Tech'ed Up

"Regulatory Hacking" • Author Evan Burfield

March 21, 2024 Niki Christoff
Tech'ed Up
"Regulatory Hacking" • Author Evan Burfield
Show Notes Transcript

Head of Strategy at The Future US, Evan Burfield, joins Niki with an update on how hacking the regulatory environment for start-ups has changed over the last few years. They take a deep dive into minerals and bioeconomy tech, talk human brain interfaces, and how building coalitions is essential to being strategic in approaching Washington. 

“The Department of Defense can be an incredibly useful partner to a wide range of startups.” -Evan Burfield

[music plays]

Niki: I'm Niki Christoff, and welcome to Tech’ed Up. 

Today in the studio, I'm joined by Evan Burfield, a lifelong Washingtonian who works at the intersection of technology and policy. He's the author of the book Regulatory Hacking, A Playbook for Startups. And today we're chatting about how tech companies can best navigate DC, as well as his predictions for the policy landscape ahead.

Welcome, Evan. Thank you so much for coming into the studio today. 

Evan: No, it's my pleasure. Thanks for having me. 

Niki: So, we recently connected, which was sort of amazing to me that we hadn't before; I think we have about 85 mutual connections on LinkedIn. 

Evan: And, and I think various, like, missed collision points of working on similar issues and similar things at similar times.

So, it's great to actually get to go back and rehash all of these topics.

Niki: It is! And when we started to talk, I realized that you had written this book on regulatory hacking that sort of absolutely fits in perfectly with what I do for a living, which is to try to help companies navigate DC, specifically tech companies.

So, we're going to talk about the book, which you wrote a few years ago, but I think it's still a very important message for startups. And then we'll talk about how things have changed since then. So, what got you into the place where you wrote a book like that, a guide, a playbook for startups? 

Evan: Y’know, like, you have all these interesting life experiences and they don't seem to, like, fit together until you get far enough along [chuckles] that you can kind of see all of the patterns. The, the very first part, which I always try to emphasize, is like, I, I grew up, my father headed up government affairs for the Washington Metro system. 

Niki: Oh, wow! 

Evan: So, so my entire childhood growing up, like, dinner table conversation was my father. My father's a phenomenal storyteller. He would come home and he would tell these, like, really dramatic stories of how “We built a coalition to get a gas tax, to fund transit by getting more money for black lung treatment for coal miners in Southwest Virginia,”  like, and so, this sort of basic mindset of how you play that game and how you play that game creatively, and that, in fact, it's a fun, and interesting, and creative pursuit, sort of was always, always there.

How do you do this interesting thing of building companies? But how do you do it in ways that actually solve big challenges, right? That do it in the public interest. And all of those threads kind of came together when we started 1776. And that was Donna Harris and I in about 2011, 2012. And the sort of entry point was, was more, y’know, “How do we actually get a startup ecosystem really going in Washington, D.C.?” Right? 

It's, it's very easy now to forget, like, what a wasteland it felt like coming out of the global financial crisis. And so, we were looking at things like 1871 in Chicago and 500 Startups and Techstars and Y Combinator was really hitting its stride. 

Niki: Wait, for people who don't know what these are, these are like tech accelerators.

Evan: Yeah, right around 2010, 2011, you were seeing this, like, flowering of new models for how you support startups. Right. In all these different cities and all these different programs. We were like, “Let's do it here in Washington. Let's, like, catalyze the ecosystem.” But what would make it unique? 

And really, the only answer was we have to lean into the sort of assets that Washington uniquely has as a city, right? We're not New York. We're not San Francisco. They have different assets. And that was going to be, y’know, working in the public interest and helping startups who needed to understand how to kind of unlock government and navigate regulation.

Niki: Right. Well, and it's, so we did a little bit of work, obviously, we didn't overlap directly, but when I was at Uber, we were involved in 1776. But so, it's this tech incubator. Everybody was in on it trying to expand Silicon Valley and replicate it in different places around, around the country.

I had been in Silicon Valley, I started out here, then was in the Valley for six years. And the whole time I was there I was going on and on about Washington being this kind of existential threat. But at the time, which was pre-2012, there weren't that many existential regulatory threats to Silicon Valley.

