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Should Entrepreneurs Work With Or Against Regulators?

This question originally appeared on CoFoundersLab: Should entrepreneurs fights legislators or work with them?

Answer from Dane Madsen, start-up strategy consultant and founder of YellowPages.com, acquired by AT&T



Generally, depending on the regulated area, such as public safety or health, fighting (for small start-ups) is difficult and very expensive. These people live to say no. I have spent time in public water and met many variations. Some places love innovation, some put the "no" in innovation. In all cases, the regulators had the ability to shut me down. Not fighting them is wise; you will not win.


If you want to use persuasion instead of a fight, it is very different than the "in your face" examples of Airbnb and Uber. I believe the hubris of both has damaged all innovators and labeled them as 'lawless wildcatters' who care not for the purpose of the regulations being enforced. The logic they use is that they are just platform, not the actual violator, not even denying that the regulation has applicability. However, they enable the violation, and regulators have the power to shut them down for flaunting such. Ask Amazon about the "nexus" when it comes to sales taxes.


I have had vehement arguments with friends about Airbnb and Uber who opine that those companies should not be regulated as hotels and taxis “'because they are new economy, the sharing economy.” Under that standard then, SpaceX, Tesla, and SolarCity should also not have regulations. It is silly. Regulations do not always make sense, but they have been promulgated over years of local legislation as a direct result of solving a problem, real or perceived. Yes, some have been put in place to hamper competition, but when you own the court, it is folly to fight it. You will lose unless the law is changed. How you sell your case, and not how you ignore a law, will determine if the law is changed.

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