Disrupting transportation: Innovation vs. regulation
New modes of mobility and how startups can influence the inevitable wave of regulation
The recent explosion of innovation taking place in transportation is unprecedented. My colleague Matt Trotter outlined the emerging forms of mobility in his Mosaic of Mobility post. These new technologies follow a trend we see quite often in the frontier tech space: the shift from bits to atoms or, put another way, the merging of the digital and physical worlds. The collision of these worlds brings in key stakeholders — such as government — who play a decisive role in whether new modes of transportation gain adoption.
I recently visited Washington, D.C., and had the chance to speak with Congressional offices and policymakers in the Administration about the influence of startups in Washington, the perception of these new technologies and their real-life impacts — especially without sufficient regulation. The big takeaway for me is that collaboration with all parties is required if we are to have a safe and effective mobility future.
Investment in transportation tech just exploded!
First, let’s take a brief look at some of the issues affecting four new modes of transport — autonomous vehicles (AVs), personal electric transportation (PET), public mass transit, and unmanned aircraft and vertical takeoff and landing (VTOL) — from a public perception, safety and regulatory standpoint.
Autonomous vehicles
There is no doubt that AVs will eventually be safer than human drivers; however, AVs are, and should be, held to a higher standard. A report from the American Automobile Association shows that 75 percent of Americans fear the idea of riding in a self-driving car, and only 10 percent say they would feel safer sharing the road with driverless vehicles. Although incidents have been relatively few in the context of miles driven, the fact is that any incident with an autonomous vehicle will make national headlines, and this inevitably skews public perception — even if the technology is orders of magnitude safer than a human driver is. AVs improve when they incorporate more data into their self-driving software. The vehicle “learns” based on miles driven and exposure to new environments. Practice makes perfect, but as you can tell, the public has their doubts. On the path to adoption of this technology, thoughtful regulation is crucial.
Personal electric transportation
2018 will be remembered as the beginning of the “scooter wars.” Personal electronic transportation in the form of scooters, skateboards and unicycles has seen incredible adoption in some major U.S. cities, and though PET is some commuters’ dream, for pedestrians it’s a nightmare. There was considerable backlash when electric scooters debuted in San Francisco. Many contend that the scooters are dangerous, especially when mixed with car traffic on the roads and pedestrian traffic on the sidewalks. Regulators are paying attention. San Francisco issued a cease-and-desist to all operators of electric scooters and only recently handed out permits to three companies for an initial pilot. Similar stories have played out in cities in Southern California, whereas places like Denver and Dallas have been more tolerant of PET use.
Public mass transit
Public perception of mass transportation today is mixed. Many San Francisco Bay Area residents love to hate the city’s rail transport (myself included!), claiming it’s outdated, crammed and prone to delays. Citizens in other metropolitan areas echo this sentiment about their public transport. The bright side is that any improvement in the technology and infrastructure is generally a welcomed relief. Given that this mode of travel overlaps a number of jurisdictions, coordination and collaboration among cities, counties, states and even countries is paramount to long-term success.
Unmanned aircraft and vertical takeoff and landing
Ever since George Jetson was zipping around in his flying car, people have been fascinated with the idea of personalized air transportation. And though commuting in the clouds sounds wonderful, there are legitimate concerns about safety, air traffic and noise pollution. The implementation of these aircraft raise some serious questions: How will they be regulated? How will existing air-traffic management systems handle the congestion? Will aircraft be able to land anywhere, or only on specific landing pads? One thing is clear: The current means of managing air traffic will not scale sufficiently, and the U.S. Federal Aviation Administration will have to devise new systems for monitoring unmanned aircraft and VTOLs urban airspace. The safety of these aircraft will depend on many factors, one being the creation of a digital infrastructure to connect everything in the surrounding airspace to provide each asset a greater situational awareness to operate safely.
The journey to D.C.
Undoubtedly, new forms of transportation will face regulatory challenges. Startups may think they have little ability to influence policymaking and as such may not make it a priority. This could not be further from the truth. I sat down with Kara Calvert from Franklin Square Group, a government relations and strategic communications firm based in D.C., to talk about how startups working on these new technologies can help shape their own regulatory future.
From our conversation, it is clear that startups today are disrupting more and more entrenched industries with fewer and fewer people; however, “more entrenched” typically means more regulation, which requires greater engagement with Washington. Kara explains that startups need to get smart quickly: “Early-stage companies don’t have the resources to waste a lot of time and money here in Washington,” she says, “so it’s really about putting together a thoughtful, strategic plan using all the resources available.” Most companies don’t need to reinvent the wheel to determine how to engage with politicians and policymakers; the key to a successful strategy, as defined by Kara, is to know the “four P’s”: policy, process, people, and politics.
On the approach that startups should take for policy, Kara asks, “What is the big goal? What are you trying to accomplish? Are you trying to stop regulation, are you trying to pass regulation or change regulation, or are you just trying to make sure that you don’t get whacked by one of the incumbent industries?” As with most things, having a clear goal, a strategic plan and buy-in from all key stakeholders is vital for success.
Next is understanding the process. “This is where I think a lot of startups can get bogged down early on,” says Kara. “The biggest problem is that government engagement is specialized.”
The third P is people. A startup should know who the decision-makers are, as laid out in the first P — whether it’s government folks or employees at your own company or someone at a third party. Kara recommends “finding advocates who understand the importance of engaging with government and people who can translate really complicated technologies — for example, artificial intelligence — in a way that a layperson can understand.”
The final P is the politics, which is where Kara and her team specialize: “Understand all the nuances and how all these pieces fit together, otherwise progress will be slow and frustrating.”
Using the example of getting fully autonomous vehicles on the road in the next five to 10 years, Kara says the question to think about is: “How do you push the regulatory bodies to accept results and adopt regulations that reflect what you’re doing? Being able to identify very tangible and specific items is crucial to formulate the tactics that fall underneath your strategic goal. Identify the general knowledge base going into something; for instance, five years ago when we started talking about AVs, the knowledge base was minimal. Now you go to Capitol Hill and you talk about AVs, and people think most of the issues have already been addressed, even though you still have two bills that are sitting on the sidelines, waiting to get passed by Congress.”
The good news for startups is that people in D.C. want to — and need to — learn, and they understand that they must know more before establishing regulations and policy. Nevertheless, they cannot be experts in everything, so they need outside engagement from startups, investors and entrepreneurs to help them understand how policy actually affects innovation and adoption. It is vital for policymakers to hear from companies because they need to understand the real-world implications.
Startups are developing a strong voice in Washington, particularly as we see startup ecosystems developing in all parts of the country, softening the often polarized opinions of Silicon Valley, Wall Street and Washington. Kara’s advice to companies is to come prepared with a plan and data about how they are affecting people’s lives: “Be prepared to inform first, and don’t feel like you can’t make a difference — you can! After all, entrepreneurs are today’s disruptors, tomorrow’s job creators and the future of the American economy, right?”
