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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:

Go deeper

Biden's pick to lead major banking regulator drops out

Saule Omarova, nominee for Comptroller of the Currency, at a confirmation hearing on Nov. 18. Photo: Anna Moneymaker/Getty Images

President Biden's pick to head one of the country's most powerful banking regulators is dropping out of consideration for the post, according to a statement from Biden that accepted the withdrawal.

Why it matters: Saule Omarova, nominated to lead the Office of the Comptroller of the Currency, faced a tough path to confirmation — with opposition from Republicans and moderate Democrats.

Judge temporarily blocks Biden vaccine mandate for federal contractors

Photo: Chip Somodevilla via Getty Images

A federal judge on Tuesday temporarily blocked President Biden's vaccine mandate for federal contractors nationwide.

Why it matters: It's the latest setback in the Biden administration's rollout of COVID-19 vaccine requirements. Federal judges in two states temporarily barred the administration from enforcing mandates for millions of workers last week.

Biden threatens Putin

Photo: Kremlin Press Office/Handout/Anadolu Agency via Getty Images

In a video call that lasted for just over two hours on Tuesday, President Biden warned Russian President Vladimir Putin that if Russia invades Ukraine the U.S. will impose unprecedented sanctions and provide additional weaponry to the Ukrainians, national security adviser Jake Sullivan said.

Why it matters: Russia's military activity on the border with Ukraine has triggered alarms from the U.S. and its European allies of a potential large-scale Russian invasion in early 2022. Sullivan said Biden made clear to Putin that, "things we did not do in 2014, we are prepared to do now."

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