a16z Podcast - a16z Podcast: Lobbying Tech

Episode Date: June 24, 2017

What is lobbying, really? Is it “white", "heavy-set" men "playing golf" and making arrangements in "smoke-filled back rooms”? It's not like that anymore, according to two lobbyists who join this episode of the a16z Podcast to pull back the curtain on this practice… and share what’s changed: Heather Podesta, founder of Invariant (and a lawyer by training), and Michael Beckerman, President and CEO of the Internet Association (an industry trade association that also has lobbyists on staff). Given the tech industry’s increasing engagement with policy, how does lobbying play out for tech companies in particular? What are the challenges when going up against deeply entrenched incumbents, as all startups inevitably do? And finally, how has tech itself changed the act of lobbying? Thanks in part to the internet, we're now in a new era of transparency and public engagement, where "lobbying" has shifted more to more open citizen engagement vs. only inside closed rooms. We cover all this and more -- including practical tips for influencing government -- on this episode (in conversation with Hanne Tidnam), recorded as part of our annual D.C. podcast roadshow.

Hi, I'm Hannah, and welcome to the A16Z podcast. In this episode, recorded as part of our Washington, D.C. podcast Roadshow. We talk with Heather Podesta, CEO of Invariant and Michael Beckerman, president of the Internet Association, about all things lobbying, tech lobbying in particular, what lobbying really is, what's different about it now, how it's changed, and where it's going. So the term lobbyists is over 100 years old, and it stems from the lobby of the Willard here in Washington, D.C. And it was when legislators were here part-time, the lobbyist would sit in the lobby and catch members on the fly as they were going to their room. Like a proxy stand-in, grab somebody with a hook. Exactly. Exactly. Exactly. And so people have this image of what a lobbyist looks like. It's going to be a white male. Sorry, Michael. I'm going to be someone sort of heavy, overweight. That's not Michael. Someone with a cigar. Thank you for noting that for all our listeners. Someone with the cigar and someone who plays a lot of golf and just goes to meetings.

And is, can I just be candid, is driven by money, right? Like there is this aspect, this feeling. They're usually pictures of dollar bills and dollar bills falling out of pantsuit pockets and the like. So that's the image. So what is the reality? The reality is very different. I think there are still people in Washington that sort of fit that stereotype, but they're not effective. That's interesting that you say they're not effective. It's no longer enough to know the chairman of the Appropriations Committee to get something done.

and you actually have to have the facts on your side. You know, 20 years ago, 30 years ago, there wasn't this level of transparency. Now every aspect of legislation is really being watched by everyone. And politicians are absolutely accountable to their constituents. I think some of the credit belongs to the Internet because all it has come down to transparency, right? Back in the day when you only got news from a newspaper, maybe what you saw on TV, the backroom deals and things like that were everywhere.

It was like Heather's described me, like the good old boys network where, you know, smoke filled rooms with no transparency, no reporters, none of this public stuff. It's changed because more people are engaging and there's a lot more transparency. And so when somebody votes on something and it's because they had a personal relationship with somebody or they got a big donation, that becomes public. And so you do need to have the rationale for why you're doing something and not just doing it as a person. personal favor or due to a campaign donation or somebody that you went to high school with and people engaging online. That's really important. Really, all of us are lobbyists whenever we engage with an elected official. If you wrote a letter ever to your congressperson or if you went into a town hall, talk to your mayor about a zoning thing, if you engage with your elected

officials at any level as a constituent, you're lobbying. What that means is, in my opinion, is you're making sure your voice is heard and you're trying to influence that process. So advocating for something or for yourself. Absolutely. And it is enshrined in the First Amendment, the ability to petition our government. Every part of our lives is represented by different lobbyists. So where you went to school, your water department, the clothing manufacturers, every aspect of all of our lives has someone in Washington. advocating on behalf of their part of the economy, even churches have lobbyists. Huh. That's really interesting. I didn't realize that. And it's to, so it's to, when they have

specific goals they want to achieve or just sort of like a general awareness, what's the range of it? It's not great if the first time you're engaging with your elected officials is when you have a problem. And so some of the lobbying or advocating is just setting a landscape. A perfect example is is where you have a new technology. If you never educate your elected officials about what you're doing, there may come a time where they're saying, what is this podcast thing? Yeah.

