The so-called “techlash” has been raging for quite some time. But some of us still remember when technology inspired trust and optimism rather than fear and anger.
After the 2008 financial crash, new entrants were fighting off rent-seeking in every industry by bringing higher quality at scale. Prices were coming down, making goods and services more affordable. Technology was seemingly providing us with the resources to tackle the world’s most wicked problems, not the least of which was climate change. And Barack Obama, a close friend of Silicon Valley, was essentially vouching for all startups and tech companies, reassuring the public that those were in it for the common good.
But then things changed: the fight around corporate taxation (which is still ongoing); Edward Snowden’s revelations; the Uber wars across the world; the fear for jobs being displaced by automation; the idea that social media contributes to corrupting democracy; the realisation that tech has a problem with gender; the never-ending Facebook crisis in the US; the highly publicised debacles of companies like Theranos and WeWork; and the fact that Obama has left the stage only to be replaced by, well, Donald Trump.
That is a lot, and it’s no surprise that European entrepreneurs have had a harder time building their startups in such a context. There are, however, methods and tricks that can be used to overcome the many techlash-related problems and even — in certain cases — turn them into advantages. To make things clearer, I came up with a list of three don’ts and three dos.
So, here’s what you shouldn’t do if you want to keep your startup safe when it comes to regulators, the press and the public:
- Don’t ignore them. There used to be a time when ignorance and indifference (what Y Combinator founder Paul Graham calls “Schlep blindness”) were assets for entrepreneurs. You had a higher chance of success if you didn’t pay too much attention to everything that was legacy, whether older businesses or institutional regulators. But we’re past that point. Software has eaten enough of the world for tech entrepreneurs to level up their game. The truth is they have a lasting advantage over incumbents and governments now, and they must accept the consequences and learn a new playbook. Today you don’t want to be a Theranos that plays cat-and-mouse with regulators. Instead, push to be those scooters companies that work with city governments from the start, because they know they’ll never succeed without official support.
- Don’t point fingers at other startups. Entrepreneurs may be on the right side of history, but they still need to close ranks and support each other as their respective startups grow. In fact, startups have a higher chance of success when they’re part of an ecosystem that brings everyone together around the best practices. The reason why Silicon Valley works so well is precisely because local players don’t settle their disputes publicly — they just root out the bad practices and the bad people early on, before their venture turns into a full-blown debacle with the potential to harm everyone (and if that fails they’ll keep those outliers at arm’s length and feign indifference — as in WeWork’s case).
- Don’t try to be the local champion. As most of the techlash originates in the US, it is tempting to try and strike the patriotic chord and present yourself as the nicer/more local version of a US startup whose reputation has suffered. Alas, that never works. Typically, it just brings your ambition down: if you’re the local champion, you might end up being trapped in your local market, as happened with French startup Viadeo, which was once considered a direct competitor to LinkedIn. Plus, it tends to turn you into your government’s pet, with the minister in charge constantly citing you as an example and showering you with government money — the most toxic thing that can happen to an ambitious startup, since government money tends to come with red tape and compromises that impede your achieving your vision.
And now, on to the three dos of tackling the many regulatory and PR challenges brought about by the techlash:
- Embrace contextual rationality. A great number of European startups ultimately fail because they try and emulate good practices that were discovered in Silicon Valley. But what works there doesn’t necessarily work here. A few years back, too many Paris-based entrepreneurs were trying to raise money using the legendary Pitching Hacks playbook, not realising that we didn’t have the same venture capital firms in France. The same is true for dealing with the techlash. Silicon Valley might be able to respond by becoming even more aloof and libertarian. But we in Europe need something different, starting with entrepreneurs and venture capitalists being more present and engaged in policy discussions related to their industry and beyond.
- Learn the other’s language. Here is some sound advice from Mad Men’s Don Draper: “If you don’t like what is being said, change the conversation.” Yet if you want a real conversation, you need a common language! Alas, too many startups approach regulators and talk to them using startup language: “technology”, “algorithms”, “disruption”, “funding rounds”, “changing the world”. You need to remember what keeps a politician awake at night and talk to them in a language they understand. Think: “jobs”, “opportunities”, “public services”, “reducing the deficit”, “purchasing power”, “economic security”, “dignity”.
- Keep pushing. Too many startups wage their pet regulatory battle and then stop when they’ve obtained enough concessions to move forward. But it’s much better to stay in the fight. It might feel like fighting for more than what you need today, and it might even enable competitors to race ahead of you tomorrow. But that’s what a thriving ecosystem is about: pay it forward to the next generation and create the conditions for others to launch challengers to your company. Ultimately, such challenges are a guarantee that you will keep on scaling your ambition rather than being content with what you have. So don’t go straight to rent-seeking: keep pushing to benefit other startups, even if your company isn’t one anymore.
Entrepreneurs’ work can have a big impact on people's daily lives — and their companies can do better than the status quo. Getting your company to the top of the heap in 2030 will mean, however, following a path that is quite different from that paved by today's market leaders.