a16z Podcast - a16z Podcast: Of Presidents, Policies, and Tech

Episode Date: January 21, 2017

How to think about tech policy and top-of-mind issues for the tech industry, given a new president? From what agencies matter for different tech domains -- e.g., autonomous cars, drones, fintech, healthcare -- to recent staffing moves, the a16z Policy and Regulatory Affairs team shares their views in this episode of the podcast. What happens to tech policy when you have a dominant Republican presence in both Congress and most states, yet a Democratic majority of mayors? Especially when cities (potentially laboratories of experimentation) may be where all the real tech action's at? How does tech policy play out differently at the local, state, international, and even federal levels? Especially when many of the tech issues don't fall along party lines ... and the traditional way you look at issues is "left vs. right" -- "but it's almost like 'forward/backward'" here. And finally, how should entrepreneurs think about engaging with policymakers, and vice versa?

Hi everyone. Welcome to the A6 and Z podcast. I'm Sonal and I'm here today with our policy and regulatory affairs team, which is our newest operating group coming up almost on two years when Ted Elliott joined. And Ted was a former general counsel at Facebook. He was formerly in the George W. Bush administration. And he has two other members of his team here as well. Matt Spence, who is in the White House and then the DOD is part of the Obama administration. And Matthew Colford, who was also in the Obama administration in the State Department. So we have kind of a, intentionally by design, a bipartisan range of perspectives in the room. But the goal today is sort of thinking about now as things are settling down, what are the implications for tech, given the outcomes? And just to launch things off, how does it affect startups? Our thesis coming into the election was there's some things where it'll make an effect, where the choice between a Republican president, a Democrat president would make a difference for tech policy. But in many instances, to a very large extent, there wouldn't be as big a difference as people think. And that's because, one, many of the issues are nonpartisan or

bipartisan in nature or break down along lines in Congress, but not along necessarily Republican-Democrat lines. Encryption is a classic example of that. You had until now the leading proponents of back doors, let's say leading opponents on the hill of encryption, have been Diana Richard Burr, a North Carolina Republican. Both on the Senate Intelligence Committee. Yeah. They're on the, you would say, the pro-law enforcement, anti-encryption side. That's just to simplify. And then on the other side, on the pro-encryption side, you have similarly a Republican-Democrat pairing as the leading, as the leading advocates of encryption. That would be Ron Wyden of Oregon, a Democrat, and Rand Paul, Republican of Kentucky. Yeah. And foreign presidential candidate. I mean, the traditional way you look at issues is left-right. In a weird way, the best way, it's almost like forward backwards. If you're looking at different tech issues. What do you mean by that? I mean, in the sense that look at some of the most interesting tech issues interact with with policy, financial technology, medical technology, drones, driverless cars, Bitcoin. The issue is not that you can look at someone say, oh,

that's a real conservative view. Like the breakdown falls upon like, what's your expertise? What's your background? Generational in some ways? And I think that's a thing that people don't really expect. So you can't identify what some of these most important issues are based on, you know, the party convention they go to. And that's something I think that was missed in the debate over the election. A lot of people are saying the fact that Donald Trump means will mean a specific set of things for tech policy. And it's a much more nuanced story in that. You've got to dig down what it means for each individual vertical. Right. So it's a lot more nuanced than necessarily breaking the issues down by partisan lines. Another point is a lot of the tech policy issues that

people think about today that are the headline issues in the world of tech policy are ones that are decided much more the state and local government issue or international. rather than U.S. federal. If you think about the issues in ride sharing, the issues in home sharing, the so-called gig economy issues, 1099 versus W-2, there's a federal component to that, but most of the action has been at the state and occasionally local levels. In some sense, if you ask, who's the most important decision maker for a lot of tech decisions? It's the mayor. It's not the people that you're seeing. One theme that does come up quite a bit on this podcast, is we talk a lot about.

software is the rise of cities as major global players, especially when it comes to tech. All of these cities and states, for that matter, are competing to be these innovation hubs. From our perspective, one of the more promising aspects of the distribution of power at a state and local level is that the Democrats control about 70 of the 100 largest cities, but they're all competing in a way to be tech friendly. I mean, Hartford, Connecticut, who thinks about them as a tech city? They're emerging from bankruptcy, but they recently started a program where they're converting the old Colt Armory, which used to manufacture, you know, colt firearms into a incubator.

