
Mbloom’s first investment is in themselves? - shuzchen
http://www.alohastartups.com/2014/07/12/wtf-mblooms-first-investment-is-themselves/
======
shuzchen
Hard to see how this passed anybody's internal alarm that warns them of
impropriety and conflict of interest. As a developer living in Hawaii that
dreams of building my own company one day (and dreams of building that company
in Hawaii), this doesn't look good for our ecosystem.

Cached version here: [http://www.alohastartups.com/2014/07/12/wtf-mblooms-
first-in...](http://www.alohastartups.com/2014/07/12/wtf-mblooms-first-
investment-is-themselves/)

Other writeups on this issue: [http://www.hawaiiweblog.com/2014/07/10/mbloom-
funds-mbloom](http://www.hawaiiweblog.com/2014/07/10/mbloom-funds-mbloom)
[http://www.civilbeat.com/2014/07/civil-bytes-is-there-a-
conf...](http://www.civilbeat.com/2014/07/civil-bytes-is-there-a-conflict-of-
interest-in-hawaiis-startup-world/)

~~~
manachar
Ugh. I live on Maui and wish there was a better tech eco system on the island
for many reasons.

I often get the feeling that this sort of self-serving entrepreneurship seems
somewhat standard on the island. Some of it is just the "small town" and
insular nature of the business scene here, but sometimes I wonder if there's
something more malicious to it.

~~~
ChuckMcM
What would a better Tech eco system look like?

Prototype manufacturing plants need a source of material having to fly things
in automatically makes them more expensive.

Software companies need engineers but engineers typically go to where the jobs
are. So until there are jobs, there are few engineers.

Infrastructure companies need startup companies that are being created to keep
the gear around so that they can help build infrastructure.

Entrepreneurs need a source of capital that understands both the opportunity
and the risks. They need banks that also understand the opportunity and the
risks.

What is the current connectivity solution for Maui? Is there 10gbit
connectivity back to the mainland? At what cost per Mb? Any local data
centers?

What are the minimum taxes on a business in Hawaii? What are the minimum
compliance regulations?

Is there an advocacy group, something like the Chamber of Commerce which has a
whitepaper (should have answers to some of these questions in it)

~~~
samstave
I just spent the last week-and-a-half on Maui for vacation. I was thinking
about how I could get to work from there for ~3 months out of the year...

I came to the conclusion, in my own little thoughts about it, that Maui s best
suited for remote dev/sysad/ops work if anything.

While I wa just thinking for myself - it could be expanded to a contract
support/ops/development company that lures talent there via the fact that it
is maui....

I don't know anything about the housing costs - but food was pretty expensive.

------
downandout
Perhaps the most shocking part isn't that these investments were made, but
that taxpayer money went into a fund where there were no bylaws or contractual
prohibitions on such investments in the first place. Someone with the
authority to write multimillion dollar checks using taxpayer money isn't
vetting their investments for these kinds of issues, and that is a significant
problem.

~~~
drpgq
I think one issue is that cities and regions all over the world are desperate
to create a startup scene. They'll pony up some money and there will always be
some insiders and grifters around to tell them how to spend it.

------
crazy1van
To me there is a lot of irony in investing public money into startups when
most citizens cannot easily invest in startups themselves given the accredited
investor capital requirements.

Here's how I see the irony unfolding in broad strokes:

1) Average middle class person wants to invest some extra money in a startup,
but cannot easily do it because he does not meet the SEC requirements to be an
accredited investor
([http://www.sec.gov/answers/accred.htm](http://www.sec.gov/answers/accred.htm))

2) The State of Hawaii invests public money in startups (in this case based on
cronyism -- even worse)

3) Where did that money come from? Tax revenue. Who contributes to tax
revenue? The average middle class person from #1.

So basically the person is investing in startups in a roundabout fashion. He
just can't choose which ones he invests in and he misses out on the major
upside of successful startups. Of course, if the startups fail and the state
loses its money, the state will go right back to the average person for more
tax revenue.

~~~
TTPrograms
Isn't that generally the idea, though? You give your money to an entity that
is presumed to be better at investing it than you ie bank, portfolio manager,
mutual fund etc. etc.

The roundaboutness doesn't seem odd to me - the issue in my mind is if this is
a sound investment decision for Hawaii. I'm not sure. The answer may be
different after this sketchiness, as it could have been legitimately expected
that it would help their tech sector in some way. That may still be the case.
It really depends on the risk profile Hawaii is going for and the financial
status of the state.

------
bitsweet
The quality of these two startups that received funding is what makes this
story suspicious:

[http://www.flikdate.com/](http://www.flikdate.com/)
[http://www.ozolio.com/about.html](http://www.ozolio.com/about.html)

~~~
shuzchen
Yeah, both companies have been around for a while and don't look to be winning
it big any time soon. Also, flikdate recently had a merger with CrossBox
([http://www.sec.gov/Archives/edgar/data/1493563/0001575872140...](http://www.sec.gov/Archives/edgar/data/1493563/000157587214000012/ex10-1.htm))
that previously (under the name gogreendirectories) was a "Web portal for
environmentally friendly green products and services"? I fail to see the
synergy there.

~~~
jrushin
CrossBox is also somehow related to First Rate Boxing, which sells speedbags,
so the synergy is obvious: dating + green products + boxing = environmentally
friendly speedbags for first date boxing matches?

------
jhonovich
Hawaii has a long sad history in mis-funding tech startups.

Recall ACT 221, which provide 100% state tax credits for investors, resulting
in massive wastes and various floundering startups.

In Hawaii, many of the 'leaders' in the tech sector believe that they are just
as talented and smart as Silicon Valley, that all they need is the money to
prove it. And then, over and over again, the State hands over money, just to
end in more embarrassing results.

~~~
uurayan
Such a true statement. The sad part about this john is that many people
leading the charge have no recollection of ACT 221 and they write off the
people like us that do as haters or non-believers.

~~~
bostonvaulter2
For anyone that is interested in the history of ACT 221 I would highly
recommend this writeup (PDF)

[http://www.uhero.hawaii.edu/assets/UHERO_WP2009-03.pdf](http://www.uhero.hawaii.edu/assets/UHERO_WP2009-03.pdf)

