00:00hi welcome to the a 16z podcast this is
00:02Matthew covert from the policy and
00:03regulatory affairs team today as part of
00:06our ongoing series about how startups
00:08are engaging with policymakers and
00:10regulators my colleague Matt Spence from
00:12the policy team dives into a case study
00:14with Joe PACU VP of government relations
00:16at lyft and David Mack senior director
00:19for public affairs at lyft about how the
00:21company has engaged with policy makers
00:22and regulators at a local level and how
00:26other companies can think about engaging
00:28with policy makers as they build out
00:30their gr or government relations
00:32function and the first voice you'll hear
00:34in this podcast is Joe from lyft
00:36followed by matt spence when you're
00:38dealing with something like the ride
00:40sharing industry the first inclination
00:42from a mayor or from a regulator in a
00:45particular city was well how is this
00:47different than what we already regulate
00:48how is this different than our current
00:50vehicle industry what was the answer to
00:52that you're dealing with mayors and
00:54cities and it's not one government but
00:56it's hundreds of governments around the
00:58country so what's the playbook we really
01:01viewed our first mission as education
01:04explaining what we were and possibly
01:06more importantly explaining what we
01:08weren't so you know we didn't have the
01:10historic relationships with mayor's we
01:12didn't have a history of contributing to
01:15campaigns what we did have was a broad
01:18universe of people both on the driver
01:20and the passenger side who recognized
01:22that this new innovation is extremely
01:24important to me we built it like a
01:25campaign basically folks that have
01:27worked on political campaigns in the
01:29past at the federal state and local
01:31level the most important part has always
01:33been the community folks that can get
01:35out there engage with drivers engage
01:37with other stakeholders turn them out to
01:39hearings get them to testify before the
01:41California Public Utility Commission or
01:44in the political process companies
01:46advocating for themselves have very
01:48little power self-interested not very
01:50sympathetic you have to find a way to
01:52make that connection with the
01:53constituents and unless you can do that
01:55in a meaningful way you're not gonna
01:57have much access just to push back on
01:59that isn't that what every company says
02:00like look we're just doing this for the
02:02our product happens to make us a lot of
02:05money but this is something that you
02:06actually want how do you convince often
02:09cynical voters or policymakers that you
02:11actually we're doing something different
02:13favourite question I think the
02:14difference though is so whereas yes a
02:16company might say yes we're helping all
02:18sorts of people art do they really have
02:19the ability to mobilize that and to
02:21convey that the importance of what
02:23they're providing to the decision makers
02:26and to the elected officials I'm
02:27thinking of a couple of instances where
02:28we've had email campaigns that have
02:31literally accidentally but shut down a
02:33city's email server because there are so
02:36many citizens writing in so much let's
02:38like take a step back so what do you do
02:40first who do you call first how do you
02:42decide who to call how do you decide
02:44which city to go into and like when is
02:47so you find consultants in markets that
02:49you don't have any specific experience
02:51and so they can tell you what the lay of
02:52the land is we relied on them to open
02:54the door and to point us in the right
02:56direction we felt it was important that
02:57we were the ones who were conveying the
03:00story no one can really tell the story
03:01of what we're trying to build better
03:03than we can so let's take let's take a
03:04city like Nashville we started engaging
03:07in Nashville and fall of 2013 the
03:09consultant put us in contact with the
03:11transportation department put us in
03:13contact with the mayor with council
03:14members to press off explain what we are
03:16what are we what are we trying to do
03:18literally we were getting the question
03:20every single day so you expect me to get
03:22into a car with a stranger right we have
03:25to be able to answer that question
03:25before we can do anything we're talking
03:27about the mayor a city council member or
03:29all the city council members maybe the
03:31city manager or the city attorney if the
03:33agency that tends to regulate for higher
03:36transportation is let's say the
03:37Department of Transportation I'm more
03:39often than not we're gonna be engaging
03:40with the director of that department and
03:43how did you think about of all those
03:45many players who to go to first I mean
03:47is the rule let's go to the mayor
03:49because he or she's the boss or do you
03:51go to the actual person who's in the
03:53weeds and understands the transportation
03:55regulations and how do you know when to
03:57take which approach some cities have a
03:59strong mayor system some cities have a
04:01weak mayor system some cities don't have
04:02mayors at all in addition to the
04:04stakeholders Joe talked about you got
04:06attorneys general you've got governors
04:08you've got folks at the Statehouse so
