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Congressional staffers by the reflecting pool outside the U.S. Capitol. Photo: Aaron P. Bernstein/Getty Images

The next crop of startups are going to need to work with all levels of government, because the world's biggest problems waiting to be solved happen to be in regulated industries.

Why it matters: Technology startups are notoriously laser-focused on innovation and building the "next big thing" — and engaging with government bureaucrats or regulators is, at best, an afterthought. As Evan Burfield — an entrepreneur, investor and co-founder of startup incubator 1776 — argues in his new book, "Regulatory Hacking," improving healthcare, energy, transportation, food distribution, education and elections is going to require a more collaborative approach.

The big picture: Burfield says startup founders tend to solve problems they know and understand. Many startups tackle the low-hanging fruit of making life more fun and convenient. A lower-middle-class single mom in Tulsa doesn't want or need those things; she's more interested in reliable transportation to work and affordable groceries.

"Given its dominance, the Valley has driven many of the assumptions about who should build startups, how they should build them, and what they should focus on. The Valley can be a magical place, but it's far removed from the lives of the other 99.9 percent of the people in the world."
— Evan Burfield, author, "Regulatory Hacking."

Between the lines: The next wave of startups are probably going to be focused on improving our lives as citizens (rather than consumers), which means having to operate in complex, regulated markets. Burfield says there are five trends driving this:

  1. Tech startups are diversifying beyond Silicon Valley to other cities to take advantage of expertise and history in agriculture, manufacturing, or healthcare.
  2. The easy problems in tech have been solved. The next focus is on industries that are still in the early phases of digital transformation.
  3. We're seeing a backlash against Big Tech, forcing the tech startup ecosystem to adapt to a new reality.
  4. Startups are solving urgent problems that would previously have been left to government or nonprofits, such as sustainable cities and infrastructure.
  5. The technologies of science fiction are becoming a reality. In that new reality of self-driving cars, brain-computer interfaces and cryptocurrencies, regulators will inevitably play a role much earlier than they did in the consumer-tech world.

The book dives into case studies of how startups have dealt with collisions with government entities, at both the national and local levels. It also provides a playbook for how to think about involving those stakeholders during the development of the product or service that a startup is trying to create. And the pros and cons of the "ask for permission" model (i.e. HopSkipDrive, a ride-hailing service for kids) and the "ask for forgiveness" model (i.e. Uber).

The bottom line: Burfield argues that it's not a bad thing that startups are becoming regulated. He writes that he's come to believe that, as a society, we have a choice about how we want technology to evolve and shape our lives. "Ultimately, and as messy as it can be, government is how we make tough choices as a society."

Go deeper:

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23 mins ago - Health

Cuomo advisers reportedly altered July COVID-19 nursing homes report

New York Gov. Andrew Cuomo. Photo: Seth Wenig/AFP via Getty Images

New York Gov. Andrew Cuomo's advisers successfully pushed state health officials to exclude certain data on the number of COVID-19 nursing home deaths from a July report, the Wall Street Journal reported late Thursday.

Why it matters: The changes resulted in a "significant undercount of the death toll attributed to the state’s most vulnerable population," the WSJ wrote.

Ro Khanna wary of Biden approach on Middle East

Rep. Ro Khanna. Photo: Cody Glenn/Sportsfile for Web Summit via Getty Images

An outspoken progressive Democrat is wary of President Biden’s approach to the Middle East, arguing it’s like “conceding defeat of the aspiration” to win a Nobel Peace Prize.

Why it matters: A number of members of Biden’s own party dislike his Middle East strategy, as his administration signals the region is no longer the priority it was for President Obama and his predecessors.

Democrats eye reconciliation for immigration

Photo: Chip Somodevilla/Getty Images

Comprehensive immigration reform is a pipe dream, but some Senate Democrats are hoping to tie key immigration provisions to the next big reconciliation push.

Why it matters: Immigration is one of the most controversial and partisan issues in U.S. politics, which is why the budget reconciliation process — which allows for bills to pass the Senate with a simple majority rather than the usual 60 votes — is so attractive.

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