I’ve been interested in the work at the Center for Growth and Opportunity (CGO) at Utah State University for some time now, and I was very impressed with what I experienced at a fascinating one-day conference they recently co-hosted on emerging issues in technology policy. The details of that discussion were off the record, but I can say that their smart, practical, and non-partisan take was a refreshing treat.
CGO’s mission is to increase economic growth and individual opportunity, and one interesting application of that goal that arose at their recent conference was how new products and services are treated by government regulators. New, innovative companies having to confront the regulatory state when they’re finally ready to launch can be a bracing wakeup call for startup founders who expected to be worrying mostly about things like finance and marketing. Introduction of even the most revolutionary and promising services can stall if they run afoul of incumbent rules or even if, because they’re so novel, they are born outside of existing categories. Worse yet, of course, are the new products that are never created at all because regulatory barriers seem insurmountable. To paraphrase my colleague Wayne Crews, it’s getting to the point where every startup’s second or third employee is going to have to be a regulatory compliance counsel.
In order to incentivize research and investment, we need structures like regulatory on-ramps and sandboxes so that newly-created offerings aren’t stranded because no one has written rules for them yet. My former colleague Daniel Press made this point especially well in regards to how fintech startups are treated in the U.S., the UK, and Australia. Of course, general regulatory reform is essential as well, including the maddening task of trying to measure the cost of existing regulations, cataloging the unofficial “regulatory dark matter” that exists throughout the executive branch, or actually moving forward with legislative reform proposals. This is especially important at the state level, where so little work has been done relative to the federal leviathan.