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Preparing for a Regulatory Storm: A Tangible Recipe for Success

From the sprawling tech hubs of Seattle, to San Francisco, to New York, to London, to Hong Kong, startups are bustling with new ideas to transform communities by providing goods and services from the touch of our smartphones. But be it farmers in Iowa City, ranchers in Idaho Falls or civic leaders in Ithaca – the disruption these companies bring is often greeted by a host of community concerns and resistance.

All too often, the well-meaning products by tech startups never reach their full potential because they are faced with a chorus of stiff resistance and fear of negative impact on their local businesses and jobs. And rightfully so. Startups must anticipate and prepare to answer the tough questions, educate communities about its products and be prepared for community opposition across diverse landscapes.

Tech companies should consider introducing themselves to communities by engaging in proactive education and outreach. Establishing community support by soliciting input from stakeholders can turn a potential adversary into an ally and thus an early adopter of the innovation you are bringing to market.

Crypto circus shows that a lack of policy is not a carte blanche

Companies creating new innovations and products, like digital currencies, may be operating in a legal and policy environment with little to no regulatory restrictions. But as we’ve seen most recently with Facebook’s Libra, the lack of policy is not a green light to move ahead with new innovations.

In fact, in a world where political movements can begin with a single tweet, local regulators and government officials are increasingly swift to respond to community outcry when it comes to emerging technologies. Additionally, government officials may not take the time to learn about emerging technologies but, at the same time, feel pressured to pass regulations in their community that limit the potential of new innovations.

The most provocative examples of startups facing an onslaught of community resistance are lodging marketplace, Airbnb and rideshare companies like Uber and Lyft. These startups have not only participated in the creation of the “gig economy,” but have also threatened existing industries.

Existing industries, like the hotel industry and liveries, have trade groups, associations, and PACS that can be activated at the sniff of a threat. These industries have been embedded in communities that have generations of loyal customers and a longstanding political machinery to readily drive efforts to squash any competition, startup or not. Today, Uber is partially banned or has been forced to withdraw in numerous countries, such as Denmark, Hungary, Germany, Italy and France. Airbnb also faces limitations in Paris, Barcelona, New York City, among other cities.

As startups look to introduce emerging technologies to the world, community outreach should be planned for and managed at an early stage to ensure that the community and government officials are on board.

The communities and startups that are getting it right

Not all communities see innovation as the bogeyman. Some municipalities have found unique ways to embrace innovation. Take the example of Seattle, a city that has gone so far as to create a startup advocate position in City Hall. On the other side of the world, Switzerland has been owning its title as “Crypto Valley,” by promoting openness and providing accessibility to its local government.

Also, it’s never too late to engage local communities and governments. Uber was able to successfully turn the tables on revved-up regulators. It created a mechanism for riders and drivers to directly appeal to their local elected officials to urge them to allow ridesharing in their community.

Uber realized that the threat of new, tighter regulation looming in major countries and cities around the world could hurt its success. However, the company has been able to withstand the worst of the pressure while readily expanding at the same time because they found a way to engage local communities.

Having a comprehensive public affairs and community engagement program in place can be a valuable tool before it becomes necessary. Not only do startups need to conduct a full analysis of threats and opportunities. They must also prepare tangible strategies to transform inevitable community fears into community support that will drive their products and services. Need help getting your arms around public affairs?

Give us a shout at for more information on our full solution set for start-ups.

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