Ryan Ray
“Founder,” “CEO,” “President,” and “Chairman” are all familiar lines on the business cards of today’s startup whiz kids but increasingly, writes Cecilia Kang of The New York Times, they might as well be adding another: “In-House Lobbyist.”
As the success of innovators continues to ultimately rely on the decisions of older-school lawmakers and regulators overseeing novel forms of commerce, many young entrepreneurs are taking it upon themselves to make their cases in Washington, D.C. and statehouses around the country.
Writes Kang:
In addition to knowing the language of computer code, founders are speaking the language of Washington, keenly aware of the potential regulatory battles that could be on the horizon.
The examples are suddenly legion. Magic Leap, an augmented reality startup, does not have a product on the market — but its lobbyists are promoting what the company may eventually do. Zenefits, an online benefits manager, is only two years old but is a member of two trade groups and has hired lobbyists and public relations strategists from the Obama administration. The chief executive of Handy, an on-demand household chores service, was recently in Washington on his third charm offensive with lawmakers.
The factors entrepreneurs consider when deciding how to engage with governmental authorities are numerous and particular to each case.
But the lessons drawn from regulatory campaigns waged by ride-sharing firm Uber and short-term rental company Airbnb have accelerated the timeline for nearly all of them, Kang writes.
It is a sharp shift from past generations of tech companies, whose founders almost made it a point of pride to be distanced from, or above, politics and politicians. The antitrust troubles and headaches encountered by the older companies, including Microsoft and Google, play some role in the new thinking. The real change, though, came after Uber, the ride-hailing service, and Airbnb, the home-sharing site — two of the largest startups — started facing a barrage of questions about their operations.
“For these new companies, the scale of innovation is so big and impactful they necessitate interacting with Washington writ large,” said Kenneth Baer, a former spokesman for the Office of Management and Budget who now advises Zenefits. “There are huge amounts of questions that society has to grapple with that didn’t exist before.”
But just pressures from the corridors of power have changed startup culture, the advent of startups as a major force in Washington is changing lobbying, too.
It is difficult to say whether all the early lobbying is delivering results. So far, it has at least allowed Uber and Airbnb to continue growing. But the arrival of money from tech companies so early in their life cycles has definitely shaken up K Street, the capital’s thoroughfare for lobbyists.
While total annual spending on lobbying has decreased slightly over the last five years, Internet companies have tripled their lobbying spending, to $47.5 million, during the same period. The industry now spends just a little less than the auto sector, according to the website OpenSecrets, which tracks lobbying and campaign finance.
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“There are few industries like the Internet for which a rise in expenditures has been so dramatic,” said Sheila Krumholz, the executive director of the Center for Responsive Politics, which runs OpenSecrets.org. “They are now engaged in a number of battles where they see opportunities to push legislation or fend against legislation.”
While the cycle of eliminating regulatory hurdles and helping to craft new rules of the road for their emerging industries will likely never cease for cutting-edge tech firms, for some entrepreneurs their aim as newly minted lobbyists is as much about diplomacy as it is about formal laws and rules.
“So much of what I do day in and day out is not even advocating for anything necessarily but talking to folks about the technology,” said Coinbase lobbyist John Collins.
Collins echoed Florida Sen. Jeff Brandes who, ahead of this year’s attempt to bring ride-hailing reform to Tallahassee, said the task was often more informational than persuasive.
“A lot of folks didn’t know how to spell Uber last session,” said Brandes. “Often these issues have to marinate for a few years before they make sense to folks.”
So it is for many techies in Washington. The old guard’s advice for startups looking for favor from policymakers? Lobby early and often.
“For our startups, the advice we give is to get in early,” said Ted Ullyot, a former adviser to President George W. Bush, who is now at Andreessen Horowitz, “because the idea is not to stop regulation at a later date but to make sure they were aware and thoughtful about regulation early on.”
