Founders: 4 ways to stay ahead of changing regulations
“Look, I love technology. Nobody loves it more than me. But the law’s the law and my job is to enforce the law. There’s nothing I can do.”
Anyone who runs a startup in a regulated industry has heard some version of this excuse from government officials before. Sometimes it’s true – there really is no other way to interpret the law or regulation in question. Sometimes the person saying it is just being lazy. Sometimes it’s an excuse to protect the incumbents, who are also frequently donors to their campaigns. Sometimes, it’s a combination of all three.
Whatever the case, applying new ideas and new technology to laws and regulations written for a different time and place is a challenge. But it’s one many of us have spent the last five years learning how to fight. It’s not like they’ve stopped making new laws or writing new regulations. This year alone, the 50 state legislatures alone are expected to collectively pass thousands of pieces of legislation – and that’s just the state government. Add in municipal government, county government, and, on occasion, the federal government, and there’s a new law passed or rule written every 15 minutes.
So how do we start applying modern technology, new ideas, and new ways of doing business to the ways laws and rules are considered and enacted? Here’s a four-part answer:
1. Educate regulators First, we obviously need lawmakers to start taking new technology into account. If legislators and regulators aren’t familiar with new platforms or don’t understand the nuances of tech-enabled businesses, we can’t rely on them to know how their work affects new startups. This means startups need to play an active role in the process and do more to educate legislators and regulators.
It’s important to know what’s happening, as it’s happening. You don’t need (and can’t afford) to hire lobbyists all over the place to do this. There are legislative monitoring services that make it possible for people to be involved in the process no matter where they sit. LegiScan is an impartial, real-time legislative tracking service that lets you monitor the status of every bill in the U.S. You can easily search legislation by a variety of criteria, including state and bill number, and information is presented in a single, uniform interface. Bloomberg Government is a more tech-savvy solution that provides similar information about bills that are in process but has data-driven tools and analytics to help bring the right information to you without having to work hard to find it. Even the tried and true LexisNexis from your college library days can help keep you or your general counsel up to speed on proposed bills that may impact your business. The vast majority of the time, whatever’s being proposed won’t matter to you. But sometimes it will, and that’s when you need to be in a position to act.
2. Be visible Second, we need to make it easier for lawmakers (really their staffs) to have someone to call or email when they’re drafting legislation or regulation that could impact us. That could mean creating trade associations of startups within particular industries that face the same issues. Some of these exist formally, like the Fantasy Sports Trade Association, Electronic Industries Alliance, and the Food and Beverage Association of America. However, companies are also creating informal alliances to help deal with laws and regulations. Earlier this year, a number of startups including Handy, Lyft, and Care.com informally joined forces to try to address the need for a new benefits model that accommodates all workers, including freelancers, independent contractors, and the self-employed. United by both challenges and opportunity, they are working towards finding common ground for independent workers that encourages innovation and ensures certainty for workers, business, and government.
If you don’t have the time, energy, or desire to create your own trade association, you can likely find an existing one that suits your needs, just by searching online. While it may be pricey to join, some additional benefits include educational resources, market research and analysis, and networking opportunities that will make it worth your while.
3. Inspire your customers to act Third, getting involved in the political process can help create more awareness and better access. But playing the same game as the interests you’re disrupting usually doesn’t work. Beyond being unseemly, the more you hand out campaign donations, the more you lose the high ground when you’re getting screwed and need to attack back. But you have something most old-line companies lack: the ability to easily reach your customers digitally and to mobilize them to advocate on your behalf. Uber beat City Hall in New York last year by effectively tapping into its rider base and making it easy for them to take action and contact city officials. Another example is Apple and its current clash with the FBI over an encryption backdoor that would help law enforcement access locked iPhones. Apple CEO Tim Cook wrote an open letter to Apple customers explaining his opposition to the US government’s demands and the importance of privacy. Whether I agree with his position or not, this garnered tremendous public support and lots of publicity for the company. These examples prove that it’s critical for any startup in a regulated industry to understand how grassroots advocacy works and to build the ability to do so into its customer outreach and service.
4. Know where the politicians stand Fourth and most importantly, there are some politicians who are innovative enough to understand the problem and try to do something about it, and it’s important to know who and where they are and what they’re fighting for. Mayor Bloomberg produced the first-ever municipal Digital Roadmap in 2011, a strategic plan to share New York City’s past success in digital and tech initiatives and simultaneously spur the development of the city’s tech scene. In Boston, Former Mayor Menino created The Office of New Urban Mechanics in 2010 to explore how new technology, designs, and policies can strengthen the partnership between residents and government. His legacy of innovation has been robustly continued by Mayor Walsh and has since spread to both Philadelphia and Salt Lake City, where they are actively part of the Mayor’s New Urban Mechanics Offices.
It’s possible for an innovative governor or mayor to require his or her legislative team to ask, “what would this mean for startups in this industry” as part of the bill review process. Most of the time, the answer will be “nothing.” But sometimes the issue at hand can be critical to your growth and success. When it is, understanding where your politicians’ technological affinities lie can guide how you bring attention to your own cause.
In the time it took you to read this, at least one new law or regulation was on its way to being enacted. They just keep coming and coming. For as long as there is government, that’s not going to stop. Although fighting battles about closed-minded or unfair legislation is difficult, if you step up and take action with the right approach, technology and team, you will be on your way to having the tools you need to navigate the murky water that is our regulatory system.
The above appeared on venturebeat.com on March 20, 2016.