This Silicon Valley startup is feeling the pain of the shutdown

October 14, 2013

For some Silicon Valley entrepreneurs, the federal government shutdown has mostly been a theoretical issue. But for others, it's becoming a serious problem.

Tara Lemmey is one of them. She's the CEO of Net Power and Light, a startup that created the iOS video chat app Spin. While the app has had good reviews, the startup had terrible timing: The new app was released on Oct. 1, the same day that a standoff in Congress ended with the shutdown.

That's a problem because an antiquated regulatory regime classifies cryptographic software as a munition and requires approval from federal regulators before it can be exported abroad. Lemmey says the government shutdown means the company can't get its application approved, which means it can't legally offer its product outside the United States.

"The first thing people started asking about is whether we can call internationally," Lemmey says. But the Department of Commerce's Bureau of Security and Industry needs to sign off on the app before it can be offered overseas. Normally, that's a "fast process," Lemmey says, but the shutdown changes that.

The agency's Web site says that "all pending export license applications, commodity classification requests, encryption reviews, encryption registrations, and advisory opinion requests will be held without action by BIS until the shutdown ends."

Net Power and Light isn't the only high-tech company inconvenienced by the shutdown. Wireless device companies will be forced to delay the release of new phones if the shutdown doesn't end soon. And companies whose products depend on data published by the government are suffering, too.

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