This transcript was created with help from Ai. Please report errors to us and always refer to the video as your primary source.

Justin Brady: From the Jethro’s BBQ studio, it is the Iowa Business Podcast. It’s been a big year for businesses. Uh, we have the data, by the way. technology, the way things are moving, we’ve been talking about this on the show for a while, that people think it’s going to lead to job disruption. It’s gonna remove all the jobs. Ah, we don’t think that’s the case here on this show. We have the data that suggests that it’s actually going to be a major job creator, and maybe we’re starting to see some of that data already. We’re joined by Iowa Secretary of State Paul Pate, who is going to give us a fresh look at what those numbers are, what that may indicate. Secretary Pate, thank you so much for coming in the studio.

Paul Pate: it’s a pleasure, and we’ve got great news, so that even makes it more special

Justin Brady: I’m excited to break that down. Before we get started, everybody, thank you so much to Dentons Davis Brown for sponsoring this show. They, of course, don’t just throw money at the show like some sponsors might do on other networks. What they actually do is bring their talent in here to talk about major trends and break everything down. You can see everything on immigration, on M&A deals, on H-1B visas, on employment, on HR stuff, retaining executive talent. You can see all of that at Iowapodcast.com/business. Uh, like I said, Secretary Pate, thank you so much for coming in here. Uh, let’s just start with the big news. Um, I think you have some numbers to break down about new business registrations here in the state of Iowa.

Paul Pate: Well, yes, we’ve seen great numbers. Uh, for the, the past cycle we saw over 38,591, uh, business to date here in this, this year alone, which is a, a new record by all means, which brings us up to 344,679, I believe, active businesses we have right now here in Iowa. Uh, and that’s the… A, a positive trend by all means. Uh, since COVID, we have seen constant growth. Mm. But this last year we’ve seen a significant growth. Uh, but I think it was about a 17% jump

Justin Brady: Why… S-this is interesting. You said since COVID. Well, uh, you, I think in most people’s mind, you may not know the answer to this, that’s totally fine, but m-in most people’s minds, they’re probably thinking, “Why, why would COVID actually add a little fuel to the entrepreneurial or business registration fire?” I don’t know if you guys know the answer to that.

Paul Pate: I, I suspect a couple things. Uh, one is, uh, people had some time to think about this. I mean, they were going through some real career shakeups and changes. Uh, they were thinking, “This is my opportunity to maybe pursue that business I always talked about or dreamt about, uh, to be an entrepreneur, to, to really have a chance at making the, uh, the big success,” if you will. So I think a lot of that was at play. Uh, for… And for some, the companies downsized, uh, because of COVID, so they needed to come up with a creative way to create a job for themselves. Uh, but the other part of it is, uh, interest rates went down, and when they went down, that helps. That encourages people to maybe they can borrow some capital to, to get going. But, uh, a combination of all the above, but I like to think it’s also because Iowa has a stable economy. Uh, no, we are not like some of these states like Florida that just is growing like, uh, wildfire. Uh, but we also don’t go down as fast as some of those do. Our cycles are much more stable, but what we’re seeing here, uh, to me, is refreshing. I think it, again, it reflects all-a combination of, of good things we’ll probably talk about here t-on your program. But whether it’s, uh, the education system, whether it’s the workforce that’s available, uh, I think all these things contribute

Justin Brady: Do you have any, uh, and, and I know that you don’t, there’s some states that collect a lot more granular level data, and t-truthfully, having a few businesses of my own, I appreciate how easy it is. We probably will talk about this to register your business with the state. It’s really easy. Um, but, uh, so, so we don’t collect, I say that because we don’t actually collect a lot of really granular data about what kind of industry you’re going into and what ki-we don’t, you know, we ha-it’s more broad. But do you have at least some sense of what kind of businesses have been created or why they’ve been created? Uh, I don’t know how much access to that data you have, but do you have at least a sense of that?

