rigorous exams−a valuable career credential. Through a second collaboration, one between the Zarb School and IBM, company executives speak at School events, provide software and support research projects.

Accounting, Taxation and Finance consistently are students’ top choices for study, and those graduates have little trouble finding jobs on Long Island or in Manhattan. The School has earned the prestigious AACSB International accreditation in both Business and Accounting, which is granted to one in ten business schools. Business Analytics (combining Information Systems and Quantitative Analysis) was renamed and revamped to reflect that this knowledge base is pivotal across every business sector; this field of study too is seeing an uptick in interest.

According to Dr. Socci, business leaders should not solely rely on specialists to help them apply digital and analytical tools to achieve goals. “They need to closely understand these tools, the common language of today’s commerce, then use them to make compelling arguments.” Students, liberal arts majors included, who minor in Business Analytics will be more competitive job candidates, he notes.

Undergrads must complete a core curriculum in liberal arts and in business. Dean Socci emphasizes that proficiency in communications is another imperative for career success.

“We make a concerted effort to see students grow while here in communications, presentation and analytical skills, without which they cannot become leaders,” he says. “It is indeed our goal for graduates to move beyond the cubicle, to eventually be in that corner office.”

He observes that many freshmen and their parents misconstrue how the economy is structured. They expect to land a job with a Fortune 500 company, but there are few on Long Island. “It is our job to educate them that 70% of jobs are with small and midsize companies that offer fully vibrant and rewarding careers,” he says. Starting in Freshman year, the University’s office of Career Services helps students define their interests.

Nearly every graduate (96%) surveyed from last year’s B.B.A. class has landed a job or started graduate school.

Moreover, Zarb is tied in for 19th place among the nation’s top business schools, in the most recent PayScale Salary Report, which measures salaries soon after graduation and again at mid-career.

Dean Socci urges companies that seek to fill positions, to provide Career Services with detailed and complete job descriptions. “When companies thoroughly articulate what they are looking for, we can find the best-fitting candidate.”

Marketing and Entrepreneurship studies register growing interest, in part fueled by the gratification of producing a business plan and getting feedback, even rewards. Four undergraduate student teams, mentored by Zarb School professors, received funding for their ideas through the

Capital One Campus Entrepreneurship Challenge. Last Spring one team went on to win third place statewide in the Challenge and theirs was ranked eighth in a national listing of “The Top 50 College Startups.” The winning idea was SmartLine, a mobile app that improves the waitlist experience at busy restaurants.

Zarb School students are engaged in a number of corporatesponsored community projects. Undergraduates, with support from Capital One, teach a fourth-grade financial literacy course to Long Island children, and a high school curriculum about financial markets is sponsored by NASDAQ QMX. Still another partner for community engagement, Flushing Bank, funds a program in which Zarb graduate school women educate Uniondale High School girls about business careers.

Options: Mix & Match, Go Online, Go Abroad At the Graduate School level, dual degrees and options to enhance an established career in a related field are powerful draws. The M.B.A. program in Strategic Health Management, for example, enrolls 15 medical doctors. Law and Engineering School pairings with business studies, often through the part-time program, are similarly compelling as a path to the executive suite.

The Online M.B.A., now in its third year, has 25 students in each cohort group who stay together for the 20 month program. They take the same courses taught by full-time professors as in the standard M.B.A. They start and end the program with a resident week on campus and take an international trip together. Online courses also are popular with Zarb School undergraduates who, during the winter and summer breaks, can earn course credit while also working. The Zarb School has decided for now not to jump in with its own Massive Open Online Courses (MOOCs) – those trendy courses that instruct thousands at a time, but with no student-faculty interaction.

Study abroad also appeals to many students, given that even small businesses today are linked to the global economy. Those majoring in International Business are strongly encouraged to spend time abroad at specific partner schools. The Zarb School’s strategic relationship with Changwon National University in South Korea includes an industrial-cultural experience tour, the study of Korean culture and language, and paid internships. The School also partners with universities in France, Germany and elsewhere. In turn, hundreds of foreign students study at The Zarb School, enriching everyone’s classroom experience.

Print and broadcast media regularly solicit from Dean Socci and the Zarb School’s faculty economic forecasts and business commentary. In speaking with The CORRIDOR in mid-December, Dr. Socci predicted that jobs growth will remain relatively flat for the foreseeable future, but as babyboomers retire, healthcare jobs should continue to grow.

