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Here’s Why Scaling Strategy Must Include Policy Engagement

Josh Pudnos

Policy Manager, FiscalNote

Silicon Valley’s innovators are not immune to government risk.

Even in the six months since I moved from the lobbying world to join a startup, I’ve seen significant strides being made to help burgeoning companies at least think twice about assessing their political risks as they plan for growth.

There have simply been too many examples this year alone of disruptors playing the wrong hand in policy or political battles for other entrepreneurs and investors not to take notice.

Yet, as a recent Los Angeles Times article identified, even among the “ambitious startup CEOs who swore off talking politics for fear of offending investors,” there remains a seemingly immovable backlog of “libertarian-minded innovators who just want to get government out of their way.”

It’s the same disinclination that plagued even the sharpest innovators of the 1980s and 1990s. According to former Microsoft Senior Vice President Brad Silverberg,

“Bill [Gates] did not engage — either himself or the company — in the political process early enough… Bill’s attitude was the government should just go away and leave Microsoft alone… Well, this approach of not constructively engaging the government and concerned politicians, of not alleviating concerns that were not going to go away, was a disaster. The U.S. federal government, many states, and the [European Union] all essentially declared war on Microsoft, and Microsoft paid a devastating price.”

Too many new companies suffer from the mindset that the government should stay out of their way. What they fail to understand is that, especially when new innovation is involved, there is a considerable amount of educating that must be done if lawmakers are to understand the benefits or reasonable risks associated with a new technology or service.

Without a proactive strategy, organizations will not be successful in influencing policy in the direction they want. Groups with a reactive strategy play defense and field issues as they come. While this strategy can appear to be more cost efficient initially — especially for outfits new to government interaction — it often results in losing control of your business strategy to the desires of the government.

I get it. It’s inordinately difficult for innovators who are so focused on their cutting-edge technologies and the growth of their companies to also understand the complex policy environment in which they exist. However, as each new product or service is launched with little understanding, regard or strategy for dealing with future government risk, innovators are placing their future growth in jeopardy.

As entrepreneurs make plans for scaling up, they must incorporate an appropriate government affairs strategy, including a plan for identifying and complying with existing laws, advocating their positions with lawmakers and building relationships with key government and industry stakeholders.

A proactive approach to government affairs gives an organization an opportunity to tell its story and message before anyone else. By building strategic relationships with policymakers early in the process, growing ventures can ensure lawmakers understand both the opportunities of a group’s innovation and what’s at risk by imposing barriers.

These will likely be different for each stage of the company, and its leaders must be willing and able to pivot to confront new challenges and threats as they increase their capacity and expand into new territories. These steps will help confront the mound of challenges — from issues at all levels of government and the patchwork of laws and regulations across jurisdictions, to battling incumbents on tricky policy issues.

Sophisticated, proactive government affairs teams know the value in digging a well before thirst kicks in — crafting a policy environment that’s best for the business and building a grassroots army ready to go to war for the benefits of that innovation any time it is put at risk.

 

Register today to attend ‘State of Regulation in Silicon Valley’, a first-of-its-kind panel discussion hosted by FiscalNote and New Enterprise Associates in San Francisco on June 8. 

You can also download FiscalNote’s free report, The State of Regulations in Silicon Valley, identifying the policy trends that will impact the gig economy, the sharing economy, biotech and genetics, healthcare and medical devices, cryptocurrencies, drones, and renewables. 

Josh Pudnos

Policy Manager, FiscalNote

Josh Pudnos is an expert on data-driven government affairs strategies at FiscalNote. Most recently managing advocacy efforts for the auto industry, Josh has experience in lobbying at the state and…

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