With the extent that, okay, we have software, we've hardware you can manufacture. They're trying to lure tech entrepreneurs and create like high wage lasting jobs. And it's also a Democratic mayor who's doing that, which is kind of a more pro-business take. Right, because tech is clearly, I mean, just, you know, to state the obvious, it's a driver for job growth and change and positive innovation. But the interesting theme, the tension here, that's kind of fascinating to me, is you said that about 70 out of 100 of the biggest cities are Democratic mayor dominated, and we're talking about cities as this new rise of power. Yet, the way that the outcome of the election shook out for state and Congress, it's predominantly Republican. That's right.

So what's the implication? So Republicans now control 33 governorships. The governor of Alaska's independent, so Democrats only control 16, that Republicans actually outnumbered. two to one Democratic governors. They control 68 out of 99 state legislative bodies, so both upper and lower houses or both upper and lower chambers. That's over two thirds. And then perhaps most importantly, in 32 of the 50 states, they control both legislative chambers and they have a veto proof majority in 17. So basically. Which essentially means even if a Democratic governor wanted to institute some sort of anti-tech policy or did not want to pass. some sort of pro-tech policy, the Republicans in these state legislatures could overturn that

bill. One of the significant effects that we see over the near term and for the next four years is on executive branch, the president, his appointees, and so on. One of our reflections on is that now you have a Republican president and a Republican Congress, this is where Matthew is going. It's when you had a Democrat president, President Obama, the presumption was any major project, any major legislative project that was initiated by Republicans would be treated with some skepticism, unless it had massive Democrat support. It would be treated with skepticism.

In other words, Republicans' majorities in the Senate and House only went so far because they could pass a bill that abide their views and then it would get vetoed the minute it got to the White House. Now that you have a Republican president, you could see the White House saying, you know what, these are great ideas you guys have come up with over the past four years, over the past six years, past eight years.

And now, great, if you send them over and you pass them, even on party line votes, or even with a very few Democrats, the presumption is those are going to be signed into law instead of vetoed. So basically what you're saying is that legislative policymakers have a more direct route from creating a policy to making it into action because of the Republican control. It's much more likely that their ideas are going to get adopted into law than it has been for the past eight years. Yeah. Taking a step back, as you say, Sown. and this is where we can start to get into some of the federal implications. We can talk about what the future of tech policies, the immediate outlook for tech policy is on the federal level.

But one of the interesting implications is that Republicans generally are in the main deregulatory. On balance, there will be fewer instances in which a federal regulation preempts to set aside and overrule a state law or to obviate the need for a state law. So you'll have more opportunities for state legislatures and governors, just state governments generally, to step up and say, wow, the federal government is not telling us what to do here and it's not occupying the field with its own regulations. So now the question is up to us, what should we do about fintech? What should we do about drones? What should we do about autonomous vehicles? So before we break down some of the verticals, what does that mean when you say do regulatory?

What does that mean for startups? Is it a good thing or a bad thing? I mean to be like so black and white about it in moralistic terms, but how should it? an entrepreneur think about that? Speaking as the Republican, I think it's almost always a good thing to have a deregulatory environment. It gives more freedom to the entrepreneur to build his business or her business in the way that they see fit and to experiment with new forms of new products, new forms of reaching consumers, new forms of giving disclosures, alternatives to traditional government, you know, a lot of regulation symptoms of a desire to promote health, safety, general welfare, prevent disasters.

Many tech companies figure well, we've got new ways of preventing that. The great example is ride sharing, of course, where you say we could have a taxi commission that prescribes a bunch of rules that puts a number in the back of the taxi cab that you can call if you have a complaint, or you can just do this app and have crowd, you know, have ratings by drivers and users. And if you think you got ripped off on the way from LaGuardia into the city, then you can, instead of trying to remember, if you don't know the area, instead of trying to remember what route you took, Lyft and Uber have it on the app and they can retrieve it and say, yeah, you were. I mean, I think this is one of those issues that's not a traditional Republican-Democratic divide. To your earlier point.