For further information about Hofstra Unversity’s Frank G. Zarb School of Business, visit: www.hofstra.edu/Academics/Colleges/Zarb/ or call (516) 463-5678 23

Dr. Patrick Socci, Dean

PROCESS TO PROFITABILITY STRATEGIC BUSINESS PLANNING

By Jeffrey Bass Ask almost any business person why strategic business planning is important and invariably he or she will respond with, “to raise capital”. The truth is, that may be the least important reason and ironically, may undermine financing efforts. The most important reason to strategically plan the company’s further growth and development is to enable the founder(s) and or executive management to focus on and memorialize the business’s mission, present method of operation and any modifications to operations that may be needed to sustain the mission (or change it). If executed properly and objectively, strategic planning will provide defensible paths to revenue growth and resources needed to sustain this growth, profitability and increasing shareholder value. As such, it can then be more successfully used as a tool in capital formation.

Let’s briefly review components of the Strategic Business Planning process and hence the resulting Strategic Business Plan: Corporate Mission Simply, the Corporate Mission is the reason the Company exists.

What does it bring to the market that makes it competitive if not competitively advantaged?

Is it responding to or creating consumer demand? Is it accretive to its shareholders in a manner that is responsive to employees and other defined stakeholders?

Management and Organization The analyses performed here require brutal honesty among the purported company executives. Are these individuals suited to the task of taking the business to the next level of growth? If the answer is yes, it needs to be proven. If the response is objectively no, then how will the management team be augmented and with what kind of skill mix? How will such executives and key personnel be found and how will they be compensated?

I also recommend formulating a “functional” Table of Organization to define both reporting relationships and everyone’s key responsibilities. Finally, the company’s managing philosophy should be defined. Will matrix management and employee participation in decision making be encouraged? If so how?

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Products This is easy. Simply describe the product/service/technology being brought to the market.

Of course, the description has to be circumspect since no one wants to provide proprietary information.

With regard to the latter, What Intellectual Property protections are in place or in process?

Does the company have or need a Research and Development program?

What are the costs associated with this? What is the status of new product development?

Markets Market research must be conducted to independently assess demand for the company’s products and the viability of the markets and respective segments target for sales. Middle market companies or larger should retain the services of formal market research firms to provide such insight as well as to assist the company in defining pricing, competitive advantages, likely market share capture, etc. Early stage companies with more limited financial resources, can nevertheless obtain research from local university affiliated business development corporations and graduate schools of business.

Marketing and Selling Strategies This section begins the process of defining revenue and cost assumptions. Thus far, detailed analyses about the management team, the product and its market have

been objectively conducted. Now the rubber hits the road with revenue and associated marketing and selling costs. The time span is typically three years.

Based on all the research thus far, what is the likely revenue build over the stated time frame? What marketing and selling strategies will be employed and what will they cost? How will sales people and support staff be compensated? Are all hires made in year one or are they phased in over the three year horizon? Will outside sales or distribution organizations be used?

Operations An analysis of the Present Method of Operation (PMO) and Future Method of Operation (FMO) must take place. In essence, a description of the current Human Resource/Technology/Physical Plant mix must be documented. What changes to those components must occur and when over the three year term? Is or will any component of the business be outsourced?

Projected Financial Information The strategic planning process has resulted in a detailed set of assumptions that can now be used to prepare a very a realistic set of financial projections for the three year term. Statements of Income, Cash Flows and Balance Sheets for each year must be developed.

Financing Requirements and Uses of Proceeds can now be defined and decisions made about how and from where such funds should be obtained.

Conclusion Since it is likely that the vast majority of readers are owners of closely held businesses, strategic planning will enable you to grow and sustain your company in a manner consistent with the lifestyle you seek.

Jeffrey Bass, M.P.A., M.A. is the Founder and CEO of Executive Strategies Group LLC, a Strategic Business Advisory Firm. He is Chairman Emeritus of the Long Island Capital Alliance after having served as its Chairman for 24years.

Mr Bass was an elected delegate to the White House Conference on Small Business where he served as Chairman of the New York State and Northeast Regional Capital Formation Committees. He was previously Principal-In-Charge of Strategic Advisory Services at Margolin Winer and Evens LLP. Mr. Bass holds graduate degrees from the City University of New York and New York University. He is published and serves as a resource for the local and national business media. He is also a Trustee of the Village of Great Neck.