We need to really get the government involved in podcasts. Yeah. So is that one way in which tech lobbying is really different from other industries where it is kind of more familiar? You know, we have a sense of what the basic asks tend to be. One of the great things about tech lobbying is how diverse it is, especially with new technologies, members of Congress are really, keen to be part of the next cool hip thing. So if you are that shiny silver object and they want to

be associated with you with it, they're keen to learn more. An attention advantage. Exactly. Interesting. So if lobbying is everything from writing to your mayor to complain about how your garbage is picked up to introducing, educating about new technologies, how is it different from other forms of influence. The government can be impacted through litigation or bad press or good press. Right. So I guess it can be three buckets, right? You're trying to stop something from happening. You're trying to make something happen or you're trying to educate so that whenever you get to the point where you're trying to stop something or make something happen. The general education is really important, particularly technology is a perfect area to think about because for a lot of

policymakers, it's new. You want them to have your point of view and you want them to really understand what they're doing. The term lobbying has a very set definition now. And so technically I'm not a lobbyist. I run an organization. We do have lobbyists that work for the organization, but we also have lawyers that deal with things that happen in the courts, which does have an impact on policy. We have a communications team that deals with what happens in the media. And all of that is tied in together. But lobbying is a very specific thing that's dealing with, you know, talking to a specific elected official about a topic. What are some of the most effective ways of doing that? Having the facts on your side and it is

continual engagement. So it isn't enough to come into Washington once with your product, your widget, your service, and sort of expect all of Washington to cater to you because you have created the best most awesome thing ever. It really is understanding what members of Congress are thinking about, but also what the agencies are thinking about. And guess what? Like any first date. There's flirting, people are excited, and then if you don't have a follow-up, out of sight, out of mind. I like to say that D.C. is a fact-free zone and relying on a congressional office or an agency to figure out how your business works by, you know, jumping onto the internet and, you know, doing a news search isn't enough. Because if you are a new,

company, if you are a new technology, you are probably disrupting an incumbent. An incumbent that is powerful and well situated in Washington. And an incumbent that has longstanding relationships and jobs in a lot of different districts. Can you elaborate a little bit on what you mean by having the facts on your side? Because I feel like everybody thinks the facts are on their side. Well, we all come to Washington with all earnestness. Part of it is explaining issues to people in terms of not what you're promising, but what you're actually delivering, but coming in with concrete data in terms of there are 206 people employed in your district. Right. And they're very concerned about your position on patents. You have to make it real and you have to explain why that position this member of Congress might have in patents works against those jobs.

So clarifying mistakes. So you have to start there and say, we're new. We don't have the relationships with you. But let me explain how we're helping your constituents. We're helping the community. We're creating value. We're creating jobs and quantify it. What about when there aren't, so when you're sort of creating a new, I mean, market creation, sort of a product that's coming in and where you're not so much disrupting an incumbent, but something very new that people don't even really understand? People can be suspicious and generally do not like surprises, especially anytime you are touching people 18 and younger, that government is going to sort of step in and make sure that,

we are protecting young adults, protecting children and the like. And so you can, you know, with a lot of these newer products, you can absolutely anticipate how Washington will react. It will generally be paternalistic. It will work from a position of this is what we've done in the past. And are you doing a bad thing or are you doing a good thing? And if people aren't telling them, telling these legislators, we're doing a good thing, they're likely to get a letter.

That's usually how this starts, a letter saying, what do you do? Yeah, you don't like getting a letter. No, there is no check in these letters. It isn't like grandma sending you your Christmas money. It is, what are you doing? Why are you doing it this way? Help us to understand why you've structured it this way. and very quickly gets into business questions,

often in a very accusatory manner. A sort of de facto negative stance. Yeah, I mean, you have legislators and you have regulators, and they're called that because they like to legislate and regulate. That's the default setting. And so, you know, whatever you're doing, that's what they're going to look to do, legislate something or regulate something.