Paul Pate: Well, I, I don’t personally in my office, the, the US Small Business Administration does a very good job of tracking a lot of that. Uh, what I would tell you I’m observing is these are small businesses. That is the backbone of this state’s economy and most states, uh, when you look at the job growth in, in those communities. Uh, it’s ev-almost 50/50 between the large industry and the smaller, but when you look at the reality, uh, they’re much more stable. Uh, the small business, that entrepreneur on Main Street who adds one to three people, uh, they tend to keep those people a lot longer, and I think that makes a difference. And, you know, we see some shifts on the big companies. Uh, the, the big finance companies, some of those folks are adjusting their employment numbers, but the smaller ones are, are picking up the slack. And, uh, most of them, or a lot of them I should say, are service-oriented, uh, in s-many ways. Uh, they’re trying to meet that niche that they found out there. And let’s face it, with online stuff, the sky’s the limit. There’s so many people who come up with creative ideas what they can do from home

Justin Brady: Yeah, and not to mention that in the old, not the old days, I mean, when I say the old days, like five years ago at this point, uh, a lot of these larger companies could, could kind of b-beat down the smaller guys ’cause they had headcount. They could get to market faster, they could get it through legal faster, they could file the patents faster. But now that you have, like, Anthropic and Gemini and Google, Claude, Groq, all these tools, uh, it’s starting to eliminate the headcount advantage some of these big companies have. So I would guess this trend would speed up. Um, do, was there any moment this year where there was, like, a major spike or big trend, or was it just kinda steady throughout the whole year?

Paul Pate: steady, and if you look at it, it comes out to, uh, about 100 businesses a day that are being f-created and organized.

Justin Brady: when you break it down that way, that’s

Paul Pate: yeah, that’s, that’s quite a few. Uh, and to me, again, I think it shows that they have confidence in the system, ’cause you don’t go out starting a business, putting it on the line like that if, if you don’t believe that you’ve got a market and that you’ve got an economy That’s gonna get, give you the support you need. Uh, and your point is well taken. We have g-uh, technology has given a lot of these small businesses a better and more stable footing to work from, because they can’t afford to have in-house specialties for a CPA or an HR person and, or someone who’s their tech expert. But with the way that we now have these other support mechanisms, you can get it pretty much at your fingertips, too. Our office alone, we do, uh, almost all of our filings online now, uh, which makes it easy for every small business. They can do it whenever they wanna do it, uh, 24 hours a day, whatever meets their needs.

Justin Brady: And this is a departure because it wasn’t like that. I’ve had a business here for a while, and I remember the original way of filing, I don’t remember what year this was, but, uh, it was kind of terrible. I mean, I figured it out myself, but, you know, it was, it was a little obnoxious, and you had to go during business hours. So people are like, “Online, that’s not a big deal.” It is a big deal. It’s new. Uh, I will say now that I’ve got you in here, I get a thank you for something, because there was some really weird issue I had where, like, my EIN, I had to update it, and then Workforce didn’t like that, and then the Secretary of State office didn’t like that, and there was, like, this conflict. And they’re like, “Well, you need to shift your paperwork first, and you need…” So your office said, “Here’s a…” Kind of white-gloved me, and they were like, “Here’s an idea. If you dissolve it today, reform it the same day, that’ll satisfy Workforce, that’ll satisfy us. You’ll be out of here. It won’t cost you anything. It’ll be fast.” That’s what we did. Click, click, click, everything clicked. It was fine. And I was like, “Huh, they just walked me through it.” And so I, I don’t think people understand that first of all, you can just start a business. There’s, there’s certain criteria, legal, finance. You can just start it out of your house. You don’t have to register it with the state as long as you’re, you know. But I don’t, I don’t think people understand. You can just go to the office and register for a new business. You don’t need to, I’m not saying you shouldn’t use a lawyer, maybe you need to for certain cases, but people can just come to your office and register a business, right?

Paul Pate: It’s, it’s pretty s-it’s pretty basic. I mean, it really is. Uh, as you pointed out, you can do almost everything online anymore. Uh, and what that does, it frees up my staff to deal with people personally now. So when you have a personal, like you said, your incident, you know, your issue, now you’re not on a, a call waiting situation like, “Will I ever talk to a real person?” Uh, because the 90% of the stuff doesn’t need a real person. It’s just-Mm he-here’s how we walk you through it, uh, all on our website or all through our fast track system. And, uh, again, it’s seven days a week, 24 hours a day, uh, depending on what works best for you. Those make a di-that thing, that makes a big, big difference. And one of the things you touched on, one o-I was very frustrated as an owner of a small business myself coming in, I’m going, “We’re supposed to be a portal. We’re supposed to help these, these businesses as they come in.” Now granted, w-Secretary of State doesn’t oversee every component that a business might have to work with, but I certainly have tried through my staff to be somewhat of an ambassador to work with these other departments to get them to cooperate, and the workforce was one of our biggest ones because they wouldn’t always, weren’t always moving quite as fast as you wanted to get it worked through. We have made m-significant milestones now where they’ve just empowered us to do a lot of things for them that normally would’ve had to wait for them to review and do this and do that. Uh, and time is money, and when a small business is starting, they need to get incorporated. They need their employer ID number so that they can start doing what they do. Uh, and, uh, they don’t have a lot of, uh, extra, uh, wiggle room for some of that stuff. So that helps immensely.