04:10you go into a market and you build the
04:13team based on what the market looks like
04:15the most important thing you remember
04:16though about the policy folks god bless
04:17them all is they have two clients one
04:20client are the folks that are paying
04:21them and engaging with them so that
04:23would be us the other client and perhaps
04:26more valuable are their relationships
04:27with the electives and so there's always
04:29a tension between how hard you can have
04:32the consultants work on your behalf
04:33sometimes in very uncomfortable
04:35situations before they will go no
04:37further and not burn bridges it's a
04:39really remember for them if they're just
04:41seen as hired guns they can't actually
04:43convey that actually I'm talking about
04:45this because it actually delivers
04:47benefits the consumers I'm not just
04:49gonna deliver message for who gives me
04:51the highest page that's right say they
04:52their job is to both open doors and
04:55introduce you to decision-makers but
04:57also lets you know how far you can go
04:59before you will erode goodwill in the
05:02community and that can be a that could
05:04be a fraught relationship that's really
05:05kind of where the art is that so
05:06so you've hired a portal consultant
05:08they've introduced you to the mayor the
05:10city attorney what do you do next you
05:13should have your policy team that owns
05:14the relationships with elected officials
05:16negotiates the final details of what the
05:18law will be and then you'd have a public
05:20affairs team which is building the
05:22campaign in the atmosphere around those
05:25negotiations in such a way that they can
05:27be as successful as possible
05:28you fly to Nashville and then you fly to
05:30Nashville again and then the next week
05:32you flatten Nashville again and again
05:33and again we're engaging with the mayor
05:36but also with the head of the Department
05:38of Transportation there but in the
05:39meantime we also are partnering with
05:41organizations who recognize the benefit
05:44of ride-sharing our launch teams are
05:46already building out a driver committee
05:48where they're signing up drivers so we
05:49are already have you know a broad base
05:51of people that we can mobilize and when
05:53the time comes so you're going into the
05:55cities and you want to deliver some
05:57benefit for the voters and for the
05:59consumers you know the famous city
06:00planner Robert Moses talked about that
06:02highways would be the greatest single
06:04element and the cure of City ills and of
06:06course now we have traffic jams you have
06:08changes in city dynamics you have a lot
06:11of other things I might not have been
06:12good you're for private company also
06:14you're making money in a way that cities
06:16don't so how do you think about either
06:19making that argument to regulators but
06:22also how do you think yourselves about
06:23whether that actually is the right
06:25argument yeah I it's a great question
06:27it's it's kind of an obvious thing to
06:28say but you can either let your impact
06:31on the community be defined or you can
06:33work to define it yourself so one of the
06:35things our team did as we were building
06:36out the public affairs team we
06:38incorporated a research
06:39function so we have two full-time
06:40researchers on the team they produce an
06:43annual economic impact study and via
06:45that learning we found out we add three
06:48quarters of a billion dollars in local
06:50spending to communities we've cut a
06:52hundred million hours off people's
06:53commutes etc so we have these
06:55demonstrations once we are in a
06:57community regulated the transit
06:59departments come out of the woodwork and
07:00they want to use us to help solve the
07:02last mile first and last mile problem on
07:04our team built out an entire transit
07:06partnership which we never envisioned
07:08when we first started the point is build
07:10your case understand your numbers and
07:12then be prepared to adapt as you move
07:14forward and figure out what is the best
07:15case and so how do you think about when
07:18you to help address the problems that
07:20regulators and government officials have
07:22and a there was a mayor who came in here
07:24not too long ago and said look I
07:25appreciate what one of our companies
07:27doing but my job is to think about a
07:29whole slew of fire regulations and
07:31safety issues I'm elected to do that so
07:34how do you think about finding ways to
07:37sort of address the mayor's concerns
07:39without just stumbling into the standard
07:42bureaucratic way of doing things which
07:43may stop you from going to market at all
07:46you know you try to take yourselves out
07:47of your own myopic point of view from
07:51within the industry right and take a
07:52look at it from the outside if I'm that
07:53regulator what am i concerned about I'm
07:55concerned about you know the the quality
07:57of the cars the quality of the drivers
07:59is that there is an accident are the
08:00passengers going to be taken care of how
08:03do we make sure that people are getting
08:04into the correct car these are all
08:06questions that we anticipated and we
08:08built in answers to those questions in
08:10the development first of all we created
08:12a new form of insurance that was