All of these new regulations and legislations like tend to have these ripple effects, right? that many of them unforeseen, that we can't say, how do you get a sense of those? The good thing and the bad thing is that Washington doesn't move quickly. It only moves quickly in a time of crisis, and that you can sort of count on. And so there are multiple opportunities to provide input into regulations, into legislation. And part of our job is to see around corners. So to anticipate before a bill is even dropped what the issues are and to begin the education so that as a bill starts to wind its way through Congress, that it ends up in the right place.

It is true. It's good and bad that Congress does move slow, but there are other things that happen in the process such as executive orders or things that happen at regulatory agencies such as the FCC or the FTC or. SECR that can sometimes move quicker or apply rules from things that they already have the authority to do on new technologies. Is that one of the things that in tech lobbying in particular you really struggle with? Because it sounds like the pace is so different, right, for these companies, which are all... Some of the larger problems in the system need an act of Congress and need the president to sign something new into law. And that's a slow process. And you have people that have been able to slow down the process. When you're on defense, you know, this is a good thing. And when you're trying to be on offense and get a new reform enacted.

and sign it to law, it's frustrating, very frustrating. The mantra with startups is move quickly, break things, just go, go, go, go. Congress doesn't work that way. The most important thing to understand is Congress is not going to be, is not going to change for you. How are you going to work through it and what's your plan? For some companies, it's simply, you know what, I'm going to do my thing and I don't need Washington. That doesn't last very long. If you know the rules of the road, you're a much

better driver and you can get from point A to point B faster. Every company can be their own advocate. Everyone has a member of Congress and two senators and has the ability to pick up the phone and talk to those offices or come and visit those offices and begin the conversation, and begin to understand where their member of Congress might be on these issues. Oftentimes, people will start that conversation but realize, wow, this is more than one phone call. And I need to focus on building the best possible product. And so how do I do both? And the marketplace gets divided up in Washington every single day.

People think it gets divided up in tech crunch and code and sort of the marketplace of the broader ether. But the marketplace also gets divided up when a company receipts that investigatory letter. And what does that say? If you are a startup in a heavily regulated space, if you are a startup in health care, if you have a Washington lobbyist and know exactly what's happening in the agencies as well as what's happening on the hill, that shows a certain sophistication and a certain knowledge and investors like to see that you know your regulators. You're signaling that you're already thinking about these things.

At the adult table. I mean, there's an expression in Washington that if you're not on, At the table, you're on the menu. So it's much better to earn that seat at the table early on. Yeah, that is a really, really important point, both for Washington, but even in the press and media, if you're not telling your own story, someone else is telling your story. I mean, the same thing. If you're not sitting at the table, someone else is going to be eating you for lunch.

Is lobbying on a state and local level different from federal in any tangible way, or is it always kind of the same conversation? I think it all, I mean, I think it all. goes down to explaining why you matter as a constituent. All politics are local, right? Right. And they care the most about what their constituents care about and what matters to the area that they represent, be it, you know, a small town as a mayor or an entire state as a senator or the entire country as the president. Why? The sort of bad rep that lobbying has, because some people feel like, well, we shouldn't need to do that, right? When Obama was running and when he was elected, one of his planks was sort of distancing himself from the lobbyists and made a very

big point of not taking lobbyist money, not having lobbyists in his administration. And it was kind of hard to be sort of deemed a second-class citizen. And so one of the fun things, sort of tongue-in-cheek things I did was I printed up these brocade scarlet letter L's. Oh, I didn't realize they were actually scarlet. That's great. And very sort of Hester Pryn-like, and I handed them out during the Democratic Convention. I think what I was trying to say is, I understand my place.

You can label me, but I am still here. I'm really proud to be an advocate. And so to have a little bit of fun with the scarlet letter was, just good laugh. Seems like for a while there was a perception in Silicon Valley that you didn't need which you've talked about.

You didn't need lobbies. We just do our own thing. It does seem now that that's changing. Has technology itself changed how you do what you do besides the obvious email and social media? Are you starting to see any real impact? I mean, you describe such a face-to-face personality-driven.

