Start-ups Can Beat the System

In today's world, every industry has to play by the rules, and regulators set those rules. These regulators aren't elected; they're appointed by politicians who are always looking to secure their positions. Big players in sectors like transportation, finance, and gaming cozy up to these politicians, influencing regulations to protect their own interests. This setup makes it hard for new ideas and innovations to break through because many folks are content with how things are.

Start-ups can fight back by hitting politicians where it hurts—right in the polls. Politicians may seem powerful, but they're actually pretty insecure. They care more about staying in the office than anything else. Before taking them on, it's essential to understand what kind of politician you're dealing with

1. “Typical Pols”: These folks may have their flaws, but they're not afraid of a little hard work.
2. “Ideologues”: These are the true believers, like Rand Paul or Bernie Sanders. They're driven by their beliefs, whether you agree with them or not.
3. “I'm Just Happy to Be Here”: These politicians are in it for the win, not for making real change. They're just happy to have a seat at the table.
4. “Corrupt Pols”: These are the shadiest of the bunch. They'll do anything for a donation or a bribe.

Uber's Victory Over NYC Taxi Lobby

New York City's taxi service has a history of problems, including drivers refusing certain areas or passengers based on race. Taxi companies had significant political influence, blocking competition for years. Then Uber arrived with a user-friendly app connecting riders and drivers directly. When a bill proposed capping Uber's growth at one percent, strategist Bradley Tusk led a media campaign accusing Mayor Bill De Blasio of corruption for supporting the taxi industry's monopoly. This was seen as a move to protect Uber's ability to compete and improve city transportation.

Uber added a new feature on its app allowing users to easily email complaints to the city. This resulted in the City Council being inundated with 30,000 emails, which was more than they had ever received for any other issue. Because of this overwhelming response, the Council decided to withdraw the bill that would have imposed limits on Uber's growth. They did this without asking Uber for any changes or compromises.

Winning in the Market

Bradley Tusk has a golden rule named after Uber's founder, Travis Kalanick, dubbed "Travis's Law." According to this rule, your first step is to offer a product or service that outshines your competitors. Gain loyal customers by delivering top-notch services and products. Turn these customers into your champions. Spread the word through media channels that your excellent product/service is being held back by corrupt politics. Form alliances with politicians who support technology. Showcase how in the sharing economy, gig workers are also entrepreneurs. Politicians fear public backlash. They yield to public opinion and constituent pressure, pushing regulators to accommodate your business needs.

The Battle Over Worker Classifications

When Handy, a housekeeping start-up, hired Tusk to shake things up in the world of worker classifications, they knew they were diving into a political battleground. In the U.S., federal labor laws split workers into two camps: independent contractors and full-time employees. Full-timers get all the benefits like Social Security, but those in the sharing economy, like Handy, avoid this by not labeling workers as full-time employees. Handy wanted to offer its independent workers something called "portable" benefits. Why? Well, people hop between jobs a lot, so having benefits they can take with them made sense.

New York City unions strongly opposed the idea. Unions are major donors in politics and hold significant sway over politicians. They feared that the rise of the sharing economy would render unions unnecessary and reduce their political influence. Independent contractors, who couldn't join unions, had no one to represent them. The unions preferred to keep things as they were, according to Tusk. Their main concern, he believed, was maintaining their power rather than protecting workers. Even with support from Republican members of Congress and backing from companies like Uber and Amazon, Handy couldn't succeed in altering regulations to provide benefits to workers. The battle now moves to the state level.

Inspires Start-ups: Lemonade's Success

Lemonade, the pioneer of online peer-to-peer insurance, revolutionized home and renter insurance by cutting out middlemen like agents and brokers. While investors were excited about this innovative idea, traditional insurance companies felt threatened. The New York Department of Financial Services (DFS) sided with the established giants, making it extremely difficult, if not impossible, for Lemonade to obtain an insurance license. The DFS had little motivation to support Lemonade's groundbreaking approach to insurance.

In a strategic move within the New York governor's office, Lemonade, a tech company, faced regulatory hurdles by garnering support from state entities like the Economic Development Corporation and the Housing Department, along with launching an online petition to protect consumer rights. Faced with delays from the Department of Financial Services (DFS), their lobbyist threatened to escalate the issue to The Wall Street Journal, accusing New York of being anti-innovation and hinting at the possibility of Lemonade relocating. Under this pressure, DFS quickly approved Lemonade's insurance license. 