Serving the Small Business Community of Long Island for Thirty Two Years With Low Cost Loans & Technical Assistance 1980 - 2013 LONG ISLAND DEVELOPMENT CORPORATION 400 Post Avenue, Suite 201A Westbury, NY 11590

516-433-5000

www.lidc.org

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The Corridor Real Property Forum “Breakfast on The Harbor” February 18, 8:30 am Cold Spring Harbor Library

You are invited to join us for breakfast and participate in a lively conversation amongst Real Estate Professionals and the allied Realty industries.

The event will be videographed and put on the Corridor Website front page.

The synopsis with bios will be published in the Corridor's BUILDING ARTS & REAL PROPERTY issue!

SEATING IS VERY LIMITED!! Purchase tickets online www.TheCorridorLI.com *Sponsorships Available* Display space Name and Logo in the Program.

Logo and Link on www.TheCorridorLI.com.

Y our Banner Stand on Display 5 Minutes of Fame Sponsorship Mention in the Building Arts & Real Property issue Call 631.683.4660 for further information

Your Industry, Your Market, Your Story Don’t miss the next issue!! Subscribe Online att www.TheCorridirLI.com!

Don’t miss the next issue!! Subscribe Online at www.TheCorridorLI.com!

26 Or send check for $35/yr to POB 2203/Halesite, NY/11743.

OR asend a check for $35 to POB 2203/Halesite, NY/11743.

Gamification Hot in HR

By Mark Fogel

The influence of social media and technology are an overarching theme to new HR trends that are beginning to take shape and impact businesses of all sizes.

“Gamification”, coined by Nick Pelling in 2002, is quickly becoming the next hot trend in HR Development circles.

With a larger percentage of the workforce each year having grown up around video games, it should be no surprise the concept is beginning to take hold in HR and work engagement programs Gamification is a great way for employers to communicate, engage, train, and retain top talent.

It has gained a lot of attention recently in the online world as a way to engage and build loyalty.

How it Works Gamification applies behavior motivation techniques from traditional and social games into non-game environments.

An effective gamification program looks more like a loyalty program, supercharged to help achieve real business goals where it is expanded beyond “points”, “badges” and leader boards.

Employees, like customers, can be engaged and motivated by using these tools and techniques in a similar way that simulations have been used in the past. These games have also shown to have a direct correlation on employee loyalty, engagement and retention.

Companies are beginning to harness gamification concepts to complete and reward employees for daily and weekly tasks.

M- Learning short for “mobile learning” is another future hot trend to look for. Compared to what we now call e-learning, which is typically delivered through your computer, M-learning provides immediate access to mobile

employees who are not stationary for significant amounts of time. Delivery to employees in retail stores, warehouses and field-oriented jobs can have the same access once limited to “corporate office” employees.

Additionally mobile devices are cheaper, easier to carry, and can provide instantaneous or “Justin-time” education and information to workers. Tremendous implications in developing countries where many individuals and businesses cannot afford a pc.

One last advantage to M-learning is the ability to provide information through gps- enabled devices. This could be useful for military, repair crews responding to weather events and civil engineering type workers that have site-specific tasks.

For workers, especially those in the baby boom generation, the acceleration of social media will cause both anxiety and opportunity as they struggle to acclimate and fit in to this new world of work.

Mark Fogel is the Co – Founder of Human Capital 3.0, a Human Capital Advisory firm, and former Chief HR Officer at Leviton Manufacturing and Marcum. Mark is also an adjunct professor at Adelphi’s Graduate Business School and a sought after thought leader appearing in local and national media dishing on a broad range of HR topics.

Mark has been honored nationally by the Society for Human Resource Management (SHRM) and HR Executive Magazine, and also received Adelphi University’s Teaching Excellence Award in 2013. His HR teams have garnered numerous national and local awards for HR innovation, wellness, and employee engagement.

He can be reached at m.fogel@humancapital3.com 27

Where’s The Money II? Roslyn Goldmacher, CEO - Long Island Development Corporation Where’s the Money I column focused on the types of non conventional financing available to small businesses on Long Island: venture capital, capital asset financing ;working capital funding.