Yeah, I mean, speaking of someone who worked in the Obama administration, Democrats believe strongly in, you know, common rules with the road. The federal government often does a better job setting that for variety. of reasons. But in tech policy, the rivers can really be true. Because you look at the technologies Ted referred to, you know, fintech, drones, driverless cars, they're all moving so quickly. There's not one answer right now. And this idea that the states are a laboratory of democracy or experiment, you try, some things may work, some things may fail. Traditionally, that's more of a conservative Republican issue. But I think on tech policy, that's saying a lot of Democrats are behind because it's so new and the technology is changing so we need to experiment. So I think it's a really good

thing. Going back to this question about what is it, what does deregulation actually mean? I think the biggest implication for startups is just reduced barriers to actually launching your product. If you think about where the biggest obstacle exists for these startups that want to release something, oftentimes that kind of last obstacle, final clearance, final blessing from the relevant regulator is what's going to prevent you from actually doing it. So it's less so in the development phase. I think you wouldn't see, it's not like you would see with increased regulation fewer people, you know, delving into these interesting issues and taking on interesting problems. It's just actually releasing the products that address them, I think, is in a deregulated environment is a little bit easier.

The analogy that comes to mind in the most obvious way is this notion of permissionless innovation, which created the internet economy today. And if people had said, like from the very get-go, because no one predicted the internet would lead to all these different businesses, and to be able to say then, like, oh, but we have to prescribe the use of it for commerce, it wouldn't have created this economy that we have today. We're actually the biggest companies are now internet companies. That's right. I would say it's hard enough for us as venture capitalists and others to anticipate how how products are going to play out and what's going to succeed and what's not. Yeah. And to keep pace with technology and to be able to foresee today

the potential uses. And so imagine the challenge to a regulator. Yes. It's a very smart person, well-intentioned, but is not up to speed on all this, just has never been exposed to them. And then at the same time, is mindful as a government official of the dangers of this and the public safety imperatives or financial security imperatives or anti-fraud imperatives that many government bodies try to enforce and try to guarantee. And so they're going to react to the new technologies in a way that's usually not helpful. They're going to try to channel a new technology into an existing box to impose existing regulations, whereas what we and most entrepreneurs want to see is, hey, it's still early days in this technology. Don't jump in and assume that this is, that this technology is going to evolve in this way or that we're not going to be able to solve this problem or that your old system is going to be better than what we could offer.

Let us develop for a while. Let us run this for three, four, five years. Different comedies will try different mechanisms. And in terms of user protection and customer protection, customers are likely, especially with software-based technologies, the switching costs are quite low. So if they find a bad experience with one company, they'll leave to go to another, provides better consumer protection. The other argument I've heard, too, is that there are many existing laws that cover a lot of the things and the behaviors that new technologies might bring to bear like drones and privacy. There are existing peeping-Tom laws. You don't necessarily have to enact a new thing specifically for drones just because it happens to go follow.

a little higher. But I do have a question for you. I don't know if even if the narrative is often painted as like here the way regulations do and don't affect you, the more pressing is inaction or sluggishness or slowness in acting one way or the other. And then in fact, the issue is that it's not so much the outcome of the regulation that necessarily matters, but that people might take too long to decide. And one example that pops in mind is drones. Some people argue it's not fast enough. And I would love to hear your thoughts on that. Well, that's the challenge of regulators err on the side of being slow to respond, but then also the technology is evolving so quickly. Yes, exactly. Fundamentally, there is this knowledge gap, too. So you look at the driverless

car example and, you know, NHTSA, under the U.S. Department of Transportation, put out these federal guidelines to the states that essentially said... And to be clear, guidelines. Guidelines. So there's no rules. It says these are the parameters under which we think you should be creating your own laws with respect to driverless cars. The really exciting thing is, that so for the states that haven't yet done anything with that, they can now become the gold standard for whatever the ultimate federal rules are going to have to be. All these states have the opportunity to kind of tinker and experiment. And then the U.S. Department of Transportation can look at those models and say, this one's working really well, this one's not working as

well. So I think that's kind of one of the more, all of that is to say that the states can almost be a forcing mechanism or a forcing function for the federal government to respond more quickly. And where's a role of the city in the state? Because I'm thinking now examples of cities like Pittsburgh or, you know, another city that's doing very advanced things on this front. Like, how does that dynamic play out? Especially, by the way, given that you have in the numbers you shared earlier, predominantly Democrat mayors and predominantly Republican state. Like, just in general, how does a dynamic play out? That can depend state to state about how much intrastate preemption there is. What does that mean? given the law of state X, does a state level law, law passed by the legislature and signed by the governor, does that preempt a city law or is the city given some latitude to set laws within its boundaries? And it does vary state to state. So you could have an instance where the city says, well, we want to be a laboratory under the law that could either be an exception to the statewide law or the state might not have moved on that law. So that's an example of one where, you know, if the state occupies the field and says, well, No city in the state can allow this, then I've seen instances where cities will challenge such a rule. Interesting.