Justin Brady: Yeah, I was prepared for a little red tape when I went to your office, and I didn’t get it. It, I just got done… I, I was in and out in I would say under 10 minutes, uh, maybe a little faster. So kudos to y’all, to all y’all

Paul Pate: to your listeners too is I also had a frustration that if you didn’t live in Des Moines or in the circle around it, you kinda got second-class service.

Justin Brady: Really? Okay

Paul Pate: because y-you’re gonna drive to Des Moines-Oh, for every time you had an issue? You had to go to the counter to talk to somebody. Uh, that had to change, and we have changed that dr-Now, now all 99 counties, in fact, outside the county, anybody anywhere in the, in the country or the world can get service via the electronic system. Um, and I think that really speeds it up and gives them the knowledge they want. And, and the interesting thing is we don’t charge for all that stuff.

Justin Brady: Right. That’s a good

Paul Pate: Mo-Wow a lot of the states around us, they charge you. You, you wanna go on and do a search, there’s a fee. And, and I go, “Time out here. We don’t need to nickel dime everybody.” That, th-th-there’s a… You do your base fees, you leave it alone, and just make sure you give them the information they need so that they can get out there and be a successful business

Justin Brady: So there’s this, uh, new, uh, I think it’s HF2678 Stop Fraud Act. For those that, uh, remember this, or not remember this, but there was an issue where people were registering fake businesses, I think they’re basically fake businesses to, um, real addresses. And your office was kind of, I guess, handcuffed a little bit from being able to address that problem. That has changed now with this law. Can you explain why that has changed and why that’s important?

Paul Pate: Well, it, it is. Uh, what we’re referring to is, it, it was brought to our attention here in Polk County, but it, I, I’m sure it is happening elsewhere as well. But we had homeowners who were contacting, uh, uh, the media and our office and saying, “Uh, what’s going on? We got this nice letter from Secretary Pate saying, ‘Welcome to being a business in Iowa.’ And we don’t have a business. And it’s showing that we’re the registered agent for XYZ company. We don’t know anything about them, and we’re not sure what this means, and we’re concerned. Does this mean we’re liable for everything this business does? Is, uh… What, what is the impact?” And when we started getting one call, okay, and then we started getting two, three, and, and it’s like, okay, somebody is… someone is definitely doing something that’s not legitimate. And the tough part is you can’t get ahold of that business because they’re using this homeowner’s address as the l-as the contact point. Uh, so then we’re back to, all right, we need to get these guys off the registered rolls so that these poor homeowners aren’t feeling obligated or could be obligated, be getting sued for things that they had nothing to do with. We didn’t have the authority, and, and that was very frustrating. So through this legislation, we’ve been able to expedite it now, and we have a short process where we now can get to that and get them off. But what really came out of this was a serious wake-up call on the fraud issue going on. And we’re Iowa nice. Let’s face it. We really, genuinely are. And it… People take advantage of us because of that image, and from both the consumer side and the business side, and that’s not fair. It gives a lot of the businesses a black eye when they, these, some of these folks, who aren’t even from Iowa, or not even from the United States, set up these bogus companies and then try to take advantage of the system. And we needed to do more about stopping that, but there was no real clear line of who was the point person on this issue. And so our office initiated that. We have brought the players together, uh, to ha-start the conversation, deciding what other legislation should we do, who should we work with, whether it’s the Better Business Bureau or the, the bankers or the bar association. What should we be doing to protect? Because we’re talking about, uh, numbers I saw excuse me, was, um-4,200 consumer fraud complaints last year alone to the AG’s office, and that’s way too many. Uh, so again, we don’t like it when these people take advantage of Iowa nice. What we suspect these people were doing is they were wanting to form a, a company so they could set up a bogus website and-Oh and run a business somewhere. And, and this business could be running, running out of any country in the world. But they can say they’re an Iowa corporation, and our wholesome, honest image, people think it’s a legit entity, and that’s fr-extremely frustrating. So I think we made progress with this legislation, but it’s just a baby step, folks. We’ve still got a lot more work to do