Sources cited included The LI Angel Network, the SBA’s SBIC program, the LI Capital Alliance, local angel investors and venture capital firms, the SBA 504 second mortgage loans, the NY JDA subordinate mortgage loans, SBA 7A loan program, geographically targeted financing sources, and micro loans. In this second edition of Where’s the Money, we will focus on the steps necessary to make that investment or loan application whether to a bank, credit union or alternative source.

The first step in accessing funding for your business is to have a solid, well thought out, detailed business plan. Talk with your accountant, lawyer, financial advisor or resources such as SCORE/SBDC and make sure you have documented the information needed by an investor or lender. Service Corps of Retired Executives (SCORE) provides business mentors and seminars in addition to business plan assistance.

See www.scorelongisland.org.

Small Business Development Centers (SBDC) provide business plan help and other services for businesses. www. farmingdale.edu/sbdc; www.stonybroook.edu/sbdc.

Part of a good business plan is the indication of how much money you need and for what purposes. You need to do an analysis of your business needs. If you are a start up, the financial projections will determine starting costs through to break even (the point where there’s enough money coming in the door to meet the expenses including a liveable salary for you). If you are an existing business, what is your monetary need? Is it for a building, for equipment, for inventory, for other needs? The need will determine what kind of investment or loan is appropriate and then you can determine the best source. As part of your business planonce you have determined how much you need, for what purpose and the best source, you need to devise a plan of repayment. If a loan is best suited to your need, describe how you plan to repay it. If an investment best suits your need, how much of your company are you willing to “give away” to an investor?

Lenders and investors also want to see your exit strategy as part of the business plan. For a lender, the exit strategy consists of the fall back position should you cease being able to repay the loan. What collateral can you offer? What assurances can you provide to the lender that their loan investment is a safe one? For an investor, how do they get back their investment and with what return?

Intellectual Property (continued from pg 9)

success of the company in monopolizing its technologies both domestically and internationally.

Is the IP licensed from a third party, and if yes, is the license exclusive or non-exclusive? A company who has licensed all or a portion of its IP is typically more attractive to prospective investors if the license(s) are exclusive and for a period of time which would allow the investor to recoup his investment.

By addressing the above factors early and continuously, a technology-based company can be assured that its IP portfolio remains dynamic and continues to play an important role as the company grows and matures. Along the way, investors will be impressed by the company’s commitment and awareness to developing and protecting its IP portfolio which will lead to capital infusion and an acceleration of the company’s growth.

George Likourezos, Esq. is a partner at Melville-based Carter, DeLuca, Farrell & Schmidt, LLP, the largest intellectual property law firm on Long Island. Mr. Likourezos’ law practice is focused on trademark and patent law, with a concentration in electrical, electromechanical, business methods, and computer science. He advises Fortune 100 companies, mid- and large-cap companies, technology investors, and start-ups on IP issues; prepares and files patent applications with the US Patent and Trademark Office and foreign patent offices; and prepares freedom-to-operate, non-infringement and other legal opinions. Mr. Likourezos is on the Board of Directors of the Long Island Capital Alliance (LICA) and Touro Law Center’s Alumni Advisory Council.

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Prosperity Through Unity

As a membership organization, the value proposition offered by the Melville Chamber is one of critical connections to the community and 110 Corridor: to the people, to businesses, to students, to knowledge, programs and services, all strategically designed and targeted to enable your business to grow and thrive.

The Heartbeat of the 110 Corridor Join The Melville Chamber Today!

585 Broadhollow Road Melville, New York 11747 631-777-6260 http://www.melvillechamber.org/ mailto:info@melvillechamberorg

Valuable Ideas Deserve Invaluable Protection.

CARTER, DELUCA, FARRELL & SCHMIDT, LLP Intellectual Property Counsel Your expertise creates new ideas, inventions and processes.

Our expertise assures that your innovations get the protection they deserve. Let our team of experienced professionals safeguard your intellectual property assets. Put us to work for you and your ideas today.

• Strategic IP Portfolio Development

• Foreign and Domestic Patent Prosecution • Patentability and State-of-Art Studies

• Freedom to Practice and Validity Opinions

• Coordination with R&D in the Development of New Products and R&D Agreements • Trademark and Copyright Prosecution

• Managing & Licensing of Intellectual Property Assets

• Due Diligence for Mergers, Acquisitions and Venture Capital Investment

445 Broad Hollow Road • Suite 420 Melville, New York 11747

t: 631.501.5700 • f: 631.501.3526 www.cdfslaw.com