08:14basically higher than any insurance for
08:16taxi for taxi passengers across the
08:19country that was that type of insurance
08:21that never existed before our industry
08:23was created so we came out of the we
08:25came out of the box with that not having
08:26being ordered to or told that we had to
08:28do this we did this of our own volition
08:29but we also recognized kind of the core
08:32aspects that of that legitimate
08:34regulation right how do you make sure
08:36that the drivers were safe well cities
08:38may have a particular process that they
08:40typically do and often it's involved
08:42fingerprint background checks that's
08:43been an issue that's been rather heated
08:46in the past while fingerprint background
08:48checks have their place there are other
08:49ways to vet a driver that are
08:52more efficient but also less intrusive
08:54and has that worked making that argument
08:56tis taken a lot of time in education but
08:58we're now at a point where we have forty
09:00four states plus the District of
09:02Columbia that have essentially adopted
09:04the background check process that we
09:05came up with before we were regulated
09:07anywhere in the country same thing with
09:09the insurance the there is now a model
09:11insurance regulation that has been
09:13adopted pretty much all across the
09:15country that pretty much tracks what we
09:17initially came up with on our on our own
09:18so far you've been describing this great
09:20cooperative approach but this is
09:22politics right and there's often
09:24corruption and entrench interest I think
09:26there are two different types of reasons
09:29why sort of bad laws or bad regulations
09:31often pass you know sometimes there's
09:33just some ignorant people don't
09:34understand but also there's a lot of
09:37just entrenched interests you know an
09:39existing lobbying group the current
09:42players don't want to let you in and
09:43those are two very different plays if
09:45there's ignorance or lack of
09:46understanding we are willing to spend
09:47the time and the energy and the effort
09:49to try to change your mind because we
09:50believe so strongly in what we're trying
09:52to do that we can change your mind if
09:54you are willing to keep an open mind but
09:56if you are determined to protect an
09:58incumbent industry and that becomes
09:59clear then that does change that does
10:01change the nature of how we engage and
10:03we have definitely encountered those
10:05situations there's a difference here a
10:07little bit versus a lot of our peers or
10:09other folks in the tech industry as a
10:11physical product that people engage with
10:13every day when it goes away it has major
10:15impacts there have been times when we've
10:18had to make the choice often talking
10:20with drivers about what's best for you
10:22to pause and markets and that's a pretty
10:24crazy thing right you're you are
10:26removing a thing from the market
10:27generally because if we did not pause
10:29the the through threat either penalties
10:32the drivers would face or other things
10:33are not worth risking then how do you as
10:35the government Relations team deal with
10:36the rest of the company what we've heard
10:38from a lot of companies are they don't
10:40want to have you that the government
10:42relations people or the lawyers living
10:44in the land of know if you are saying no
10:46all the time you're not going to grow
10:47and build the business withdrawing from
10:50market is one option so what are the
10:51other things that strategies to address
10:53these concerns in the more contentious
10:56markets where it becomes pretty clear
10:58that there is a fairly over effort to
11:01protect the incumbent industry we'll
11:03have to raise the stakes a little bit to
11:04turn out not only our passengers and our
11:06drivers but strategic partnerships as an
11:08example the Urban League saw a
11:09commonality of purpose and of what we
11:12were trying to do it unlock areas and
11:14communities that were previously
11:15underserved by transit people who
11:17ordinarily did not have good access to
11:19transportation and lower income
11:21neighborhoods now do so in a
11:22particularly difficult City we now we
11:25don't only have our driver speaking for
11:27themselves or passengers but we now have
11:28the urban league wing and other
11:30organizations can help carry the message
11:32that this is bigger than the way the
11:35mayor or the city is looking at it so
11:36we're able to make it bigger than just
11:38us so that's a really interesting point
11:40especially because tech is different
11:41from a lot of other established
11:43industries and that you know you don't
11:44have plants like GM on the ground in
11:47Detroit so most people learn about these
11:49issues through the media and the media
11:50will find you know a driver on option a
11:53a driver on option B and then any number
11:55of stakeholders will come in purport to
11:56speak on behalf of drivers drivers are
11:59the best champions having those
12:01conversations right in front of elected
12:02officials is crucially important and
12:04it's turning bodies out to stand in line
12:07take time out of their day that's hard
12:10right okay you can catch more flies with
12:12rather than vinegar but sometimes you
12:14just need a flyswatter though do you
12:16have any lessons learned about when
