The day entrepreneurship died (or What the Grokster case means: top entrepreneurs to flee the US)

People have been debating the fallout from the Grokster case in terms of Hollywood and the music industry, but what is at stake is much, much bigger.

Yeah, I know it sounds crazy, but what is the point of building a technology business in the United States if you’re going to get sued for the *potential* illegal use of your product? Why would an entrepreneur or their investors take this risk?

Blogger.com, MSN Spaces, and TypePad.com could be used by child pornographers or terroists.
GMAIL and Yahoo IM could be used by child pornographers or terroists or people trading Mp3 files.
Flickr could be used by child pornographers or terrorists. People could trade copyrighted images on Flickr too.
Del.icio.us and Furl.com could be used to tag and distribute Mp3 files illegally (in fact, I know this is happening)

At this pace people who are thinking of building a Web2.0 services company are going to setup shop in Asia or an island somewhere out of the reach of the US courts.

  • The United States will lose the tax revenue from these startups (including huge capital gains taxes when these companies consolidate).

  • The United States will lose the jobs created by these startups.

  • Companies in the United States will lose the advantage of using and partnering with these service providers.

Think I’m crazy?

Skype isn’t based in the US.
Online poker companies are not based in the US.

What’s next to leave? Blog and photosharing software? Bookmarking software?

Are we going to go after folks who make hard drives next? How about people who make laptops? Perhaps the ISPs?

I’ve heard from a number of entrepreneurs who are looking into starting companies off-shore. Heck, Nick’s blogs are not incorporated here. Maybe Nick saw this before the rest of us. Any entrepreneurs out there considering leaving the US to start companies? I’d be interested in hearing what people are thinking.

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