But generally, at some point, those are two different areas. And I think generally speaking, you're going to find states being much more laissez-faire in cities being proscriptive. Put yourself in the shoes of an attorney general, the chief law enforcement officer of a state. From the perspective of Republican attorneys general for the last, they've, you know, from their perspective, they've been spending the last eight years battling what they perceive as kind of regulatory overreach. And so they're going from a position not only where they no longer have to be on defense, but actually can be proactive. And go on offense. And thinking about what the best deregulatory models are. But I mean, I want to, I mean, not to be the Obama Democrat

person, but I mean, I actually think like for all the people. Okay. Play for your team, God damn it. I am. I'm, I'm proudly am. But I think like for all that you talk about Democrat overregulation, I think the Obama administration made a lot of efforts to really build partnerships with the tech community. Not only was it culturally, it was just very cool to be part of tech, but I think they really worked. I mean, they were pioneers in creating entire new roles for tech. Both like roles for tech, like bringing actual tech entrepreneurs and senior tech people into the government to explain the impact of regulation. So I think there was definitely not this idea. We're going to blindly regulate and figure it out later.

There was really an effort to go and work with tech companies or work with entrepreneurs. And the bottom line is I got I got to ask this a lot by policymakers. It's like, why do these rules matter so much? Because put yourself in the perspective of an entrepreneur. You know, you've raised a seed round, a few hundred thousand dollars. You've raised a series A round, maybe two to ten million dollars. The cost of hiring either a lawyer or a lobbyist or someone is specialized in that or having someone on your dedicated team who they just do with compliance and regulations,

that's a big chunk of money after the money that you've been fundraising. So I think for policymakers to understand, if you're a new company, you're focused on making a great product and selling it. And everything that distracts from that that's complying with rules really takes away with the core mission. And it's just very expensive. I mean, just look at the numbers. If your seed around is $500,000, do the math for how much it costs to pay your legal bills and things like that. And it's not good. Even taking a meeting in a startup, you have one person doing 20 jobs sometimes. And the government, 20 people are going to win jobs. And then, I mean, like, I would tear my hair out at just the sheer and efficiency of government that you have. Like, everyone feels this. Like, you

You don't walk around and say, this is working really well. We need more, like, concrete, windowless buildings in Washington. And so we all want to, like, stabilize and streamline this. How do we get there is the question. I'm glad you shared the perspective of where, you know, some of the people who wear the policymaker hats are coming from and how you had to explain sort of what the mindset of startups to them. I would say that the flip side of that.

And we've had this on the podcast because we've had quite a few politicians on this. The message that I hear over and over and over from them, whenever I ask them the question and I always ask them, what's the advice you give to entrepreneurs? They all say over and over and over again, talk to us. Explain to us. Don't just assume, don't blind, don't black, you know, black wallet. Just talk to us. And it's not about giving us a demo and giving us stats and making a case.

It's just about have a conversation and just explain the bigger context and trend up. Tell the pro-innovation story. Right. For what you're doing. Right. So drones are about, they're not about spy and your neighbors or making life difficult around around international airports that are about great applications for industry, for agriculture, for construction, for insurance, for public safety, finding lost people in forests, making a lot of

jobs a lot safer. And if you tell pro-novation stories like that, or ride sharing is a great way for my mother now that she's in her mid-70s to start getting around rather than having a drive on Bay Area streets, or it's a way to reduce drunk driving. Once you're out there telling those stories, then a policymaker's says, okay, great. This is an interesting perspective. And had you had the startup waited to let some newspaper ride a big expose driven by somebody else and incumbent to that. And then respond. And then respond. Then you're on your heels. So it's good to be out there talking about this stuff.

