‘Distruptive’ Startups Refine Their Strategies for Working with Regulators


By Patrick Coffee Comment

airbnbAirbnb’s executives have decided that the free market doesn’t trump the law and that the rules do apply to them after all.

The details have been reported elsewhere, but the decision is a big deal for startups (and their investors/promoters) that might eventually run up against those pesky things we call legal regulations.

The big questions to be answered–and the ones that most concern these startups’ advisory and PR teams–are “how should ‘distruptive’ businesses be regulated” and “what’s the best way for them to work within/around existing regulations?”

The point is that big startups facing off against local and state governments have some big strategic choices to make: they can either cooperate, cast themselves as victims of The Man, or do a little of both like Uber, Nest and Airbnb.

Noam Schreiber of The New Republic argues that startup founders should work with regulators before such issues turn into headlines. Kevin Roose of New York goes a step further, writing that start-ups should help those officials who don’t specialize in the digital field better understand their business models and, again, work with them to create new legislation without naming them as the enemies of all things innovative.

At any rate, creating nonprofits to spread misinformation while trying to downplay the simple fact that many customers are, in fact, breaking the law will not endear these startups to the legislators who will eventually have to work with them. Existing regulations may well be a big mess, but they’re also the law of the land.

Something tells us that more tech wunderkinds will eventually get over the fact that they just happen to be the smartest, most important people in the room and realize that the act of picking fights with regulators rarely ends well.

But then, maybe Silicon Valley stereotypes are even truer than we thought.