For decades, the tech and startup community paid little attention to Washington, D.C. Entrepreneurs chose to focus their energies on building their companies, without much regard for the happenings of Congress or state legislatures. But in recent years, startups have begun to recognize that the decisions made by policymakers in a distant city can have a huge impact on their day-to-day operations and bottom lines. While the lawmaking process might seem long, laborious, and, at times, incomprehensible, it is more important than ever for the entire startup ecosystem to proactively engage policymakers at all levels of government—not only to foster a startup-friendly environment but also to anticipate and shape important policy debates that will affect America and the tech and startup communities for years to come.
The importance of civic and policy engagement cannot be understated. Every year, major industries and big companies pour hundreds of millions of lobbying dollars into cities, state capitals, and Washington D.C. to influence public policy. Those efforts often result in laws that run contrary to the interests of the startup community. In 2011, for example, the recording and movie industries pushed hard for the PROTECT IP Act (PIPA) and Stop Online Piracy Act (SOPA), which would have had a chilling effect on the startup ecosystem, and the potential to shut down companies like Etsy, Vimeo, or Flickr with no regard to due process. Last year, some of the country’s biggest ISPs fought to undermine strong net neutrality rules. But thanks to the tireless efforts of the startups in Engine’s network, we were able to win both of these battles and push back against bigger players with deeper pockets.
Fortunately, when startups get involved in public policy proactively, lawmakers pay attention, working on legislation that supports entrepreneurship and removes regulatory roadblocks. For example, the JOBS Act, passed in 2012, improved startups’ access to capital markets by relaxing restrictions on equity crowdfunding and general solicitation. The JOBS Act also made it easier for “emerging growth companies” to test the waters for a public offering, helping to spark a boom in IPOs. Obsolete laws that protect entrenched incumbents, similarly, can be repealed. For example, as Tesla began to sell more and more of its electric cars direct from the factory, it ran afoul of disgruntled car dealers who sought to have outdated dealer franchise laws enforced. The company began to push back by educating state officials about their business model and mobilizing Tesla’s famously loyal customers. Several states have since repealed those monopolies to allow Tesla to conduct direct sales without a costly and unnecessary middleman, benefiting upstart car companies and consumers.
Today, there are also several proposals under consideration in Congress that would help startups. A bill from Senators Mark Warner (D-VA) and Dean Heller (R-NV) would defer taxes on stock options until they are actually exercised and sold, making it easier for employees to exercise their options. Fixing the counterproductive tax on illiquid stock options will make it easier for startups to use stock options to compete for and incentivize top tech talent. Another bill from Senator Jeff Flake (R-AZ) would restrict the ability of patent trolls to file their frivolous patent litigation cases in favorable districts that are otherwise totally unrelated to their claims. These legislative opportunities, which can benefit many startups and their employees, would not exist were it not for the active efforts of many startups and their allies.
And for startups working on cutting-edge of technology, engaging with policymakers is almost certainly a necessity. From bitcoin to artificial intelligence, autonomous vehicles and drones, these technologies not only have the potential to revolutionize society, but to render existing laws and regulations irrelevant. Thus, it is incumbent upon startups to work with government to help shape a positive narrative around emerging technologies and to develop a framework for policies that support continued innovation. Taking the initiative to educate and cultivate relationships with policymakers can turn potential liabilities into major assets as startups grow, hire and build a public profile.
So how can you, as a startup, proactively affect policy change? Sometimes it’s about advocating for particular positions on a specific issue. That might include signing a letter or a petition, or even publishing an opinion piece in your local paper. But just as often it’s simply about exposing policymakers to your company, inviting them to visit your office, and educating them about the work you are doing and the challenges you face. That way, when policymakers find themselves deciding how they will vote on a bill, they recognize how it will impact your company and why that should influence their decision.
This is Engine. Put simply, we focus on policy and regulation so you don’t have to, and we provide you with the easiest and most effective ways to advocate for your business. All we ask is for you to tell your story. Join Engine today and help us make the voice of startups even louder.