Tuesday, June 10, 2014

Let the Litigation and Legislation Begin!

On Thursday June 5th, the Virginia Department of Motor Vehicles ordered Uber and Lyft to cease operations in the Commonwealth.  

This is just the next step in the on going battle between Uber, Lyft, Side Car and other peer-to-peer upstarts that are trying to disrupt the highly regulated and tightly controlled taxi industry.

I have been watching this battle evolve since Uber broke into the D.C. market last year, and have been closely following how this and other startup vs regulator & incumbent market issues, such as Airbnb vs regulators and the hotel industry, Ethical Electric vs regulators and utility companies, General Assembly vs regulators and (mainly) for-profit quasi-vocational schools and Tesla Motors vs state government and the automobile dealer industry, are playing out around the country.

Next it will be drones and driverless cars.

Each one of these examples tells a story.  They tell us that many of our state and local rules and regulations meant to regulate businesses seem to have been written in the stone age.  But in reality, they were mostly written for the marketplace as it existed, and the framework was designed to accommodate small changes as the need arose.  And that worked for a long time.  But now, we are seeing entrepreneurs who want to disrupt marketplaces and industries, and we have many industries that are prime targets for the shake up.  

Unfortunately, many of our state and local governments (especially regulators) are not ready to have that conversation.  But sadly, too many entrepreneurs also aren’t prepared to have those conversations either.  I don’t know if that is because entrepreneurs don’t understand the roles legislators and regulators play and the impact they can have on their businesses, or because often time government moves too slow for them, or because they simply believe its easier to ask for forgiveness that it is to ask for permission.  Regardless, we are not seeing open lines of communication between government officials and entrepreneurs.  

By the way, with regulators it is usually better to ask for permission, then ask for forgiveness when you don’t like the answer and go and do what you wanted to do anyway.

Among the responses to the VA DMV announcement was from Virginia State Senator, and 2013 Republican Candidate for Attorney General, Mark Obenshain.  He tweeted - 

But does the answer really need to be litigation AND legislation?  I would vote for legislation (or regulation) over litigation.  But as a state and local lobbyist, I might be a little biased.  

Look at Tesla, the lost a legislative battle in New Jersey a month or so ago.  They threatened (or maybe more than threatened) litigation.  The now have a second chance in the legislature, with a pro-Tesla bill passing committee last week.  They always have court to fall back on.  

But is litigation the right move for the rest of these disruptive startups?  If you are planning to be a disruptive startup, is it going to be right for you?  Like I said, I vote advocacy first.  But have a good lawyer on speed dial.

So, what is the solution?  I hope this tweet is a good sign.

What lessons can you learn from all of these stories?

First - Regulatory advocacy matters.  Strong knowledge of both the local regulatory landscape and national regulatory trends and best practice-type solutions is important, but its not enough.  Nothing beats taking the time to get to know your regulators.  You may not agree with them.  You may not get the answers you want.  But open lines of communication are critical to finding workable solutions.  Even if you have to find those solutions while asking for forgiveness.

Second - Legislative advocacy matters just as much in your regulatory advocacy efforts.  Why?  Legislators and staff probably have existing relationships with regulators, and are probably more willing to help.  In addition, most state legislatures hold some sort of oversight responsibility over the executive branch agencies.

Lastly - Your customers are the best advocates you can have.  Provide a service that your customers don’t just want, but demand, and you have a very powerful story.  Does any one care if Uber, Lift, and Side Car (or Airbnb, General Assembly or Tesla for that matter) enter a market if they have no customers?  No. These businesses are winning legislative and regulatory battles because they provide great products and services AND their customers LOVE them.

About Michael O'Brien...

Michael O'Brien is the founder and principal of MOB Advocacy. He has more than ten years experience as a state and local lobbyist. Michael has lobbied governors, mayors, legislators, state and local agencies and regulators in more than 40 states.

Before starting MOB Advocacy, Michael was the the national state and local government affairs department for RISE (Responsible Industry for a Sound Environment). Prior to RISE, Michael launched Molina Healthcare's political and grassroots advocacy programs, created strong public-private partnerships as director of The Washington Center, and developed a federal, state and grassroots advocacy program for The National Conference for Community and Justice.

About MOB Advocacy...

MOB Advocacy is a full-service, multi-state government relations firm located in Fairfax City, Virginia. Founded in 2012, MOB Advocacy has quickly become a recognized leader in state and local government relations.

MOB Advocacy's clients range from established corporations, tech start-ups, nationally recognized non-profit and advocacy groups. Our clients chose us because MOB Advocacy offers the full range of solutions of a large government relations firm with the personal service of a boutique firm. Mob Advocacy helps its clients to navigate the complex world of state and local legislative and regulatory affairs, procurement bureaucracy and appropriations processes to achieve their organizational goals.