12:18you've decided to take the harder we're
12:20gonna fight against you option versus
12:22one the conciliatory option and then
12:24when you do also decide that we do need
12:27to withdraw from market how do you
12:28navigate that within the company with
12:30the product team or the marketing team
12:32or the revenue generating side when
12:34you're dealing with a new industry like
12:36ride-sharing that has not yet issued any
12:39sort of legislation regulations that
12:41that framework has not yet been created
12:42you have in my opinion really one chance
12:45to get that right if you have one law on
12:49the books then the next place is gonna
12:50look at that one law and then you have
12:52two laws in the books and the next three
12:53place are gonna look at those do you
12:54mean that is like a matter of precedent
12:55or if you go in and really take everyone
12:58off like that's your you never get a
13:00second chance to make a first impression
13:01both but in this case as a matter of
13:03precedent if you have let's say six
13:05places that have decided to legislate
13:07this area three have come up with laws
13:09that work and three that have come up
13:11with laws that don't here operating in
13:14the likelihood of the bad regulatory
13:16framework moving forward is that much
13:18more increased so you have to draw the
13:20line and that's the case ultimately that
13:21we had to make internally to the
13:23business that this may be a short-term
13:26for us but in the long term as you know
13:28we only have one chance to really get
13:30this framework set up you have to get it
13:33yeah and that really dries and then
13:35ultimately that drives the answer to
13:36your question which is well if you know
13:38how much honey or vinegar do you use in
13:40terms of trying to deal with elected
13:42officials it's really all about that
13:43fundamental goal in what is going to
13:45lead to a framework that is going to
13:47work for this industry in this city or
13:49in the state and ideally we would like
13:51to do that cooperatively but at the same
13:53time if we're faced with framework that
13:55is not going to work we have to take the
13:56gloves off and I think really important
13:58building on that is you got to get
14:00policy makers a lot of credit here like
14:0244 state bills in three years plus the
14:04District of Columbia and a lot of that
14:06was policymakers taking us at our word
14:09that we are building an alternative to
14:10vehicle ownership which deserves an
14:12entirely different regulatory existence
14:14then taxis do and they did but the other
14:17thing I would say is you always have to
14:19give people a path to success it cannot
14:22be a zero-sum game where we win the
14:24election what does that mean giving
14:26someone a path to success it means you
14:28have to allow people to win and elected
14:30officials their job is to advocate on
14:32behalf of their constituents so you have
14:34to work with them to find a way so that
14:36you have a shared common goal and so
14:38many elected officials care a great deal
14:40about reducing congestion or they care a
14:42great deal about reducing drunk driving
14:44they care a great deal about economic
14:46empowerment for certain communities
14:47there is a win for everybody by finding
14:50that common ground and just going in and
14:53bulldozing you may win one or two that
14:54way but they talk that's the other thing
14:56you have to go to places where
14:58legislators and policymakers gather that
15:01entire circuit of basically clubs in
15:04socializing events like the Republican
15:06Governors Association the US Conference
15:08of Mayors where lawmakers and policy
15:11makers attorneys general meet you have
15:13to go to those things and meet them on
15:14their ground that's where your education
15:16campaign should really begin so this is
15:18a question that we get from a lot of
15:19startups is when do you join those
15:21organizations when does it make sense
15:23product when do you actually contribute
15:25to individual candidates you form a
15:27especially if you're a startup these are
15:30very expensive organizations to join and
15:32how do you know when the bang is worth
15:33the buck you should invest in those
15:35things when you have people that can
15:36dedicate the time to them to make them
15:38worthwhile so I would start first
15:40depending on the level where your
15:42regulated if you're a single person I
15:43would join a tech net net choice there's
15:46any number of great organizations that
15:48can be co-leaders of information for you
15:50probably on day one if you're hiring a
15:52person to oversee government relations
15:54that person will do the best that they
15:56can for you but you've got to give them
15:58the weapons in the house maybe Gantt so
16:00as you scale a pullet policy team you're
16:02scaling and internally but you're also
16:04scaling it with a set of external
16:05relationships and memberships which
16:07don't come free that's right times if it
16:09is fundamental to your ability to sell
16:11your product I mean you can try and
16:13someone else will take care of it for me
16:14but that's a really dangerous way to run
16:17a business so you know another thing
16:19that a lot of companies encounter is you
16:22are not the only player in your market
