a16z Podcast - a16z Podcast: Of Governors and Mayors, and Tech Policy

Episode Date: December 15, 2017

Many of the big tech policy issues of the day play out more so at the state and local level, not just federal level. The decisions that cities and states make every day -- from autonomous vehicles to bike sharing -- may therefore end up setting the stage for broader government policies around new tech. But where do "politics" come in for these policy decisions? Many tech policies are in fact bi-partisan or even non-partisan, argue Governor Doug Ducey (R-Arizona) and Mayor of South Bend Pete Buttigieg (D-Indiana), in conversation with a16z policy team head Ted Ullyot. This "byte-sized" episode of the a16z Podcast is based on a conversation recorded November 2017 at our annual Summit event, focused on innovation. How can places and people be more receptive to innovation and innovators?

Hi, and welcome to the A16Z podcast. This episode of the podcast is all about how many of the big tech policy issues of the day play out beyond Washington at the state and local level. Recorded at our annual summit in November 2017, Ted Elliott, head of A16Z's policy and regulatory affairs team, discusses with Governor of Arizona, Doug Ducey, and the mayor of South Bend, Indiana, Pete Buttigieg, many of the key developments in tech policy around autonomous vehicles, dockless bike sharing, and more. We're honored today to have joining us, Governor of Arizona, Doug Ducey, and the mayor of South Bend, Indiana, Pete Buttigieg. Governor Ducey, who's a Republican, and the mayor, who's a Democrat, are two outside the Beltway leaders who've made their mark as being highly pro-technology, pro-innovation, and pro-entrepreneur. Governor Ducey was elected governor of Arizona in 2014, Arizona's 23rd governor. Before that, he served as the state's treasurer for three years.

And in that capacity, among other things, he was Arizona's chief investment officer. He began his career in the private sector. Procter & Gamble, ultimately became CEO of Coldstone Creamery. And since being elected in 2014, Governor Ducey has made it a priority to place Arizona at the forefront of the pro-innovation regulatory reform. Mayor Buttig's career also spans both the public and private sectors. He was elected mayor of South Bend in 2011. He was an intelligence officer in the Navy deployed to Afghanistan. He remains a naval reservist, still in Intel. Worked at McKinsey earlier in his career.

Earlier this year, he was one of the finalists. for the chair of the Democratic National Committee. And as part of his platform for running for head of DNC, was emphasizing issues of innovation and entrepreneurship. So Governor Ducey, can you tell us a little bit about that? How did you go about thinking about autonomous vehicles as a place for Arizona to get into it? We were hosting the Super Bowl in Arizona in that first month.

I was first elected governor. We also had to assemble an entire government. You know, 35,000 employees, 43 agency heads, 220 boards and commissions. So our agency had at the Department of Wights and Measures told us that his plan during the Super Bowl was to shut down Uber and Lyft with a sting. And we thought this guy didn't pay much attention to the campaign. So we returned him to the private sector that afternoon. We lifted all the regulations, and these were regulations that had been written decades before for the taxi cab industry. The press couldn't believe that we had terminated somebody in state government and through executive order lifted these regulations.

as a person who came from the private sector, we wanted Arizona to be seen as a place that was open for business. One thing you get to do in these positions is you get to make decisions. So you can either make good decisions or bad decisions. We're always going to have a concern for public health and public safety. But once we get beyond those two hurdles, we want a lot of innovation and entrepreneurship flourish. Yeah, it's good for the people of your state, of your city as well, presumably as part of the thinking. Mr. Mayor, among other things, you were one of the first mayor is to welcome in to a city to South Bend, the dockless bike company, line bike, full disclosure, portfolio company. What went into that thinking? Did you encounter any resistance

there? Yeah, so a lot of the thinking there matches to the city's goal of becoming a beta city for new technologies, new social ideas, new policies, and new businesses. So you take a city like South Bend, and if you're not familiar with it, or you only know that we have a football team there, it's really an industrial town. We grew up around the auto industry when Studebaker was making cars, and we grew to a scale about $130,000 at our peak. Now we're down to about 100, but growing again for the first time in a while. That, I believe, puts us in a beautiful position to be a beta city and a test bed for new ideas. So we're just big enough that you'll encounter complexity.

