The Fixer: My Adventures Saving Startups from Death by Politics

The Fixer: My Adventures Saving Startups from Death by Politics
Category: Finance
Author: Bradley Tusk
Publisher: Portfolio
Published: 9/18/2018
Most new startups today are in highly regulated industries with strong incumbents - transportation, hotels, drones, energy, gaming, education, health care, cannabis, finance, liquor, insurance. The more startups try to snatch a piece of the establishment's pie, the more they risk running into a political wall. That's where Bradley Tusk comes in.

Book Summary - The Fixer: My Adventures Saving Startups from Death by Politics By Bradley Tusk

Key Insights

Politicians don’t care about innovation or your start-up, they care about votes.

If you try to change the status quo, the regulators and politicians would come after you. You may not be interested in politics, but politics is interested in you.

Tusk shares strategies and tools to win political battles.

Technology and innovation can disrupt elections and transform politics.

Political strategist, a consultant, a venture capitalist- Bradley Tusk illustrates his years of experience in helping startups navigate through political and legislative processes. The book discusses the ‘psyche of politicians’, their actions, and how startups can challenge the status quo. He explains how campaigns such as Uber’s, backed by loyal customers, can sway the decision-makers, change existing regulations, and win. If you are a tech start-up, this book will prepare you like no other. You’d know what to expect when dealing with regulators- they become defensive, and would do everything in their power if your ‘disruptive’ start-up does not benefit their entrenched interests. The book provides you with an implementable framework to tackle political or regulatory hurdles.

Key Points

Do not ignore the political risks.

If you are disrupting, then be ready to be attacked by groups that benefit from not changing. These are the rich and influential people who are in power through a carefully established network of politicians. These politicians are the ones who appoint regulators, and the regulators follow the instructions of the elected officials. Most of them do not care if you are bringing better ideas to the market. All they care about is maintaining the status quo, and therefore, would stand in your way. However, do remember that most politicians are insecure and all they care about is being elected (and re-elected). They are concerned about their image in the media because it influences voters. If you are able to generate negative media, that in turn hurts their poll ratings, then you may have their attention. If you have a strong narrative that the media can buy, you can get the politicians and the regulators to clear your way.

Know your opponent before engaging. Ask yourself the following questions:

What is their narrative? Who is in charge? Who is making the donations? Who are they reporting to? Do they have powerful allies? Will you ask for permission or would you beg for forgiveness later?

Once you understand their story, it will prepare you to carve out YOUR plan of action to deal with their onslaught.

Your customers are your greatest advocates, even politically.

Uber is a simple (and a game-changing) app that connects drivers and riders. It isn’t a taxi company but competes directly with taxis. It disrupted the taxi industry, and the governing bodies were not happy. When the New York Mayor- Bill de Blasio proposed to cap Uber’s growth at 1% a year, Uber fought from an unexpected angle and won. Firstly, Tusk aligned the ad campaigns to feature people of color, immigrants, and other New Yorkers who benefitted from Uber. De Blasio, whose entire narrative was built on working for the vulnerable, found himself on the opposite side of his supporters.

Secondly, Tusk used the media to highlight the links between the industry and the mayor. This established that Blasio’s agenda was driven by corruption.

Thirdly, Uber tapped in the power of its users. By adding a “de Blasio” button on the app, it allowed users to understand the issue and empowered them to take action. They could email or tweet their council members by pressing the button. The City Council received 30,000 emails in a week, more than any other legislation.

As a result, support for de Blasio dropped and the mayor’s office had to abandon the bill to stop the public beating they were getting from the voters. Uber saved its future.

Remember that your customers can help you win the battle. Ask yourself the following questions:

Are your customers passionate about your service/product? Do they care about what you offer? What does your competition look like? Does the governing body care about your customers? Are they the voters? Can you mobilize your customer base into a political force?

Such questions will help you decide if you want to fight the battle, with customers as your strongest weapon.

To mess with the unions or not? Choose your battles.

Handy is a startup that connects customers with cleaners and handymen. All the workers are independent contractors. Unlike full-time employees, they are not eligible for Social Security and other benefits. Handy wanted to change that by offering “portable” benefits like healthcare or pension to its independent workforce. This potentially would have benefitted millions of American workers while maintaining the flexibility of being an independent worker.

It was a positive step in improving labor laws and working conditions. However, unions stood in the way. Unions do not like independent contractors. They can’t represent them or unionize them. In exchange for donations, they sway the politicians to apply state laws that thwart the rise of the sharing economy and the independent contractors.

