My VC Adventure: Seven Months In
Shortly after helping Uber defeat a proposal by Mayor de Blasio in New York City to cap the number of cars that ride-hailing companies could put on the road, we launched Tusk Ventures: the first VC firm of its kind focused on helping startups navigate government and regulatory hurdles in return for equity instead of cash.
In some ways, I expected it to be straightforward. We’d been working with Uber on a variety of political, regulatory and media issues for the last five years and worked with major companies and institutions running campaigns at all levels of government for the last seven. We enjoyed working with entrepreneurs, we knew the political landscape across the country well, and we had the appetite, capital and risk tolerance to do a lot of work for a lot of startups for equity in return.
It’d be pretty similar to what we were already doing, except now when things went really right, the startups we’d work with would not only become lucrative investments but also see its products and platforms help change society for the better. So it all made sense. Seven months in, I’m a little older and a lot wiser. Here’s what I’ve learned so far:
- There’s definitely a market for our work. More and more startups are venturing into regulated industries that naturally produce some level of interaction and conflict with government. The deeper they wade, the more help they will need understanding how to navigate and survive the political process. Industries like education, health care, fantasy sports, insurance and on-demand services like home cleaning are ripe for facing political and regulatory challenges. In addition to Uber, we’re working with companies like FanDuel, Handy, Eaze, MyTable, Booster, General Assembly, Altschool, Nagare Water and others. Building a portfolio of 75 companies over the next five years is definitely doable.
- You don’t know what you don’t know. As Pericles said back in 450 BC, just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you. Startups who need us the most, tend to understand government and politics the least. You have to understand how government works, how to make things happen, how regulations and laws are passed or blocked to make any sort of progress in this industry. Many founders got to where they are by being tough and by controlling everything. Realizing that politics is an entirely different language and approach doesn’t always come naturally to them, but the sooner you do, the better off you’ll be.
- Choose your battles wisely. People know that we’ve helped Uber overcome a lot of regulatory hurdles, and that’s great. But some founders (wrongly) think that Travis chose to live outside the law in every situation and want to do the same, whether or not it actually makes any sense for them to do so. It got to a point where we even had to put together a guide for startups on when to ask for permission and when to beg for forgiveness. Our goal is not to wage the same fight every day, in every market, for every startup. We should first begin by looking at ways to work with regulators, not against them.
- Laws are more malleable than we think. The policies, laws, regulations, approaches and norms around the intersection of tech and politics are so new, it’s on us to shape them. We need to bring both sides together to help develop broader policies around how cities and states provide permits for entirely new technologies. We need to help push back against the corrosive influence of campaign donations from entrenched interests and end the pay to play culture that dominates so many levels of government. We need to stop talking past each other and start talking to each other to make sure regulators better understand where startups are coming from and startups better understand why regulators sometimes do what they do.
- Everything is connected. When Apple fights with the FBI over encryption and privacy, it has a ripple effect on how regulators generally view startups — arrogant, stubborn and self righteous. When unicorns have down rounds, it has a ripple effect on how regulators think. When state Attorneys General like the way they look on TV when they announce a crackdown on one startup, that encourages them to go find five more to attack. Nothing happens in isolation.
To me, the need to find common ground between startups and regulators is greater than ever. Most founders just want to pursue new ideas, many of which can add real value to consumers and industries. And most regulators really do want what’s best for the public. The hard part is getting each side to not only realize that, but be flexible enough to be able to actually work together. I’ll check back in a few months and let you know if it’s working.