If an idea or a technology or an approach works in a place like South Bend, that matters. We're also small. We're small enough you can get the attention to the mayor. We're small enough we can be creative around any regulations, tear down barriers. And so you take an idea like Lymebike. And for a city like us, the biggest obstacle to having bike share, share, something I always wanted to do, I think most mayors do, was paying for these stations. Leaprogging that by having a system with no stations at all made a ton of sense for us.

And actually, the biggest issue I've had is just dealing with people who want to know how much tax money we've spent on it, not understanding the business model, which is that we put no city cash at all. And so we've also absorbed the tech industry's mantra that it's okay to fail. Now, in government, it's not okay to fail in the same way as at the same times. But in a case like this, we knew that we were taking a risk, but if it didn't work, that's No skin off the taxpayers back. How do you search out those innovative companies like one?

One thing that's happening right now, especially as Washington gets more and more paralyzed, is there's this community of state and local officials. And it is bipartisan and it's coast to coast. I got basically a referral from another mayor who said, we were looking at this in our city. We're not quite the right size for it, but I think you'd really like this idea. And he was right. So it's a great example of how sometimes cities, even across international boundaries, are forming relationships and cooperating, sometimes without waiting for our national

governments even to catch up. One thing you touched on there is in terms of the bipartisan nature of a lot of this. And I think you two being here is an example of that, a Republican and Democrat here, opposite sides of the aisle, but united on the pro-innovation deregulatory and pro-technology front. Many, probably most of the key tech policy questions defy partisan boundaries. Drones, it's not a partisan issue. Fintech, not really a partisan issue. Autonomous vehicle is not tremendously an issue, not tremendously partisan. So those ought to be areas where in an environment where we see a lot of paralysis and politics that we can can see some forward movement.

You want to talk about that? I mean, you're in a say with a Republican governor now. You had Mike Pence before that, another Republican governor. Yeah, my tender age. I'm on my third Republican governor already. No, I think a lot of these issues, it's just about delivery. You know, in local government especially, I think it's largely true for state as well. You know, you'll never hear about a state or a local government shutting down overpartisan disagreement, right?

We deliver water. You need water to live. And so it's not even on the table. We're under a pressure to deliver that, I think, compels us to be more open to innovation. Governor, have you seen that also? Oh, I 100% agree. don't think any of these issues fall into either partisan category. You couldn't call them Republican or Democrat. I wouldn't know that I'd call them bipartisan. I'd call them nonpartisan. I mean, this is economic development. And I think, of course, that is a reality, but it's more a reality in Washington, D.C. I mean, Pete and I are part of a group where you'd have to Google someone to know what their party affiliation is, where people come together and share good ideas that are happening in public policy. I mean, no one knows who Doug Ducey is. Indiana, and no one knows who Mayor Pete is, you know, likely outside of his state. So it really

disarms where you can say, hey, have you had this challenge? And that's what I think the real challenges for states and for leaders is how do we continue to grow our economy and innovation. We're already doing it, but why are some of our best companies going elsewhere to test these products? The New York Times front page of the business section recognized that self-driving vehicles were coming to Arizona to learn. And that was actually, a result of other governors pushing them out and saying, we're going to hit you with permitting fees, we're going to hit you with recertification, we're going to hit you with extra licensing. And what we said is once we're satisfied that public safety, we've checked

that box in public health, you're welcome to come test and roll out in our state. Yeah. That raises one issue, Governor, which is the gaining acceptance for your pro-innovation platforms among various constituencies in the city and in the state. You mentioned the regulator who immediately didn't get the message about what you would run on and adopt the opposite approach with Uber and Lyft around the sewer bowl. Are the stories about how you've gone about convincing people that, for example, autonomous cars are safe or safer than the baseline of human driving? Well, one of the great things about being governor, you're a chief executive officer,