So the pro-innovation story isn't just telling that story. It's telling it proactively is what you're saying to some extent. I would say in some cases you want to be under the radar, no? Sure. There's plenty of times you want to be under the radar. You're in stealth mode as a company. you don't want people to know exactly what your plan is, or maybe you haven't precisely worked out your plan. So the minute you tell your pro-innovation story and then somebody comes back and says, well, how are you complying with law X and you don't have an answer? And then you should have your act together. But it's good to be aware that there's going to be a lot of people telling the opposite story, the anti-innovation story, the story about why your new product is dangerous, why it's bad

and why it must be stopped right now. Sometimes that person telling the quote anti-innovation story has their own agenda in the case of agencies or players who are trying to exert some form of regulatory capture. Yeah. There are two types of that. I think there are two real buckets of regulation. Some is the regulatory capture, rent-seeking behavior, incumbents trying to use the government to make more money, which is not what you want our government to do.

The second bucket is these are just really hard issues and hard problems. You're trying to figure out. The thing that's interesting just being, you know, coming from seven years in Washington to Silicon Valley is, I think there's too much an assumption here that regulation is the first bucket, the rent seeking, the rent seeking behavior. Yeah. Like the FDA or the SEC or the Consumer Financial Protection Bureau is out to affirmatively, like, shut down some startup. They're trying to defend some other. And that does happen.

There is some regulatory capture, but the regulatory capture happens more, I think, at the state and local level. Yes. When you have, like, taxi unions, hotel unions and lobbies and things like that. Stylist commissions. And these are people who are paying a lot of money to the coffers of those cities. Yeah, I mean, I don't know how much the hairstylists are paying. But I mean, it is great. When you think about like, why do you need all these crazy certifications? Why is the government even getting involved?

So that does happen. But I think the irony is it doesn't happen the ways you think. When Ted came on board and I interviewed him for a Q&A, it was actually a big eye opener for me when he described a flavor of regulatory capture that's actually more about being able to walk the hallways and having these longstanding 20-year relationships where you know the industry, you know the people. You know the lingo, and that's the advantage that a lot of people don't have. This example would be, let's say you're at the Defense Department, like Matt was, and you're not even aware that there are companies in Silicon Valley that could do something as well as the traditional defense contractors that you're going to for a third of the price, right? Like, I mean, if you live in Washington and you work in defense, your vision for private sector engagement

with defense is Raytheon, Boeing. you know, it's not, it's not some of these smaller cyber companies out here. Because you have these long established processes, precedents, procurement relationships. I think it does very much come back to the knowledge gap. And that's what's so encouraging about seeing policymakers come out here and want to learn about the ecosystem out here is, you know, they understand, they're starting to understand that there is more to the private sector. I guess now just to switch gears because this is, it's really interesting for getting

the flavor of state, local. Now let's talk federal and what's happening because we, do you have a new president. What does that mean? I mean, Ted, in the beginning, you said there were a few cases where there are exceptions where the federal... Well, I mean, I guess what I was referring to there is there are some issues where the choice of party in the executive branch is significant. And what are those issues? A good example, net neutrality. That's one strong example there. That's a very hoary complex issue. And it's been an issue that's evolving over the years, but essentially you have the FEC, the Federal Communications Commission for the past eight years has been a predominantly, it's a five-member commission and it's three members, including the chairman of the party of whoever is in the, occupies the presidency. So it's been

a Democrat-dominated three-two commission. And now it's going to flip and be three-two Republican. And the FCC series of rules about net neutrality will at minimum be massively modified by the incoming administration. So that's a clear one where there's a big switch. Set aside how Silicon Valley feels about that. Silicon Valley's view on net neutrality. We're using the easy shorthand, Silicon Valley and DC very broadly because there are clearly very many flavors of how people feel on these issues depending on their business and what they are they're affected. Like I think Netflix would feel very differently about net neutrality than some other small startup. Facebook, Google. Yeah. There are other issues to, I mean, you know, immigration for example. It's not a

tech issue per se, but has a deep and profound effect on tech. And that's an issue where there are, you know, as vast divides between, you know, Donald Trump and the Democrats as anything. I think Democrats and Republicans both feel very strongly. If the other side had won, it would have made a big difference. So I don't want to say these things don't matter. But it's more nuanced. So to kind of jump in to a little bit of the federal government-specific focus of this. So more deregatory.