Tusk and Handy took the battle to New York but were immediately faced with union leaders who wouldn’t budge. The fight to secure new laws and to change worker classification continues at the state and federal level.

You have to be persistent. Politics-as-usual is hard to overcome.

You can challenge the status quo with the right tactics. Remember, regulators, are nothing but political bodies.

Lemonade disrupted the insurance industry by becoming the first digital insurance company that was based on a peer-to-peer model. Customers contributed to a pool. It drew its costs and profits from the same pool from which the claims were paid out. At the end of the year, the left-over money was paid back to the customers, unlike a traditional insurer.

The New York Department of Financial Services, or the DFS, was standing in the way. DFS’s processes were inflexible and served the traditional insurance model. It had no incentive to grant Lemonade an insurance license.

Tusk and Lemonade worked together to create a narrative. It established that New York was under the influence of ‘entrenched business interests', because of which Lemonade would relocate to London. Andrew Cuomo, the state governor, had received political donations from the insurance companies. This enabled Tusk’s team to highlight “pay-to-play” corruption. The entire campaign portrayed Cuomo and his governance as anti-innovation.

The political cost of disapproving Lemonade was too high. DFS gave in to the pressure and approved Lemonade’s insurance license.

You’d be in a better position to tackle the regulators and the politicians if you have – a solid narrative that the media can buy, funds to spend on advertising, resourceful inside lobbying, a moral high ground, and the capability to hurt the politicians by leaving town.

Regulators will come after you. Be ready.

Daily fantasy online sports is a big business today. In 2015, the market was new. FanDuel and DraftKings, two leading names, disrupted the sports and casino industries. The games allow users to create fantasy teams for popular sports like NFL and win money based on their performance in real-world games. In other words, it is a platform for online sports gambling.

FanDuel and DraftKings were so busy competing against each other that they forgot about a common opponent- the casinos. Casinos have a tight relationship with politicians, state governments, and anti-gaming advocates. In October 2015, when a midlevel DraftKings employee won $350,000 using insider information in a FanDuel competition, an investigation was announced. The legality of online fantasy sports was in doubt.

Tusk and FanDuel tried mitigating the damage by making a case for online sports gaming in The New York Times and by putting a ban on employee betting. This was not enough. A battle between long-time political donors- the casinos-and Fanduel- a start-up with no political connections, ensued.

Like Uber, FanDuel decided to fight back with customer advocacy. The app allowed its users to contact their state legislators. Around 150,000 customers batted for FanDuel. In 2017, legislation securing online fantasy sports was passed.

FanDuel’s win was a good outcome but they could have been better prepared and wouldn’t have needed to defend themselves. However, it clearly displayed the power of mobilizing actual voters.

Technology and innovation in elections? Yes, and it could be great.

In 2016, Michael Bloomberg decided to run for the presidency. He was known for supporting innovative technology. Tusk, who ran Bloomberg’s 2009 mayoral elections, came on board as his campaign manager. His strategy for victory was innovative. Since Bloomberg had no party infrastructure to rely on, he wanted to rope in constituents in the sharing economy. His ideas were centered on using tech to facilitate voting. For example, with a Bloomberg button on the Uber app voters could get a free ride to and from the pooling station.

He envisioned getting the brightest minds to the house, such as Elon Musk for energy secretary and Bill Gates for education.

Bloomberg decided not to run because the polls indicated that he’d hurt Hilary Clinton’s chances. Trump became the president and Tusk regretted the lost opportunity.

With Tusk’s expertise in politics and technology, he started Tusk Philanthropies to push for mobile voting in elections. With many using smartphones, it becomes easier to inform the voters about various issues. But disrupting the election process is not easy because politicians don’t want to change. However, using technology to change the way people vote would help solve important issues.

The Main Take-away

Every start-up is a tech start-up. If your ideas are disrupting, then be ready to fight a battle with the bureaucracy. Do not ignore or underestimate politics. They will come after you. Be prepared with the right narrative and strategy to overcome those who stand in the way of innovation.

About the Author

Bradley Tusk is the founder and CEO of Tusk Ventures that helps startups navigate the political, regulatory, and media hurdles. He has worked with many startups and Fortune 500 companies such as Uber, FanDuel, Handy, AT&T, Google, and many more. He previously served as Mayor Bloomberg’s campaign manager in New York City, Deputy Governor of Illinois, and Senator Chuck Schumer’s communications director.


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