How to launch a startup into a regulated market, according to Bradley Tusk

Politician turned venture capitalist Bradley Tusk recently spoke at a TechCrunch Live event on how startups should approach regulation. Dibbs CEO and co-founder Evan Vandenberg joined Tusk in the conversation. The event is embedded below, and it’s free to watch.

Throughout the talk, the two guests expressed their firm stance on the power of utilizing regulations to build trust and utility. Tusk admits he’s known as the regulation guy — and for a good reason, too. Before starting his VC firm, Tusk was instrumental in Uber and Bird’s early days, helping the two companies bring their services to new markets in slash-and-burn style.

Evan and his team’s attention to regulatory details lead to Tusk Ventures’s investment in the company’s Series A. As Tusk puts it during the event, he seldom hears startup founders like Vandenberg and Dibbs’ proactive approach to regulations.

“Part of what our firm does is we invest but then we take on the regulatory communication challenges of our portfolio companies, and we work on them,” Tusk said. “And that’s because of my and my team’s background in politics. So the idea of ‘Here’s a company that’s proactively interested in new forms of regulations.’ That’s the kind of nerdy stuff my team, and I geek out about, so it was cool to have a founder like Vandenberg, too.”

Tusk advises startups to answer the following questions when launching into a regulated market.

What are the laws on the books?

It may be that your thing is completely legal, allowed or somewhere gray. So, for example, Bird when we launched Bird, in most markets, we didn’t ask for permission to come in because it wasn’t illegal, right? We tried to be nice about it, but electric scooters were banned in Illinois and New York. And we had to pass legislation in Springfield and Albany; once we did that, the scooters came in.

So the first thing is what’s allowed because you may have a huge problem, you may have no problem or it may be most likely somewhere in the middle.

Who are you pissing off?

Who are you going to be fighting with politically? Are you disrupting an entrenched interest? And if so, what’s their relative political power in that particular jurisdiction that you want to launch in? Or is it whitespace like what [Evan Vandenberg and Dibbs] are doing where no one’s ever done this stuff before? So the good news is, you don’t have pushback from the taxis or the casinos. The bad news is that nobody knows what to do.

What relative strengths do you bring to the fight?

For example, with Uber, the way we beat taxis in every market was to marshal our customers and have them directly reach out to their city council member, state senator or mayor and say, ‘Don’t take this thing away from me.’ And because a couple of million people engaged in that for a couple of years, we went everywhere.

How do you get elected officials on your side?

Elected officials appoint regulators, and 99% of elected officials are desperately self-loathing, insecure people. And 100% of elected officials make every decision solely based on the next election and nothing else… So if politicians only care about re-election, what do you have to offer them that makes them think that legalizing your product will help them get reelected, or failure to do so will decrease their chance of reelected?

Once you can convey that sentiment to the politician who appoints the regulator, the regulator will be told what to do.