Regulations can define the best places to build and invest – TechCrunch

Market timing –the relevance of an idea to the current state and direction of a market – is the most important factor in determining the sustainability of that idea.

Several inputs inform market timing: through consumer preferences in response to a pandemic. The price of goods for a resource that is finite and becoming scarce. The creation of a new algorithmic or genetic technique that expands the potential of what can be rationalized, repaired and built.

But market timing is also defined by a less discussed area that arises not in capital markets but in the public sector – the regulatory landscape – namely government decisions, the broader legal system and its combined level of control. control over a particular subject.

We can understand the successes and challenges of many valuable companies today as they burn with the regulatory landscape.

We can understand the successes and challenges of several valuable companies today as they burn with the regulatory landscape, and perhaps also use it as a lens to see which areas represent unique opportunities for new businesses to start up. and develop.

Retrospective: value in regulatory gray areas

“Technology is coming and changing faster than regulatory regimes can, or cannot control,” Uber co-founder and former CEO Travis Kalanick told the Aspen Institute in 2013.

The brash statement downplayed the fact that the regulatory landscape had in fact resulted in a number of crucial results for the company up to this event. It changed its name from UberCab to Uber after receiving a cease and desist order in its first market, California. Several of the first employees left due to regulatory challenges and the startup’s iconoclastic ethics. It shut down its taxi service in New York after only a month of operation, then in early 2013 received its lifeline in the city after being approved through a pilot program.

Fast forward so far, and Uber has a market cap of around $ 82 billion, with the ousted Kalanick having a personal net worth of around $ 2.8 billion.

Yet even at its scale, many of its most important growth questions centered on how the regulatory landscape would treat its category favorably. More recently, this came with the UK Supreme Court ruling that Uber drivers could not be classified as independent contractors.

The regulatory fabric has exerted a similar influence on other companies in the sharing economy. In October 2014, for example, Airbnb’s business model became viable in San Francisco when Mayor Ed Lee legalized short-term rentals. In November 2015, Proposition F in the city aimed to restrict short-term rentals like Airbnb, and the startup has spent millions on ads to engage opposition voters.

Airbnb’s current market capitalization is $ 92 billion and its CEO Brian Chesky has an estimated net worth of over $ 11 billion. Like Uber, its regulatory tribulations continue, with the most recent being fined and found to owe the city of Paris $ 9.6 million.

The stories of these two companies and others in the sharing economy space demonstrate the value that the regulatory fabric can add to or subtract from a company’s wealth, but also underscore the value – for founding teams, the first employees, investors and customers – to navigate the gray areas.

A look around us: the data economy

The current regulatory fabric has accelerated the timing of the market for ideas in a number of categories. Solutions that enable data privacy, like BigID, and those that integrate data privacy into broader customer value propositions, like Blotout, benefit from the streamlined growth of GDPR in Europe and their inspired analogues in the United States. .

Comments are closed.