Justin Brady: Yeah, and I, I wanna ask you about that, what the more work to do is. But, um, for those that don’t know, I, I have a, a client that’s based out of… Well, they have an office in San Francisco, and they said–I was like, “Are you ever gonna just use the San Francisco office?” ‘Cause they have a, they actually have an Iowa office as well. And he’s like, “Actually, we’re gonna still base out of Iowa because believe it or not, people around the world love the Iowa…” Uh, you know, they’re, they’re like, Oh, you’re from Iowa. You’re, you know, you’re not gonna rip me off. You’re kind people.” So that image really does hold some weight. It’s not just a thing. Um, but that is absolutely fascinating that people were, to get digital stuff, they needed to have a physical address, and so they were trying to take advantage of local business listings. I think it’s like, I think your website said there will be possibly 573 million in unreported losses, I think Common Sense Institute of Iowa. So this is your way of getting ahead of it. What–You, you mentioned this is, you got a long way to go. What’s next then? ‘Cause the–Basically, this allowed you to–We’re a nation of laws. You can’t just go, even if you see fraud happening, if it’s illegal, you can’t do anything about it. You have to go through the right channels. This allows you to just go open an investigation, shut things down if you need to. That’s pretty good. What’s next, though? What, what else has to be done?

Paul Pate: Well, it’s gonna have to be a kind of a multi-approach. Uh, the first steps we’re doing is more consumer education and, and working with groups like the Better Business Bureau to let people know what they should be looking for, what questions should they ask before they enter into any kind of agreement, uh, with businesses on, on transactions. And that’s business to business as well, uh, in knowing what they’re getting into. Uh, I also think it’s important that we have all the players at the table so we can see just how deep this problem ru-uh, goes and what kind of solutions is reasonable to use. Because we don’t wanna penalize the business process by making it so overly burdensome with regulations, uh, just ’cause we had one bad actor. Uh, but at the same time, we, we-Yeah clearly wanna stop the bad actors and what, and what they’re doing. But I… And then obviously law enforcement, we need to make sure that they’re working more collectively with us because quite frankly, some of them, if it’s not a l-lot of money or a lot of people, they’re not gonna rush out to do a big investigation. Sure. Uh, and the b-and the one that’s the biggest issue is one we’ve heard about some time just because of the, uh, the whole world we’re in now with the internet, uh, and the websites. These guys aren’t in the United States. They’re over in some country that has no real enforcement component. So even our own FBI has, is limited on what can I do. So the, the, the conversation, the legislation from the federal level on what do we do to protect American citizens from bad actors across the water from us. Uh, and so I say we don’t have all the answers, but we start with the education side. I think that’s the one I’m gonna have to lean into pretty heavy here in the next year or so, is really trying to do more on that front

Justin Brady: And what does that look like? Like, uh, what is that, I guess, if, uh, someone stops listening here, what’s that one or two thing takeaway where you’re like, “Hey, business owners, the Secretary of State says do one and two so you aren’t taken advantage of”? What are those one to two things?

Paul Pate: Well, it sounds overly simple, simplistic. Uh, if it sounds t-to be true, it’s probably not true. Let’s just be honest with that part. Uh, but I think the other things you can start looking at when, particularly when you’re doing on the internet, uh, do a Google search on what the business looks like. You can do that. You know, you can pull it up, and if all of a sudden it comes up to a, uh, a, uh, a mailbox center, well, that should give you a little sign you’re not dealing with somebody who’s got any bricks and mortar. Is that a concern for you, uh, ’cause you can’t get to them and, and when you need to get to them on an issue? Uh, you checking with the Better Business Bureau to see if they have any kind of listings because Better Business Bureau is across the country, so you’re not just dealing with here in Des Moines or whatever city you’re in. Those are all basic steps. Uh, and doing a search on that company to see what you can read on, about the company to see what kind of reputation they might have. Now, do people do that for every little thing they buy? No, they don’t. Uh, I, I recognize that. But, uh, there are other consumer, uh, protections that you’re gonna hear people talk about in protecting your credit card information and things like that. Uh, th-sadly, these bad actors have more time on their hands than you and I do to come up with different angles on how they’re gonna do it. So what we wanna do in working with our partners is keep putting these little tips out there so m-people will pick up on them. And the more of those that they put into their day-to-day lives, the better I think they’ll be as consumers and hopefully protect them. So it’s it’s a, it’s a bit of a path

