(I was recently asked by the Mass Technology Leadership Council to join a team of bloggers covering the Innovation UnConference. Our work was posted on the MassTLC blog. This particular session was left off the blog for reasons unknown but I enjoyed it, so I thought I'd post the content here. I promise a fuller post on my overall impressions of my first unConference later this week.)

Public Policy Horror Stories

MassTLC Innovation UnConference Session 3: 1:15 to 2:15, Nov. 16, 2012

Session Leader Nick Grossman, Union Square Ventures

While mercifully short on horror stories, the session provided an eye-opening look at the role local, state and federal government can play in the life of any business.  Attendees ranged from representatives from Google, Verizon and U/Mass to startup entrepreneurs and an international business development exec from a cold yet exotic locale. What follows is a distillation of the comments and discussion from all participants in the session.

Innovation – especially truly disruptive innovation – has a tendency to “ruffle feathers” among public and private entities with a stake in the old order. When those entities are governmental and regulatory, companies can find themselves suddenly faced with business challenges they had never anticipated. Some examples cited included the recent difficulties faced by Uber and AirBnB, two companies in the peer-to-peer economy vanguard who found early successes in circumventing an established economic model yet found themselves faced with an existential crisis when local and state authorities threatened to shut them down for violating existing rules for the taxi and hotel industries. In the education market, Coursera drew the negative attention of Minnesota regulators who briefly attempted to boot the online education company out of the state for violating a very out-of-date statute related to the regulation of educational institutions.

Though Coursera ultimately prevailed, and Uber solved its problem with a consumer-driven social media campaign that made officials sit up and take notice, problems such as these will persist as long as the pace of innovation grows at a faster clip than does the capacity of regulatory bodies to absorb, understand and act appropriately toward each new development.

Companies are not helpless in this matter, however.  Though it is seldom done in the earliest stages of a start-up’s lifecycle, it is important to start looking for a select few potential influencers within government that can provide information and guidance to young companies and, as the company matures, develop into an advocate on their behalf with regulators and legislative bodies. It is important, too, that like-minded companies or companies that share a market sector put aside their competitive issues and band together to present a united front and serve as a large and credible provider of information and relevance to governmental entities.  Verizon is working to create an organization such as this in Mass. and Union Square is building a similar group to advocate to government on behalf of “Peer Economy” companies, like Uber and AirBnB.

Though few companies contemplate at their outset the role government can play in their daily business, it is safe to say that every company has the potential to engage with government at some stage in their lifecycle.  The result of that engagement can be more positive if the company begins to think of government in the same way it thinks of partners, customers, media and analysts… and does so from its earliest stages.