The most obvious layer are the likes of Uber and Airbnb. They’re quite obviously a net positive to everyone other than entrenched industries, but had to have strong-willed founders willing to create something in the face of, and at times fighting, regulation
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But what I think is interesting, as
@patrickc points out, is the next layer where there may be the likes of Uber or Airbnb that just got squashed by regulation that we never heard about, or we conclude they killed some “unsafe” practiceShow this thread -
Yet if we go even deeper (call it galaxy brain if you must) there are companies that aren’t started or invested in for fear of regulation
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Some of those are obvious, e.g. a company doing something that needs FDA approval requires $100m in investment when the actual tech might require $10m, but we even see it at Lambda School, in a relatively less-regulated space
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In fact I suspect the net effect of regulation is actually greater when the regulations aren’t well-defined, because it stops people from trying. It’s awfully difficult to build around something that doesn’t have clear precedent, which is almost everything interesting
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The risk there is company-ending, and causes an odd scenario: well established companies are unwilling to take such risks, which leaves only newer and more relatively shady companies doing those things
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I think we’re seeing this to some degree in ICOs. Legit companies aren’t going to act without precedent and existing case law from the SEC, so we’re left with new companies and sheisters hawking 99% bullshit, to the point that almost everyone says “ya just shut out down”
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Interestingly some of the most impressive startups I see nowadays are entering heavily regulated spaces. There’s such an enormous moat when you make it through that it’s worth a shot, but it takes a founder willing to spend 80% of effort dealing w regulators and 20% w tech
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It may be to some degree that all the easy stuff has been done, but in my YC group at least 50% of the companies we’re going up against serious regulatory risk; the kind that’s difficult to define, understand, prepare for, or hedge against
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I know this would never happen in a billion years, but if you wanted to truly unlock innovation you would have to have regulators more frequently *bless* some practices, not just condemn them. A stamp of approval, not “they haven’t killed x yet so let’s assume it’s safe”
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End of conversation
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Great CEOs create some kind of tension, whether in sales goals or solving really hard problems. If life was frictionless lazy people would start companies & defraud customers. Regulations create tension and keep them in check. That’s good for both customers & founders with grit.
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