Evan: The book was essentially the stories that I kept telling various startups over and over again [chuckling] in trying to, sort of, counsel them and give them advice about how to, sort of, do this work better.

Y’know, it's, it's hard to overstate how different the environment was even five, six, seven years ago. Y’ know, this was the Obama administration, this was pre-tech lash. [Niki: Right] Right? So like, what, what's changed between now and then, like, one, one dimension was that this was still this kind of neo-liberal consensus moment where, y’know:  “Washington shouldn't be too involved in the economy. We want to have a general default towards permission for innovation.”

Innovation was a good thing. All the Obama staffers were all, like, leaving office and immediately going to Silicon Valley to work for tech companies. [chuckling]

Niki: Yeah! I mean, David Plouffe, campaign manager, went to Uber when I was there. 

Evan: Yeah, absolutely. The, the general perspective on, like, the default assumption was, “startups are going to solve all of our problems.” And at the time, we were a bit counter-narrative in saying, “Hey, actually, if you want to go transform healthcare, or education, or transportation, eventually you are going to have to accommodate yourself to government. 

I remember a, a venture capitalist, and you'll appreciate this, a venture capitalist in 2011, 2012 in Silicon Valley who was an investor in Uber, and I was explaining the premise of what we were going to do with 1776. And he goes, “I don't get it. Like, Uber's proved if you just stack up enough capital, you can roll government. What other model is there?” 

And even at the time, I was like, “Y’know, it's real early in the Uber journey. [Niki: Right] And I'm not sure that's actually how the whole story is going to eventually end as simply as just if you stack enough capital, you can roll government. Government doesn't matter.”

Niki: Right. And actually, you just made some, a couple of observations about transportation, healthcare. So, those are highly regulated industries.

Evan: Highly regulated! 

Well, look, so, so one dimension right now is just government is taking a much larger role in directing the economy. The transition from Trump and now to Biden, like, we are now in a place of at least light, tacit industrial strategy [Niki: Yeah] in more and more sectors.

Niki: Yeah, we've shifted!

Evan: The problems that we are facing are really big, really challenging, and really scary. We have things like the Inflation Reduction Act. We have things like the Bipartisan Infrastructure Bill. We have things like the Chips and Science Act. There will be more of these. Right? Government is taking an active role in directing how industry evolves and develops and what technology can be used for. That's one big thing. 

The second thing is, like, the, the technology itself is, like, vastly more impactful than social media and mobile phones were ten years ago. Like, vastly more impactful to these really big hard problems but it's also more dangerous. [Niki: Right] You look at AI and computational biology and robotics and, like, this, this stuff is obviously, [chuckling] obviously has real, real risks that have to be managed. 

And I think the third change is just, like, we've already gone through the techlash, like, we went through the “Let's let innovators innovate as, as, with as little friction as they can, and we'll trust that they will do the right thing.” And in a lot of cases, they didn't end up doing the right thing!

Niki: It's true! I know. [chuckles]  I just made a face, which no one could see, which is sort of a dismayed one and, I almost defended it, but you're absolutely right. 

Evan: Right! And so, like, and as somebody who is, is, it comes from and is deeply engaged and believes in the power of entrepreneurs and startups to solve problems, like, we probably would be in a healthier place today if, if some of those leaders had made perhaps, more forward-looking, wiser decisions at the time.

Niki: Right. So, I think that's right. When I started at Google, it was these magical inventions [Evan: yeah] that, y’know, suddenly you could send huge attachments for free on Gmail, and you had collaborative docs, and you had Google Maps, and then you had Waze. 

None of that, seemed like it needed regulation in the way that a 4,000 pound vehicle with a stranger picking you up through an app; or telehealth where you have a doctor, y’know, across state lines; or financial regulations where we are creating a new alternative currency like Bitcoin.

Suddenly that is very much in the government sphere. 

Evan: I was having, I was having dinner last week with a startup that I'm an investor in which is, literally, like, sending satellites to space and then bringing them back down on paragliders and landing them within a 5-meter radius. Like, you don't have to get very creative to go, “Huh, they probably need to, like, work with the FAA.”[Niki: Right] before they start landing satellites on rooftops.[laughs]  

Incredibly powerful. Incredibly cool. So much you can do with it but like, there is zero chance government is not going to play an incredibly active role in both creating their market and in defining the rules around which they can operate. 

