Why Washington drives innovators and entrepreneurs nuts

March 20, 2015
In The News
 March 20 at 12:15 PM  

AUSTIN–Jeffrey Cardenas stepped on stage to give his company’s one-minute pitch. Grabbing the microphone, he began by posing a question to the large banquet hall, which was filled to capacity with investors, entrepreneurs and technology executives attending the South by Southwest technology convention in this state capital.

“How many of you like the way our government functions today?” asked Cardenas, one of the founders of ThinkVoting, a voter information start-up based in Austin. Not one hand rose from the tables. “I didn’t think so,” he responded.

His line drew a few chuckles from the audience, but his underlying message emerged as an all-too-serious theme at this year’s convention, which presents a rare opportunity for the start-up and entrepreneurship communities to rub elbows with federal policymakers. Their message this year – that Washington is, in a word, broken – wasn’t exactly hidden in the titles of some of the event’s forums:

“How to fix American Politics”

“How Government Fails and How You Can Fix It”

“Move Fast, Government, or Get Out of the Way”

“MAYDAY: The Fight to Save American Democracy.”

“Friend of Foe? How Government Impacts Startups”

Spoiler, that last session generally suggested the latter. One of the speakers was Virginia Lam, who previously headed up the government affairs team at Aereo, a New York technology company that allowed subscribers to watch television through Web-connected devices. That’s “previously” because the company was driven into bankruptcy after it lost a Supreme Court battle with several major broadcast networks last summer.

“We were essentially hoisted into a gray area where there was no regulatory structure that Aereo could live in, and for us, it was so demonstrative of the legacy regulations that we have, where new technology just doesn’t fit into a box,” Lam told the room. Consequently, she said, “start-ups like us die a death by a thousand cuts.”

In her mind, the company, which has since let go of all of its employees, was “a victim of when our laws can’t keep up with technology and innovation.”

What makes matters more frustrating, some say, is when both sides in Washington agree on solutions that could make a difference, and yet progress is mired by disputes over more contentious issues. Veronica O’Connell, vice president of government and political affairs at the Consumer Electronics Association, pointed to immigration reformlegislation and proposals to overhaul the U.S. patent system as examples where she says politics have become the enemy of smart policies.

“It gets pretty frustrating,” O’Connell said, noting that many technology companies have been eager for better protections of their intellectual property as well as more access to foreign talent. In both cases, certain changes that are widely supported have been unable to move forward as politicians tussle over larger provisions.

“They are not Republican bills, they are not Democrat bills, but because of the politics of it all, they are getting weighed down,” O’Connell said.

Speaking specifically about the immigration reform debate, Evan Engstrom, head of the policy team at start-up lobbying group Engine Advocacy, echoed the same sentiment during an interview in Austin: “We have entrepreneurs saying, ‘Here’s an obvious problem that we wantpolicymakers to solve, but because of certain political forces that we don’t necessarily understand, it has been impossible.”

Even in some of the sessions with a more “kumbaya” tagline, a sense of frustration shown through. During a session slugged “Politics of Innovation: DC, Tech Working Together” – in which some examples of positive collaboration were highlighted – Jason Seats, director for the Techstars accelerator program in Austin, said that many policymakers still don’t seem to distinguish between the needs of large corporations and early-stage ventures.

“There’s a very big difference a large tech company and a tech start-up, and I think elected officials don’t always understand that,” Seats said.

It wasn’t merely Washington outsiders who voiced their frustration at this year’s convention. Some members of Congress – yes, Congress – joined the chorus, too.

“I think one of the best things the federal government can do is get out of the way and let innovators innovate,” Rep. Will Hurd (R), now nine weeks into his first term in Washington, said during one of the sessions at South by Southwest. He added that he has been outraged to learn about some of the federal rules around things like federal technology procurement, which have been in place for decades.

After he started digging into some of the outdated rules during recent congressional hearings, he was startled to receive praise from senior lawmakers. “Some of my colleagues were patting me on the back, like ‘Great question, Will,’ ” he said. Hurd’s response: “Why am I the first dude to ask that question?”

He later added, “the way the government runs is totally backwards.”

One of the underlying problems is that Washington is “slow and burdensome and has a difficult time adjusting to change,” according to Kyrsten Sinema (D-Ariz). Speaking during the “Politics of Innovation” session, she said that makes it tough for federal officials and entrepreneursto communicate.

“It’s almost like we need someone to help translate between genius guy and government guy,” she said.

While she expressed some optimism about Congress working more closely with the technology sector moving forward, Sinema doesn’t expect some of the longstanding stalemates – particularly around the country’s outdated immigration laws – to end anytime soon.

“I don’t think you’ll see any immigration reform happen in the 114th Congress,” she said. Sinema went on the explain that, while both sides seem to agree on changes that pertain to the type of highly skilled workers the technology sector wants to bring in from other countries, those changes continue to be held up by debates over issues like border security and deportation laws, as well as a political dispute over whether to tackle immigration reform piece-by-piece.

“It’s not as simply as saying “this makes sense, everyone supports it, why don’t we do it,” she said.

But that, Engstrom said, is why Washington often drives entrepreneurs nuts.

“We hear something like, ‘Here’s something we all agree on and it would help,’ and yet we can’t do it?” responded Engstrom, who sat on the panel with Sinema. “That’s totally contradictory to the attitude in the tech world, which is, “Here’s a problem, I’m going to solve it.’ ”