So corporate tax rates coming down, generally good for business. Repatriation, repatriation of income that's been parked overseas. for many years. There's a lot of talk about that coming back, that rules will be changed, laws will be changed, to allow that money to be repatriated at lower tax rates. It'll be attractive for American companies to bring that money back. And one potential outcome of that is a very good thing for tech in particular, which would be a lot of large companies with money that's come back that they need to deploy to explore

promising new technologies to take some risk with that and potentially to acquire companies to engage in M&A. So deregulation, corporate tax reform to include repatriation. And then I think another area in this relates a little bit to two other areas that relate a little bit to deregulation is you will have an administration that is more skeptical of two things. One, unions and two class action lawyers. So why is that important? Because several of the significant issues that we think of in the tech policy world were at some level driven by the feelings of unions and class action lawyers. Can you give me a concrete example? Yeah, I'll give you. So one example would be gig economy companies. So yeah. So by that you mean obviously like, you know, the classification of

workers, like there's this new emerging gig slash sharing economy, however people call it. And whether workers who have certain flexibilities can should be classified as contractors or not and the implications of that, some people have been arguing for there being a third classification. There's all kinds of movement and activity on this topic. That's an example of how the changing nature of unions and class action lawyers can have impact on. Or that's an example of how if you have an administration, again, broadly speaking, but I think a fair, a fair statement is a Democrat administration is going to be relatively friendly to unions and friendly to class action lawyers. A Republican administration is going to be much less friendly to unions and to class action lawyers. Just to double check this with the

Democrats in the room, I mean, you guys agree with this? portrayal it's fair in so in so much as you can make any sort of generalization about either political party i mean i think when ted when ted says democrats are going to be friendlier towards unions certainly true one of the interesting things i'll have to watch that is going to be born out over the next few years is as as democrats do try to portray themselves as more pro-tech especially these at a city level yeah what is their relationship with these unions going to look like i think it's right that the i guess the modification may i think democrats And there's a belief that there should be more of like a social safety net to Democrats credit.

I think with a lot of tech issues, it hasn't necessarily been just a pro-union issue. But I think it's thinking in terms of like, okay, if you don't have a job that you're tied to health insurance, how do we think about make sure people don't get sick and just show up in emergency rooms as their first line of defense? And no one came up. In many ways, the ACA has actually empowered the economy, the Affordable Care Act, the Affordable Care Act or Obamacare The portability of your benefits is actually higher. And a lot of places that were actually falling on economically hard times that you thought would really be going for Democrats did not. A really interesting thing is that we actually haven't talked to that much is given how scrambled like the electoral map was.

You know, what does that scrambling translate into a set of policies? And with tech policy, it kind of proves our thesis in a sense because tech is such like a new frontier, like the relative roles of mayors and governors and international and state are still working themselves. helps out. And I think our biggest prediction would probably be that a lot of the legislation that you're going to see from a Republican-controlled Congress moving forward is going to move to, you know, set up this environment for more experimentation. Okay. So we talked about immigration, net neutrality. One thing that comes up a lot, given the rhetoric and the media and Trump's own rhetoric for that matter, is how about things like trade and like international trade? And when I think of tech is something very global, you know, software doesn't have borders necessarily. And yeah, there are things like ITAR,

and like important rules run at the export of software to certain regimes, et cetera. But is there any implication on that front that we should be aware of in terms of the outcome of the election? I think we'll see how it plays out. I think most of the impact, as I see it, of the trade talk would be on physical goods rather than software, especially when it's delivered no longer by it, you know, long ago, when it was, you could stop a shipment of discs at the border. That was one thing. It's not how software is distributed now. No, now it's like cloud, SaaS-based.

So I think that's going to be tougher. I mean, to the extent a tech company is running a physical, tangible, large product, potentially there's an impact there. There's one, I think, in a sense, bipartisan issue that I think will become more important trade policy is protection of American intellectual property. Yeah, that was a place where a very influential Silicon Valley voice, that of the EFF, was highly skeptical of the. Trans-Pacific Partnership because the TPP, you know, there's a push by American intellectual property owners to make sure that the TPP had strong IP protections for American-produced products overseas. And that seems great in the interest of most tech companies. The EFF, though, was wary of that because the AFF thought that that could be applied in a way

that that hurt the development of the web in those countries. It's funny. If you talk about, in a sense, a lot of the common rhetoric in the campaign of the presidential was about train enforcement. It was that other countries need to play by, apply the same rules that Americans do. It's just not fair otherwise. You know. China's example. And I'll just add another nuance here, which is that two more things. One, that the global landscape is changing. The players like China itself is seeking to protect intellectual property in certain ways, certainly at the government level, whether it happens at like all the individual factories is a whole different question. And then secondly, another nuance is that in our business, and software. Obviously there is a complex matrix of patents in some cases where you really need it. But at the end of the day, a lot of the defensibility in moats, we're looking at our network effects. Okay, so let's talk a little bit about some of the announcements. If every, you know, all the nominees are confirmed. What are the implications of who's doing what? And can you guys kind of break it down for me? So I think first and foremost, the good news is that none of the folks that have been named at this point come in with any sort of anti-tech bias. So how do you