Niki: Well, and to go back to what you said about if some people had acted in a more potentially responsible way. That sort of behavior, I think, has created an overcorrection in Washington. 

And so, what you are helping people think about is, “You're going to end up in the crosshairs of DC, make it constructive because they're going to define both your market and your economics.”

Evan: Yes. Well, yes. So, if you are operating, if you're building frontier tech, if you're operating in a lot of these regulated sectors, we're in a place right now where actually government is rolling out a whole bunch of programs that can actually help you create your market.

There's a whole lot of startups that I advise right now who are actively using, like, [chuckling] government programs to use non-dilutive capital to get over a big R&D hump because this is hard, complex technology that isn't proven yet that needs to be validated that it's safe. And someone, right, needs to create the environment in which you can do that.

The Department of Defense can be an incredibly useful partner to a wide range of startups. A whole bunch of the human brain interface startups. 

Niki: Okay?! [dismayed] Is that what we're talking about, human brain interface? 

Evan: Well, it's an example of a startup [Niki: chuckles in dismay] that's, like, incredibly cool, can solve a lot of problems, but, like, you don't have to get much imagination to go, “Could be really dangerous!”

A lot of them are actually doing their first trials on the backs of grants from DoD, and programs with DoD that give them waivers, so that they can actually go get to a place where they can prove that the technology is safe quicker than they could otherwise. 

Niki: I just, I don't know. I'm, I don't want anything implanted on my brain, yet.

Evan: Yeah, it's, it's, I think, having spent the last week playing around with the Apple Vision Pro, that's about as close as I want to get to. I think the, like, the reality now is when we were originally, when I was originally writing Regulatory Hacking, it was still for a particular niche of startups, right?

The vast majority of startups were kind of operating in this space where they didn't really need government, and government really wasn't going to get involved. 

Roll forward five years later, like, the, the overwhelming bulk of venture capital right now is going into frontier technologies for which the most logical markets are highly regulated, in which there is obvious risks, and in which the amount of capital to build this stuff and validate this stuff is extraordinary. And the benefits of like non-dilutive capital and government helping to validate it to simulate those markets are obvious. 

Niki: I think it's absolutely almost a reversion to how it used to be, which is the government subsidizing R&D. Then we went through this explosive, y’know, it was easy money for everybody because you didn't have a lot of sand in the gears. Now you've got sand in the gears, you've got to go to the government to get some of the R&D help.

And why not? Because they want to move things domestically again. We're not in an era where just we only see positives of globalization. 

I think you and I have talked about minerals. That might be something interesting to discuss.

Evan: Yeah, like, again, you're a, if you're a y’know, you go look at a startup like Astroforge, which is, y’know, has a, has a mission in flight right now to go send a satellite around a asteroid in the asteroid belt. And the goal on the second and third mission after this is to eventually come back with a giant load of critical minerals. 

Niki: Okay, can I just say something about this? I didn't know you were going to say that! 

So, on April Fool's at Google, we always had an April Fool's joke, and this was years ago. I was answering the phones for the April Fool's jokes, and on that day someone called and asked me if we were doing asteroid mining, and I was like, “It's got to be a joke.” [Evan: No] We were! [Evan: No] Yeah] [laughs]

The founders were absolutely investing in this.  [Evan: Absolutely] Fifteen years ago.

Evan: Yeah, but like, this is again one where, y’ know, your ability to get government as a partner to help, [chuckles] like, there is a very, very, very clear national interest in figuring out ways for us to meet our critical mineral needs for both defense and the green energy transition in ways that do not leave us completely reliant upon China and Russia. [Niki: Right] Very clear national priorities there. 

DoD, Department of Energy, are absolutely putting out a variety of programs to help stimulate development there and offset R& D costs, and oh, by the way, you're gonna have to work with government to regulate [chuckles] the part where you take a, send a satellite to an asteroid and come back with a big load of minerals, right?

Y’know, those would be, another example, you get really wonky, like, one of the other major areas of potential for critical minerals is mine tailings. So, we have 130,000 closed mines in America. [Niki: Okay] Almost all of those mines have giant piles of the crap that was left over when whatever we were originally mining was taken out.