16:24so you're coming up against regulation
16:26but other companies deal with other
16:29competitors sometimes we're trying to
16:31create a regulatory moat to stop
16:33competitors from getting in other times
16:36two companies are so similar it's hard
16:39to think about how one company can win
16:41in the regulation front while the other
16:43loses so how do you think about working
16:46with or alongside competitors that's a
16:50great question because you know the
16:52reality is is that even though we may
16:54view ourselves extremely differently as
16:56companies in terms of what we're trying
16:58to accomplish and what we're about we do
16:59play in the same sandbox and we're on
17:01the same side of the vast majority of
17:02core policy issues so what you do tend
17:04to agree on what from a policy
17:06perspective needs to get done however
17:08there may be in vast differences in
17:10opinion as to how best to accomplish
17:12that one of the hardest decisions that
17:14we had to make as a team back in 2014
17:16which is our first decision to leave a
17:18major city one of the first cities that
17:21was developing an ordinance was the city
17:24of Houston and ultimately the ordinance
17:26that that developed was not one that we
17:28felt worked and we had to make the very
17:30difficult decision to pull out of that
17:32city our competitor did not make that
17:34decision in the long term I would dare
17:37say that the decision for our
17:40to stay in that city actually led to
17:42more cities and more jurisdictions
17:43trying to follow the lead that Houston
17:45put out there because they believed and
17:48rightfully so that hey a company can
17:51clearly operate under this framework so
17:52there can't be anything wrong with it
17:54there is a chance as the industry to
17:56draw a hard line there and I do believe
17:58that that led to more difficulty over
18:01the next couple of years then it would
18:03have if as an industry we had maintained
18:05a hard line this type of regulation does
18:07not work for this industry but when can
18:09you work on your own as a company versus
18:11when do you rise and fall together as an
18:13industry would you talk to the other
18:14regulatory teams at your competitors if
18:17you're a smaller company can you think
18:19about almost trailing behind when the
18:21other companies are like the lead
18:22bicycle on the pack so you don't have to
18:25take it all on yourself it's actually
18:27quite the opposite yes we had a broad
18:29roster of consultants way more
18:31consultants than we had internal members
18:33of the gr team but because it was so
18:35critical for us to make sure that we are
18:37out there really explaining not just
18:38coming in and saying hey this is what we
18:40need we're not going to tell you why
18:41just this is what we demand but doing so
18:43in a way that explains that builds
18:45champions that builds you know elected
18:47officials who can see why it's in their
18:49interest we have never and never have
18:52and never will just rely on another
18:54company to try to accomplish what is
18:56best for our industry we strongly
18:58believe that it is critical that we are
19:01involved in any one of these
19:02conversations and can you win at the
19:05expense of your competitors it's
19:06extremely tricky to try to get a
19:08competitive advantage in an industry
19:10where operationally you are so some
19:13similar to your competitor and it even
19:15if there are opportunities I think
19:17they're very fraught with risk you know
19:20what you try to push for that MAPE
19:21advantage you and today may be used
19:23against you to your disadvantage
19:25tomorrow so ultimately I don't think
19:27there's really any way to get a
19:28competitive advantage when you are in
19:31the same sandbox yeah and anyone who's
19:33entertaining doing that in order to get
19:34an advantage has obviously got a bigger
19:36problem and that is right you should not
19:38be using gr as an assault weapon on your
19:42opponents unless it is necessary to be
19:44able to survive and sell your products
19:46right there's a difference there so what
19:48are the other groups that you need to be
19:49aware of and what are some of the things
19:51that you're hashing out
19:53now as we get into autonomous vehicle
19:55technology as we're able to be more
19:56efficient with filling up the amount of
19:59cars that are on the road and combined
20:00with the fact that we're seeing a clear
20:02decline in car ownership well if you're
20:04a bit more efficient on how you're
20:05transporting people around then all the
20:07parking spaces you see on the side of
20:08the streets the parking lots one of our
20:10co-founders John Zimmer noted that if
20:13you were to take all the parking spots
20:14in America it would fill the entire
20:16state of Connecticut and more that's an
20:18amazing amount of space that we can
20:20repurpose if we're able to crack this in
20:22the inherent and efficiency in ground
20:24transportation were on the verge just
20:27the very early steps of doing that it's
20:29gonna be a lot of fun over the next few
20:30years thanks very much for joining
20:32thanks for having us Matt thanks for
![How To Succeed As A NEW & YOUNG Realtor [Deals Every Month + Luxury Listings]](/_next/image?url=https%3A%2F%2Fi.ytimg.com%2Fvi%2FrtrRghgTayc%2Fhqdefault.jpg&w=3840&q=75)