know that, by the way? Just based on their public records or what they've said, the industries that they've been in. A lot of them are coming from business. Some of them have spent time in Silicon Valley. So I think the good news is that a lot of them are not coming in with some sort of bias against the technology community. And a lot of them, I think, are actually open to being informed by Silicon Valley on certain tech policy issues. So if you look at driverless cars, for instance, I think it's a safe assumption that Elaine Chow, who's the incoming or the presumed secretary of transportation, does not have any firm views on, you know, what the federal rules around driverless cars should be. And so going back to what we were talking about earlier, she might actually look to the states for guidance or for examples of good models. And also, Department of Transportation is a hot button agency. It's a very important agency, but it's not a, it's not a, it's not a, it's not a, it's not.

a politically hot button agency in the way, in the same way that, let's say, justice, state, DOD, treasury, can tend to be. One more piece of good news. I think a very positive thing is the role that Peter Thiel has played for tech, has been invaluable for tech in that room. It's a very respected voice within that team. And by the way, I'd also add that as at the time we're recording this podcast, many of the, many of the key positions that are very focused on tech or most relevant to tech policy,

have not yet been filled. What are some of those positions? Food and drug administration. FDA. Right, because FDA affects like health care startups. Yes, health care startups and, you know, the development, you know, health tech, health startups, drug development as well. Yeah.

And, you know, Treasury is another one. Yeah, I think, you know, for FinTech, the security exchange. Right. Yeah. FTC, Federal Trade Commission, Federal Communications Commission. FCC, right. The organization that regulates non-neutrality. And then even something like DOD, we don't yet know who's going to be in charge of, you know,

technology acquisition at DOD. And the U.S. Department of Defense is one of the biggest tech buyers in the country. So a lot of open questions there about, you know, who those folks are going to be. So what I'm hearing is that so far that generally speaking, they don't necessarily have pre-conceived anti-tech biases. And secondly, some of the most specifically, you know, tech angled positions haven't been filled yet. And that's sort of the two main takeaways on that so far.

I would say the thing, if you're a blank slate, it cuts both. the ways. Right. One of the interesting things to watch is, you know, one of the things that the Obama administration did was to open, you know, some quote-unquote field offices for different federal agencies out in Silicon Valley. So, right, like the Defense Department has D-I-U-X. The State Department has had a representative out here. The Commerce Department, Department of Homeland Security, Opened offices out here. I think what is to be seen is whether the Trump administration prioritizes that relationship with Silicon Valley in the same way to the extent that they actually have a presence out here. Well, and the flip side is also true. Like, they created a lot of sabbaticals,

like when you think of organizations like the U.S. Digital Services and sort of these, you know, Mikey and Haley, they're on the Existency Podcast. So given the TBD nature of it, what do we know for some of the domains that we play in? I'm going to just do a lightning round. FinTech. Any thoughts on what can happen? Well, I think one of the significant pieces there is going to be what happens to the CFPB, the Consumer Financial Protection Bureau, which is a relatively new agency, but a highly unpopular agency among Republicans has been challenged in court. There's a court decision saying that the limitations on removal of the CFPB director are unconstitutional. Oh, I remember this. This is the one where it's not a multi-director. We mentioned this in our end-of-year listical. It's an important decision, and it's one that's now on appeal.

but we may not even get there. Now that you have a change of administration, it's conceivable that the Congress and President Trump will substantially rein in the CFPB, if not eliminated altogether. So I think that's one thing in Fintech to keep your eyes before. Anything else on Fintech? Yeah. So Patrick McHenry, who's one of the chief deputy whips for the Republicans,

Republican from North Carolina, one of his pet projects actually is kind of, you know, this basket of fintech issues. So the Financial Services Innovation Act, which he sponsored is, you know, the purpose of it is to essentially create these opportunities for fintech companies to ship their product before they get the, you know, official certification. And so it's creating a regulatory sandbox of sorts for fintech experimentation. Okay. So that's fintech. How about autonomous cars? And actually, let me just expand that to all autonomous vehicles from self-driving cars to drones to any other self-driving thing.