Yeah, 100%. I mean, it's easier to reach people and get people engaged in that process. I think a great example of this and when I actually I was on Capital Holes during the SOPA PIPA debates of on piracy, the entrenched interest in D.C. at the time were the content industry, the Hollywood Studios, which have been at this game for a very, very long time. The internet

industry didn't even have a trade association that happened was. People used the tools of the internet. And there was a groundswell of people calling, writing, emailing their elected officials. And it stopped that bill dead in its tracks. It was 100% on the path of going through the process, no question. Had full support, bipartisan support in the House, in the Senate, and the committees, that bill was going. And what happened was, there was a groundswell, a grassroots effort and others and some of our companies were involved in that to make sure that individuals who cared about this issue called and emailed. And so those tools are even more refined now. And you see even non-tech companies and non-tech industries make that

part of their process. Without a doubt, technology has created all these different channels of communication. And members listen to that symphony of voices. But there is a still no substitute for the face-to-face conversation, and God forbid, picking up the phone. Hearing a voice on the other end of a phone and having a conversation that still has enormous power and resonance, and it is hugely effective. The format probably matters more on how much time it took you to do it. Back in the days of letters, for example. Postcards.

Yeah, if you had like a postcard, all you didn't do it's like, you'd just like, you know, check mark and it was already written, that's lower than if you wrote a personal letter. You know, if it was handwritten is better than... You didn't take the time to tell me how it actually is. Right. If it's a form letter, you know, that's, you know, different. Like, same thing with emails. If it's a personally written email versus a form email where the members getting the same hundred thousand of the same exact text, they know that, right? If you're just putting your name on something and someone's generating all these emails...

That's meaningful. I know it varies industry by industry, what the issues are from tech, you know, in terms of tech lobbying, what you face. But are there particular ones that, you know, you're really, that are the big, that are the sort of hot zones for you right now where you're having the most difficulty? I think one of the mistakes that people make is saying, oh, tech, it's all one thing and they are united, which is very different from autos are largely aligned, airlines largely aligned, pharma largely aligned. Tech, not so much. Yeah, I love that you said that actually. People, like, you know, they get confused and you say internet and tech companies, like, it's all the same thing. And it's very different if you're, you know, Facebook, Airbnb, Twitter versus if you're Hewlett-Packard and IBM, and it's very different.

How much does your job change from administration to administration or what you do? How do you deal with these change over the change in administration? It doesn't change. I mean, it is the same blocking and tackling and part of it is dependent on. people and their priorities and their mission. But, you know, at the beginning of a new administration, whether it's a Democrat or a Republican, there is the need to go in and make the introductions, begin the education. Again, yeah.

So you start over. You start over. And you start over. I mean, it is a repeat prisoner's dilemma. It doesn't change, but that's something that we need to remind everybody of, particularly for our sector. So think about this, most of our member companies and probably most of your portfolio companies only have known one president. Wow. Think about that for a second.

So for the last eight years, you've had, you know, President Obama. And so even companies, let's say that are, you know, 10 years old, right? Like they really probably in those first two years weren't really engaging that much and weren't really thinking about government as the way they were, you know, from the last eight years. Now you have a different president. And guess what? In some period of time after now, we're going to have a different president. You have to engage regardless of who's in the White House. You have to be talking to the president, the administration, and the government you have.

When we agree with them, they heard about it. And when we disagree with them next, they heard about it. Each issue needs to be looked at in a vacuum and work with them on the next one and the next one. The idea that CEOs or the idea that companies should not be engaging with a government or a president you disagree with is completely opposite of the kind of democracy and kind of government we have. Because if our elected officials are only hearing from the people that agree with them, think about the kind of government we're going to have. It can get frustrating.

You can feel like Bill Murray in Groundhog Day. But that doesn't mean you don't wake up and do the necessary things to get through the day. Look, every issue has the potential of being bipartisan, particularly in tech. You might have Republicans that are good on some issues and bad on others, and you'll have Democrats that are good on some issues and bad on others. There's rarely the person that's bad on everything. Most 90% fall in that middle spot where,

you know, they're with us on some things and against us on others and you have to be able to work with the people that agree with you on that issue and then they might disagree with something else, fine. You know, that's what happens. That's just the nature of the beast. Welcome to compromise. Well, thank you both so much for joining us on the A16D podcast. Thank you. Thank you.