The Perks of Being Policy-Native in the Digital Economy
#GovTech is strategic repositioning at its best
Last week, Bird was allowed officially allowed to operate electric scooters in Santa Monica. In contrast, the city of San Francisco has pushed out Bird to preferred Skip.
So far Skip has maintained a low profile. In the Financial Times (which was probably the first international publication to cover electric scooters), its CEO openly rejects the idea of a first-mover advantage. For Skip—“It’s not about getting there fast, it’s about being there a year from now or five years from now.”
Interestingly, at the same time, Bird has repositioned itself by launching its ‘GovTech Platform’.
Why is it a natural move?
1 — Bird has already sold itself to investors as “a computer with wheels”. So why not share its insights?
2 — For Bird repositioning itself as a #GovTech is about long-term relationship building. Bird has run into trouble for deploying into new cities without asking first. Yet, ultimately, like all scooter companies, Bird knows they’re going to run into the same city officials again. Of course, Bird is not the only one to “play it nice”, but to my knowledge, it’s the only one to have used the term #GovTech as part of their efforts.
The Perks of Being Policy-Native in the Digital Economy
If you’ve looked at the main investors, besides Sequoia and Accel, you’ve probably noticed the presence of an NYC-based and relatively new VC firm — Tusk Ventures. When reading about Bradley Tusk, this doesn’t come as a surprise that his firm has invested in Bird. Before launching his VC-arm, Tusk has built his reputation with the political strategy work he did for Uber.
Exciting news—on September 18, Bradley Tusk is launching The Fixer! It’s a book [1] written for political junkies [2] and entrepreneurs. With the boom of electric scooters, the end of the summer is definitely the right timing.
So, what’s unique with Tusk Venture? They are policy-native. It prides itself as the first U.S. political strategy venture capital firm. In fact, Tusk Ventures grew out of Tusk Strategies — the consultancy firm. The equity-for-services model is based on solving a complex political and regulatory challenges in return for equity in each company and for investment rights in each startup’s next round of financing.
The Regulatory Era is the Next-Stage of the Digital Economy
In a context where software has been eating the physical world, Tusk is not the only one carving out this promising niche.
There’s also 1776, a DC-based VC and incubator for startups “disrupting entrenched industries. This summer, its founder, Evan Burfield (together with J.D. Harrison) even released Regulatory Hacking: A Playbook for Startups. What’s his big idea? We’re entering the next era of the digital revolution: the Regulatory Era.
What’s the problem? If like me you went to business school (or even if you joined a startup accelerator), let’s be honest, nobody teaches you how to scale a venture in an industry intertwined with government.
Regulatory Hacking = a strategy combining public policy and alternatives to traditional marketing for startups to successfully scale in the next wave of the digital economy (1776 website)
The Long View
Unlike what the titles may suggest #Hacking + #Fixing the advice is absolutely not too fight to the death to win.
Both Tusk and Burfield take the long view because they know that ultimately, what matters is long-term relationship building :
1)Naturally, the best scenario for investments firms and startups is to be contacted to share something. That’s what happened when last fall Alice Zagury from The Family was teamed up with Jean-Noel Barrot (MP and economist at MIT & HEC) to produce a report on Financing French businesses. It was really about sharing The Family’s knowledge + network of entrepreneurs so that the Government can understand the landscape
2)Another thing is that investors and startups are producing and sharing with the outside world their thinking about their fields. What’s even more ambitious, is when they produce their own thinking about regulatory issues. In this regard, Nick Grossman’s piece for Union Square Ventures “Regulation, the Internet Way” was visionary.
“Engaging in a dialogue with policy makers, and demonstrating self-regulation via algorithmic accountability, is a way to productively engage with policy makers.” Hemant Taneja of General Catalyst in Elad Gil’s High-Growth Handbook.
3)I’m very curious to see how different tech companies in the same space deploy their policy strategies, and the rise of Bird, Lime, Skip, or Spin comes in handy. Will they all converge to the same model or differentiate themselves? And along which axis?
Europe is good training
Just like in the United States, in Europe, the digital transition is bound to impact tangible industries and heavily regulated markets.
1)If we, Europeans, want to create more equitable and stable growth out of the digital economy, we need governments to level up their game. As digital markets will be more and more fragmented, we need civil servants and public sector employees to better understand the logic of the digital economy.
In this light I believe that the intuition of Dean Yann Algan (an economist) and Nicolas Colin (a former senior civil servant turned tech investor, and author of Hedge: A Greater Safety Net for the Entrepreneurial Age) to locate a tech-oriented Masters’ degree and a dedicated research Chair in the School of Public Affairs (rather than in a School of Management) is a forward-looking and strategic choice.
2)In parallel, the upcoming challenge for startups and tech companies will be to manage the political and cultural elements of the ecosystems in which they operate, as economist and investor Bill Janeway once pointed out. That’s what Uber acknowledged when launching their White Paper on Work and Social Protection in Europe.
The social sciences, and in particular political economy and the sociology of markets are more relevant than ever in the digital economy.
3)There’s ongoing research on how different institutional configurations react to the expansion of the same tech company. Here, I’m thinking of MIT professor of political science Kathleen Thelen who is looking at how the United States, Germany, and Sweden reacted to the “shared shock” of Uber and found three different responses.
I look forward to reading Regulatory Hacking: A Playbook and The Fixer.
Meanwhile, if you want a quick #Regulation fix, you should read/listen to:
- a16z Podcast: The Art of the Regulatory Hack with Evan Burfield and Sonal Chokshi
- Recode Decode Interview with Bradley Tusk
- Forbes column Tech & Policy in Europe+ Regulating the Trial-and-Error Economy by Nicolas Colin, cofounder and director at The Family
- Regulating the unknown by Sebastien Soriano, chairman of the French agency in charge of regulating telecommunications
If you’re a Sciences Po student, feel free to join our courses ”History of Tech Revolutions” and “The Digital Transition of Organizations”. Just write me at laurene.tran@sciencespo.fr
We’ll start next week with Nicolas Colin’s presentation of his book Hedge: A Greater Safety Net for the Entrepreneurial Age.
[1] It’s not uncommon for tech investors to write. Think about the classics The Hard Thing About Hard Things by Ben Horowitz or Hackers & Painters by Paul Graham or the recent Hedge: A Greater Safety Net for the Entrepreneurial Age by Nicolas Colin and Doing Capitalism in the Innovation Economy by William H. Janeway of Warburg Pincus.
[2] Likewise, there seems to be a tradition for political campaigners to leave a record (in the US at least, less so in France weirdly) with for instance The Audacity to Win: The Inside Story and Lessons of Barack Obama’s Historic Victory by David Plouffe or Masters of Disaster: The Ten Commandments of Damage Control by Chris Lehane. Interestingly, Plouffe and Lehane both went on to work for tech companies (Uber and Airbnb).