and these agency heads, they report to you, and they work at the pleasure of the governor. So, I mean, I've learned a lot coming into government. I've met a lot of nice people, learned a lot of neat acronyms. But everything I'm doing, I learned in the private sector about setting a vision, convening the right people, having metrics that folks can be held accountable to. So I don't think you have to sell people on pro-innovation. You have to lead at pro-innovation. You have to make good decisions. And you have to be thoughtful. It is easier to just say no. There's that institutional no, that there's always a pressure. And oftentimes a bureaucrat, they will default to that. So as a leader, you have to change the culture. I, of course, didn't look. determine anyone when I came into office, but when someone wanted to shut down the city during the Super Bowl, it did send a message to everyone in state government that things had changed. And today,

our cabinet meetings remind me of our all-hands meetings at Coldstone Creamery. I mean, we've got people that are really thinking out of the box. And for most of these ideas, you need technology. Mayor Pete, how has the reception been in South Bend? Yeah, there's always resistance, and my experience is similar to the governors. A lot of the resistance is actually an inside government. I mean, I had to convince people to use this experimental email platform called Outlook to kind of bring us into the late 20th century. On the other hand, I had a mandate. So when you run for office in your 20s, you know, your face is your message. And you are the candidate of technology and new ideas and innovation.

Even if you don't like technology and you don't have any new ideas, people still see you that way. And so you can say that the community sent a message just by voting me in in the first place. The other thing I think is that you've got to have experience, right? The more an innovative move pays off, the less resistance there will be to it. Now, the risk is, sometimes you just have to do it. And in the spirit, again, of some tolerance for risk, you have to do it knowing it may or may not work, but seeing as believing. And if you got it right, you'll have that much more room for maneuver the next time around

when you're trying to convince stakeholders to give you that opportunity. Let's talk a little bit about the relation between what you do and the federal government. So autonomous vehicles, there's a framework that the Department of Transportation works with and NHTSA works with. You have to interface with the federal government on a number of things. How do you think about that? And how do you find that relationship when you do need to work with the federal government on innovation issues? I think a lot of it really is just tearing down obstacles, right, and making sure we have the room for maneuver. Although you shouldn't discount what a pro-innovation federal government can do.

Actually, the first time I witnessed a dockless bike sharing system was in Denmark on a delegation led by Secretary Fox, secretary of transportation in the last administration. But the reality is the federal government is usually at its best when it's just setting up a framework or tearing down obstacles. At the end of the day, you know, we have this patchwork of state regulations, which are usually most relevant from telecoms. to issues like autonomous vehicles. And the cities are very much at the mercy of the states. So I spend most of my energy figuring out not how to deal with Washington, but how to deal with Indianapolis.

And we reach out to our mayors and they want to run their city. I don't have a desire to run their city. And that's why we've had success regardless of party affiliation. Washington, D.C. is a totally different animal. In Arizona, we will wipe from the books this calendar year, 500 regulations. We want to kind of thatch the regulations, the rules, and the laws that are unnecessary or have. had good intentions at one point and now are an obstacle to growth.

What we want to say to Washington, D.C., is let us have charge of these dollars and the direction with the same intention of getting people back to work, making sure that they don't fall through the cracks and the safety net. As we wind down, I just had a couple questions about putting your money where your mouth is. Mr. Mayor, have you ridden a live bike? Oh, absolutely. That's great. And Governor Ducey, have you ridden in the autonomous vehicles that are testing out in Arizona?

I've ridden in three autonomous vehicles, and boy, these things are. are very close to ready for prime time. My grandmother's 93 years old. I think she's going to live till she's 115, but she has had her freedom reduced because of her eyesight. With these driver's vehicles, it would be like she's 50 years old again.

What it can do also, I think we have 38,000 deaths annually in America, 94% of them due to human error. What this could do in terms of saving lives, helping that is disabled, I think it's going to be an incredible, brave new world in front of us.

Great. Well, thank you both. I think this, again, a strong illustration of the importance of state and local policymakers when you're thinking about tech policy questions. And also, one size does not fit all on state and local. Please join me in thanking the mayor and the governor for joining us today.