Collectively, those 130,000 closed mines and their mine tailings have enough critical minerals in them to meet all of our critical mineral needs as a country for the next hundred years. And they tend to be superfund sites that are currently leaching pollutants into the ground. 

So, there seems like a really interesting opportunity to use a lot of the bioeconomy development, a lot of venture capitals flowing into that, to use new amino acids and phytomining and microbial mining to come up with really interesting ways to extract those critical minerals and potentially remediate those sites.

But, like, incredibly complex liability and regulatory hurdle to navigate where you have national labs that could play a constructive role. You have the EPA, you have state governments, like, but you're talking about literally a multi-trillion dollar opportunity. 

There are several trillion dollars in minerals sitting in piles polluting the ground right now.How are startups going to go help solve that problem? 

Niki: Right. And so, this leads to what you originally were talking about, which is, what differentiates Washington is our ability to navigate permitting processes [Evan: mm-hmm], and appropriations cycles, and the rules of government, right? And understanding how an agency issues a rule versus what the White House can do with just signaling versus getting an actual piece of legislation passed.

That's the expertise here that can help unlock both the markets for these different industries and for people who have finally moved from just software or, y’know, SAAS enterprise products into real highly regulated, y’know, no joke, space, transportation, health care finances, which absolutely the government's gonna be involved in.

Evan: I think a lot of startup founders, particularly ones who haven't really spent time, like, if you're on your second or third startup, these kinds of areas, like, eventually you learn and you get it. But if you're a first time founder, it's really easy to think that this is, like, “A bill becomes a law,” [Niki: right] the old cartoon of, like, here's how. 

And, and, like, almost all of this work with startups. Almost all of this work, even trying to set better policy is operating so far below the level of, “Let's spend ten years trying to build a consensus to get a giant piece of legislation passed.”

There is all kinds of conversations going on right now about how we need to do a comprehensive overhaul of the 1872 Mining Act. [sarcastically] That's awesome. [Niki: laughs] [sarcastically]I'm sure someday, in some magical world, the stars will align and we will rewrite the 1872 Mining Act.

 In the meantime, what makes this work so creative and so interesting is all of the levers [chuckles] available beneath the surface that don't require going and getting some major piece of legislation passed. 

Niki: Which is going to take an unbelievable amount of time. Right now there's a lot of discussion, well actually there's been discussion about a new agency to manage AI. Two years ago, three years ago, there was a whole discussion about a new agency to manage privacy.

That is so ridiculous! 

I mean, I think we did start DHS after 9/11, but you basically, aren't going to have a new agency, and certainly not in time to do anything meaningful. 

Evan: Look, I - The, the, the idealist in me goes, “Bravo for Sam Altman and other leaders in the AI world standing up and being honest in front of Congress and saying there are real risks around this and we need regulation.”

That was a truthful and right answer and one that I believe in. And, if I were a strategist advising Microsoft and OpenAI and other company on how to make sure that they had an extended runway with no regulation, the thing I would advise them to do is to go before Congress and announce, “We need a new agency.”

[Niki: Right] Because, because it's going to take [laughing]  [Niki: It's not going to happen!] Well, or it will take an extraordinarily long time, and meanwhile, you still have-

Niki: Right, they're getting market share!

Evan: Yeah, I mean, there really is something to be said for, you're getting market share, you're gathering up all of the primary assets in the space, and eventually, when that new agency or that major new piece of legislation comes, it will inevitably be crafted around you, because that's how this stuff works.

Niki: Right, you're creating, sort of, a moat because you're better able to shape the regulations and to navigate existing regulations. 

Evan: If AI leaders had wanted to maximize real regulatory oversight on their activities, what they would have done is gone before Congress and said, “Almost all of the existing authorities to regulate us exist within the SEC, the FBI, [Niki: the EEOC] the FCC, [Niki: Right] , all of these agencies already have these authorities. What we need to do is send a clear message that these agencies should go out and creatively use their existing authorities to put in place regulations to control our activities.”