I think at this point in Congress, it's another one of these nonpartisan issues. There's no anti-driverless car caucus or anti-dron, you know, anti-autonomous drone caucus. So it's a little bit too early to tell. I think it is going to be important to watch what these different states do. You know, interesting factoid is that 41 out of the 50 states have still not passed any legislation or any. Is that a bad thing or a good thing? In many ways, it's a good thing because these states actually have the opportunity to, you know, try different models that are going to inform what the federal government does. It's a bad thing just when there's uncertainty. Right. I mean, so I think the part, because the part of it is, is like, you don't own investor

resource if you're developing things and then have the regulatory regime change on you. Right. And then no matter how good your product is, you're screwed. So I think the court, The flip side of, you know, the states or the laboratories of innovation is sometimes you do want to have certainty. There's certain areas you want to have uniformity. You know, you don't want to have roads that you can drive on one state, but you can't in another. But that'll come later. But I don't think, I don't know if we're at that stage. It feels too early for the tech. How about health care and bio? Any high level things? There, there's actually been some bipartisan movement, I would say, with the 21st century Cures Act. That's right. We had Upton and Walden on the podcast. They were the ones who sort of drove that. Again, so again, a little bit TBD, hard to imagine that it would be more restrictive, more restrictive than... The general push there presumably will be an FDA that will be more likely to approve experimentation and special trials to get beneficial drugs in technologies out into the market sooner.

I mean, the elephant in the room is the Affordable Care Act, of course, which is the same as Obamacare. one thing that some companies have said is, you know, to the extent that having preexisting conditions matters and that the existence or non-existent of the Affordable Care Act happens, that makes a difference if you have companies that diagnose treatments. So if it's a problem to have on the record that you have a pre-existing condition, that will also change the business dynamics. Right. And we already talked about the portability of benefits and the implications for sharing economy. And there's a third implication, which is a general shift of towards value-based care. But that could still be come out in some other form. It doesn't have to necessarily be the vehicle of the ACA. I think it's way too early to say how an ACA replacement will shake out. But a couple of things that seem pretty clear is there's strong interest from a political perspective, if not other perspectives in maintaining the portability piece that's been popular ever since even before, but certainly since the days of George Bush's plan,

George W. Bush's health vision for health care. And then secondly, it would be the pre-existing conditions. That's one that I think it would be, there seems to be a lot of political interest in retaining that in whatever the new form of health care. Of course, there's other issues like cyber, et cetera, but those are like very complex with multiple facets to it that I think we'd have to pull threads on. We don't have time for. So any parting final words? If there's a takeaway, I mean, or something that you'd want from both sides is for the due administration, talk to tech, you know, understand what the challenges are. understand what the companies are trying to do. And for tech leaders here, go talk to the

administration. You know, don't think, you know, maybe I didn't vote for this president, so I'm not going to sort of work with it. Like explain this type of saying, the pro-innovation case go through because I think that's the sad thing that is both Democrat and Republican is there's still this enormous divide between Washington, Silicon Valley, even bigger than I thought it was. You know, the advice that we give to a lot of our companies and entrepreneurs and founders is you want to establish these relationships with policymakers. You want to get in front of these policymakers and you want to interact with these policymakers

not from a transactional point of view. You're not doing this because you have some sort of ask. You're doing this because hopefully you're curious about how the policymaker is thinking and the policymaker... You're building a relationship. And the policymaker, you know, the vast majority of policymakers are genuinely interested in what's going on in Silicon Valley and want to understand these technologies.

Honestly, it reminds me of just what Cranny says all the time about sales. It's long and you should be the on setting the criteria. And to your point, telling the pro-innovation story. And certainly that's, we've seen great interest in policymakers coming to hear about the latest and technological advances. Speaking from a tech policy perspective about what this can mean for companies and for technologies, I think there's a lot of reason for optimism, the deregulation, the pro-innovation mindset, things we've talked about in the podcast. Many of these issues don't divide along strictly partisan lines. It is an opportunity, surprisingly perhaps, to many in Silicon Valley,

to have not just something that's an outcome that's good for tech, but also one that builds some bipartisan bonds. Okay. Thank you guys for joining the A6 and Z podcast. Thank you so. Thanks.