Justin Brady: Yeah. How are you working… You, you mentioned earlier you’re working with the AG’s office, uh, AG Bird and her team on this stuff as well. What are some of the things that you guys are doing together?

Paul Pate: Well, the attorney general announced, uh, a serious push on consumer fraud sides, and, uh, of course, her–through her efforts, uh, she’s g-appealing to the federal level to be more of a partner in what’s going on. Uh, we also have to wor-closely work with our Department of Public Safety, uh, our, our county sheriffs and police departments, uh, giving them the tools they need, uh, to help people because, I mean, if you were defrauded right now in, in, in your town, what was your first call gonna be? Well, oftentimes it’s your police department. Sure. Okay. And, uh, that’s not always easy for a lot of the smaller departments. So I’m hoping that you’re gonna see more help from the FBI and from the state maybe to helping those local law enforcement folks have the education and tools to do better in their own investigations as well. Uh, because most of these guys are a little more sophisticated, and they’re not just, uh, picking on Lime Springs, Iowa. They’re picking on a lot of other communities

Justin Brady: Yeah, that’s a good point because if you have some digital attack or someone, you know, uh, from whatever digital thing, someone from a foreign country is doing something digital and registering a business address, local police departments are gonna be like, “We’re, we’re gonna keep you safe, but this is like, what… We don’t even know where to start with this,” right? If they, if they’re under-resourced or, or something. So, uh, getting some type of, uh, shared database, shared presence, shared at least strategy makes a lot of sense. Um, I guess last question then before you go is I wanna talk about… I, I completely… You mentioned this, by the way, a couple years ago. You, the… I believe you guys were working on this, and it’s still a thing. I think it’s IBAT, and it’s the, uh… You brought me this challenge coin here. Thank you for doing that. I’ll show that to the camera. Um, but it’s the, uh, Iowa Businesses Against Trafficking. How… Now, this is out of the Secretary of State office, so tell me a little bit about how this works. Um, what is this program, and how are you helping businesses, uh, fight trafficking?

Paul Pate: Well, uh, again, I talk about h-Iowa nice. You know, I think this is one of the greatest states to be in and raise a family, but it’s not always nice for everyone. So until we get it to that level, our work’s not done. And for me, on a personal level, uh, I got introduced to the, the whole challenge of human trafficking, the sex trafficking and the labor trafficking in Iowa, uh, when I was back in my own hometown of Cedar Rapids at a, uh, a lunch and learn where they were talk-presenting on the trafficking challenge. And listening to them tell me, tell us, “Well, there, this is what, this is happening, this is, this kind of thing is happening,” and I’m going, “Seriously?” I was the mayor in Cedar Rapids, and I, I’m go-I’m a little frustrated why we didn’t talk about this stuff. Uh, and it, because it isn’t like Hollywood. It isn’t just a, a van pulling up and grabbing somebody and putting them in a van and then selling them into the sex trades. It’s far, far more sinister than that. Uh, in many cases, it’s family putting their own family into the sex trafficking world. Uh, it can be, uh, some people preying upon older seniors. It can be people who are on the internet, uh, trying to reach out to our young people and, and, and, uh, looking for people there maybe who have some depression issues or self-esteem issues and telling them, “Oh, yes, I know your family doesn’t know you or understand you. I do. I’ll be your, your friend,” and they put them in this bad place. Uh, this is here. It’s all around you. And it comes in different forms. And what I felt listening to this and going, “Wait, wait a minute here. We’re the portal for businesses in Iowa. We have over 300,000 businesses alone.” Businesses are very involved in their community.