Lemonade exemplifies how start-ups use effective tools like crafting compelling stories for the media, investing in advertising, taking a stand against corrupt practices like "pay-to-play," and positioning themselves as champions of technological innovation against political opposition. Politicians gauge their success by winning elections, so they prioritize keeping their voters satisfied.

Tackle Tough Times: Start-ups Struggle with the System

Some new companies, like Tesla, face challenges because of old-fashioned rules. Tesla wanted to sell its cars directly to people, but in many states, that's not allowed. Car dealerships can raise prices a lot and have a lot of power because they're friendly with local politicians. They give them money and even sponsor sports teams. Tesla had to say these dealerships were holding back progress and jobs. They fought hard in every state but didn't want to take big risks, even though Tesla's boss Elon Musk wanted his company to be seen as a big changer.

Tesla cared a lot about its image. Musk only wanted people to think good things about his cars. But playing it safe didn't work because Tesla didn't want to take big chances, even though Musk wanted his company to be seen as a force for good. Other new companies have the same problem. Not all of them can be as bold as Uber. People who think they can outsmart politicians or wait them out usually end up losing. They don't understand that politicians care more about votes than cool new stuff. If you're not a problem for them, they won't change anything.

Preventing Regulatory Backlash

Start-ups must pay attention to politics, especially when dealing with regulators. Ignoring this can lead to serious trouble, as seen with online sports gambling platforms like FanDuel and DraftKings. They didn't seek permission to operate their apps and weren't ready for the backlash. Despite making huge profits and shaking up the casino and sports industries, they eventually faced regulatory challenges due to their approach.

In response to a scandal where a DraftKings employee used insider information to win $350,000 on FanDuel, investigations ensued, prompting FanDuel to take action. They banned employee betting, established an advisory board for ethics, and advocated for online sports gaming in The New York Times. FanDuel kept legislators informed throughout to show goodwill. To gain support from the casino industry's political players, they engaged their customers in the fight, aiming to rebuild trust and credibility after the incident.

Fantasy sports players are a dedicated group, with five million users regularly using apps like FanDuel and DraftKings. These platforms borrowed an idea from Uber by giving their customers a simple way to contact lawmakers directly through their app. This move resulted in 150,000 users reaching out to state legislators almost half a million times through various “forms of direct contact”. Instead of relying on traditional political methods, FanDuel leveraged the power of actual voters to push for change. This same approach could be used to engage people on critical issues like climate change.

Tech's Positive Impact on Elections

When Michael Bloomberg served as New York City's mayor, he embraced innovative technology. He used it to share all his campaign promises online and publicly track their progress. During his 2009 mayoral re-election campaign, Tusk, who managed Bloomberg's campaign when he considered running for president in 2016, aimed to engage constituents in the sharing economy using tech.

For instance, by simply tapping the Bloomberg button on the Uber app, voters could snag a free ride to the polls. This was a fresh approach to show how technology could make voting easier. However, Bloomberg eventually withdrew from the race over concerns of splitting the vote and potentially handing Donald Trump the presidency. As a result, Tusk's inventive campaign strategies never saw the light of day.

Revolutionize Politics with Mobile Voting

Politics needs a tech upgrade to tackle big issues. Currently, politicians focus on extreme voters because they're the ones who usually show up at the polls. But what if we could engage more people from all sides? Enter mobile voting. Imagine an app that lets you vote from your phone – it's like Uber for elections. With so many people using smartphones, it's a no-brainer to use technology to inform voters and make voting easier.

Sure, shaking up elections won't be easy. Some politicians are comfortable with the status quo. They argue that mobile voting is risky and not everyone has a smartphone. But imagine if having a phone was as common as having an ID for voting. It'd be cheaper and ensure elections represent everyone's interests.

Enter Tusk Philanthropies, led by Tusk, who knows both tech and politics inside out. With support from tech-savvy figures like Bloomberg, pilot projects in each state can make mobile voting a reality. Blockchain tech could keep votes secure, and the Department of Defense could even test mobile voting for soldiers overseas. Changing how we vote could speed up solutions to big problems and strengthen democracies.