Niki: So, this actually leads to the main point of this conversation, which is by, by sitting here in Washington, we see the importance of these levers and these conversations to actually not over-regulating but more than that, you can flip little levers at agencies or get funding or work in partnership with the government to unlock things now and faster and in ways that are going to break open these technologies so they aren't regulated in advance.

Evan: Y’know, before we, before we started the podcast, we were saying that both of us share a little bit of an anti-authoritarian tendency.

Niki: Oh boy! Yeah, that's what we were saying: That you were born that way and I became that way. [chuckles]

Evan: I'm building right now, I head up strategy right now for a policy studio called The Future US. And the basic premise here is that these basket of emerging technologies, AI, computational biology, quantum computing, advances in robotics, directed energy tools, weapons, all this stuff has extraordinary potential to solve all of the big problems that we face right now. And there are obvious risks. 

Can we get in front of this stuff? Can we educate policymakers? Can we do the work to go, “Hey, if you can put these things in place, for example, on emerging technologies and critical minerals. Hey, Department of Energy, DARPA, DoD. EPA, if you guys can go [chuckle] do these four or five smart things, then, then you're going to create the natural conditions to let this incredible engine of innovation go solve the same problems that you want to solve.” Right? 

That's, I believe that very, very deeply, but it's not as simple as saying, “ If you just let innovators go do whatever they want without any guardrails, good things will inevitably happen.” [chuckling] Particularly given the risks and consequences of the technologies that we're playing with right now. 

Niki: And this leads to what I mostly do for a living. So, you do a lot of working with founders and startups and thinking through specifics on how to hack the regulatory system. [Evan: yeah] A lot of what I do is work on communications around that.

And so, incredibly, people are still saying, “Let innovators innovate. If you don't, if you don't let us, you're going to drag down the economy.” But it's, nobody cares anymore because they feel like there have been too many costs at letting people just, y’know, move fast and break things. Privacy is dead. 

All the things that people used to say 10 15 years ago. To stick to the, “Just let innovators innovate” is not the right message, a better message is what you just said, which is “We can work together to unlock things” and we're now in a place where you need to partner with government and you need to just genuinely accept the reality that there are going to be impacts from this that might be negative.

Evan: 100%. And, y’know, getting the narrative framing around this stuff right is extraordinarily hard. And it's something that I think particularly post-techlash, Silicon Valley continues to be kind of a beat slow on. And I feel like Silicon Valley had this incredible run for about 10, 15 years where they were in front of and leading the sort of cultural narrative.

They come across now as a bit like the golden children who are now petulant [chuckles], versus, like, responsible adults.

Niki: Right. I say this a lot. Yeah, you need to be full adult. [Evan: yeah!] 

So, this came up when I was doing a ton of crypto work. I'd say, “I get that you're a borderless, y’know, stateless, decentralized system, but if you're an American citizen, if you're a U. S. citizen, or someone on your board is, you're still subject to the Patriot Act.” 

So, y’know!  [Evan: Yeah]

An ounce of prevention is worth a pound of cure. It's better to just ahead of time acknowledge you are going to be subject to this and, and be smart and be full adult about it.

You're going to save yourself a lot of money. You're going to move faster and you're not going to accidentally trip into getting regulated out of existence, which we're on the brink of having happen with a lot of the blockchain technology. 

Evan: Totally. For me personally, certainly for the work we do at The Future US, like, what is interesting and exciting is actually getting into the weeds in the particulars.

And when you get down to the weeds, like, the opportunities to really, truly solve problems that we need solved with urgency. If you care about this country, if you care about democracy, if you care about a healthy form of capitalism, we have problems we need to solve, and these technologies are incredibly important in making that happen.

And there are almost no scenarios I encounter in which there are not also obvious risks that need to be dealt with like adults. That's a mature posture. 

Niki: Right! And so, I don't want to put words in your mouth, but as we wrap up, I think the main message you're sending to people is: we need to get together in constructive ways, look at all of these complex levers of government, think the way that, y’ know, municipal city planners have thought for a hundred years around getting coalitions together, coming up with incentives, thinking creatively about strange bedfellows, getting everybody together to unlock what the public sector can do for the private sector.

I'm so glad we finally connected and thank you for coming into the studio. 

Evan: Oh, absolutely. My pleasure. Thank you for having me.