Justin Brady: That’s a good

Paul Pate: They have stakes in it. I mean, they do. Their employees are there. They’re there. Uh, they want it to be a good community. And I thought, “This is a natural. This is a place we can reach out and build a, a choir, if you will, to help put the message out, and frankly, an army to combat it, uh, in so many ways.” So w-we launched it. We went out and we started asking businesses, uh, to do a couple basic things, to learn something about trafficking and then to do something. And we have put together a pretty extensive, uh, website with a lot of ideas for them and resources. I don’t claim to be a human, uh, trafficking expert, but we have a lot of experts in Iowa, so we connect them up with those. And we’ve seen significant, uh, progress. Uh, we have over 1,000 businesses representing over several hundred thousand employees, and what they do is they take time to share the information with their employees or their customers or their suppliers. And, uh, through that messaging, we hope we can do a better job of heading it off and, uh, getting the, uh, help to the folks who need it, uh, to get them out of that system and get them back into some kind of a normal life coming out of the shadows. So Uh, that’s our goal. It’s been very successful here in Iowa. I have convinced my colleagues in other states to do it now. I think we’re up to about six other states who have joined us and are doing something similar. Uh, so that’s where it starts. You know, you start with one business helping out, and it keeps growing, and now we have over 1,000 businesses helping

Justin Brady: That’s interesting because people are like, “I don’t understand the common, like, the b-businesses for w-human tra-okay, I, I, I, that’s nice, I guess.” But what, what you’ve identified is a lot of problems are just mass communication issues. Like, how do you communicate to a bunch of people so that they’re all aware of the same issues and they can coordinate? And this is why it’s so effective because you have contacts with all these businesses, and you can help them coordinate. Um, are there a few takeaways for that? Like, you know, if you think about it, um, the, like, Iowa businesses have eyes everywhere. And so are there a few takeaways where you’re like, “Hey, Iowa business owners, train up your front desk or train up your, your cashiers or train up… Here are the things to look for.” Like, what are those next steps Iowa businesses can take to fight human

Paul Pate: It has worked very successfully. An example is all the hotels and motels in Iowa are asked to train every single employee. And there you go, the I’s in…

Justin Brady: Yeah, that’s a big one

Paul Pate: Uh, we’ve worked with others. Uh, go into any local Casey’s, Hy-Vee, you name the, the facility, and the restrooms, and we have the little stickers there. It says, “If you need help, here’s a hotline.” And that’s paid off. We’ve had people who have reached out and said, “I need help.” Uh, and those are special steps. Uh, the fact that we do, uh, us personally, but the advocates that we work with have done training sessions, uh, to help people loo-know what to look for. An example was, uh, Cedar Rapids Airport. They helped train some of the airport personnel out there. Those personnel, shortly after they went through the training, spotted a young lady who looked like she might be an, an issue, if you will, and, uh, determined she was being trafficked. They were flying her to Chicago to put her into the market. Uh, and so yeah, it, it does work, and, uh, you know, that’s where you start it at. Uh, and the other point in this is if we start knowing what to look for and the signs that makes these people, uh, potential victims, let’s head those off. When, when… And, you know, we always had to deal with teen suicide and, and drug issues and things like that. They all kind of travel in the same family in many cases when you talk about trafficking. So they’re not all separate. Uh, so if we can help solve one of them, you’re probably solving another one at the same time, whether you recognize it or not. So we’re working together on those things. Uh, but it’s, again, it’s just not my office. My office is a facilitator. We are, We are, putting the information in the hands of these businesses and, and, uh, their employees and their clients and their customers in an effort to hopefully spread the word, and I think we’re getting there, but work’s not done.

Justin Brady: Yeah. If people want to… I obviously appreciate your time today. If people want to get involved with that program, is it just your website?

Paul Pate: It can go right to our website, the, the, uh, Secretary of State’s website, uh, sos.iowa.uh, gov. Had to think a minute. Too many websites. Uh, we’ll make sure we get that right for your, for your folks, but yeah. Uh-

Justin Brady: it’s the same website if people wanna register a business with your office as well. Uh, obviously, congratulations State of Iowa and all you entrepreneurs creating businesses out there. That’s very exciting, and thank you for sharing those numbers with us. Really appreciate it. Um, Iowa Secretary of State Paul Pate, thank you so much for coming on the Iowa Business Podcast.

Paul Pate: Easy topic to come and talk about. We’ve got a great state here. All right, thank you