Jan 2, 2019 · 34m · a16z
a16z Podcast | The Art of the Regulatory Hack
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z Podcast, 1776 co-founder Evan Burfield discusses 'regulatory hacking'—a strategic approach for startups operating in complex, heavily regulated industries like healthcare, energy, and civic infrastructure. Burfield outlines how entrepreneurs can partner with policymakers, map political power dynamics, and leverage regulatory frameworks to build scalable, high-impact businesses.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 17.5% of the talking time here. How this is scored →
The host as informed peer 3.6 Guest teaching 5.0 Guest disagreement 1.6 The host pushing back 1.6
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 6:43 Rejection of 'Black Market' Label
Evan immediately rejects Sonal's assumption that sub-Saharan informal markets are black markets, explicitly clarifying that they are individual micro-vendors operating on street corners.
Hardest push from the host ▶ 14:59 Questioning Regulatory Hack StabilitySonal pushes back on Evan's premise of building companies on regulatory mandates, arguing that relying on policy changes feels like a fragile foundation for a startup.
Biggest teaching moment ▶ 8:50 Machete Logistics Reality CheckEvan educates the hosts on the grounded realities of African agriculture trade, explaining that banana purchasing requires on-the-spot physical negotiation alongside gangs of youths carrying machetes.
The host holds their own ▶ 12:28 Insight on Regulatory CaptureSonal demonstrates strong industry expertise by citing partner Ted Elliott's insight that regulatory capture often stems from entrenched incumbents simply knowing the policy hallways better.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Defining Incubators versus Accelerators and 1776's Model | 3 | 4 | 2 | 2 | Evan pushes back on conventional terminology, stating they hate 'incubator' and 'accelerator' labels because 1776 operates virtually across global networks. Sonal provides relevant domain context regarding remote versus local workforce dynamics and references Kenya's iHub. | |
| Targeting Nasty Sectors and 20-Year Investment Thesis | 3 | 5 | 1 | 1 | Evan lays out his 20-year thesis that massive returns will come from solving deeply complex 'nasty' sectors like healthcare rather than lightweight consumer photo-sharing apps. The hosts concur and share personal anecdotes about absurd paper-form inefficiencies in urgent care clinics. | |
| Global Case Study: Twiga Foods and Micro-Vendor Logistics | 2 | 7 | 3 | 2 | Evan educates the hosts on Twiga Foods' supply chain in sub-Saharan Africa. When Sonal asks if these are black markets, Evan politely corrects her, explaining they are informal blanket micro-vendors, and paints a vivid picture of local banana negotiations requiring gangs with machetes. | |
| 1776 Mission and Introducing Regulatory Hacking Concept | 5 | 5 | 2 | 3 | Sonal demonstrates domain familiarity by quoting partner Ted Elliott's perspective on regulatory capture and hallway knowledge. She then challenges Evan's carbon monoxide regulatory hack case study by pointing out that building a business on regulatory mandates feels fragile. | |
| Elon Musk and Proactive Regulatory Hacking in Core Infrastructure | 5 | 4 | 1 | 1 | Evan frames Elon Musk's enterprises as masterclass regulatory hacks. Sonal demonstrates technical knowledge by detailing Opower's use of persuasive psychology and consumer behavioral benchmarking to fulfill energy efficiency mandates. | |
| The Regulatory Hacking Playbook: Power Mapping and Grass Tops | 2 | 6 | 2 | 2 | Evan walks through the regulatory hacking playbook starting with power mapping. He educates the hosts on Washington D.C. jargon such as 'grass tops' versus 'grassroots' engagement. | |
| GovTech Strategy and the Role of Mayors in Innovation | 5 | 4 | 1 | 1 | Sonal synthesizes the GovTech discussion by observing that the city, rather than the state or nation, has become the primary unit of innovation analysis. Evan validates this by describing how mayors act as competitive decision-makers in network effects. | |
| Bridging Silicon Valley Tech and Washington D.C. Mindsets | 4 | 4 | 1 | 1 | Evan discusses bridging D.C.'s institutional political knowledge with Silicon Valley's technology speed. Sonal draws a parallel between 1776's platform and Andreessen Horowitz's self-conception as a 'network of networks.' | |
| Regulatory Hacking versus Traditional Lobbying Practices | 3 | 6 | 1 | 1 | Evan distinguishes regulatory hacking from traditional lobbying, noting lobbying is too slow and resource-intensive for startups. He concludes by explaining the four historical inflection points of 1776 that inspired the organization's name. |
Statements from this episode (15)
Next 20 years of venture won't be driven by consumer social
“Our number one thesis is that the giant investment opportunities of the next 20 years are not going to look at all like the last 20, right? It's not going to be as nearly as much lightweight social and”
Burfield: Healthcare delivery is 1776's most active startup sector
“The delivery of healthcare is, is massive and probably the most active sector we see.”
Healthcare AI is blocked by missing decision layers on EMRs
“We're not really even at the point yet where we can start to apply all these amazing advances in AI and all this kind of stuff to healthcare, because we still haven't really created that, that decision layer on top of the billions that have been spent on EMRs.”
Burfield: 80% of Sub-Saharan FMCG and Produce Flows Through Informal Markets
“80% of all fresh fruits and vegetables and fast-moving consumer goods in sub-Saharan Africa go through informal markets.”
Regulatory friction stems from policymaker ignorance, not regulatory capture
“There is some of that. There's regulatory capture, but in a lot of cases, it's like policymakers are trying to achieve an objective, and they have no idea.”
Burfield: Corporations quietly use regulatory changes to build competitive barriers
“If some large auto, you know, automobile manufacturer very carefully gets a rule change that helps them open up more markets at less cost and maybe even potentially erects a bit of a barrier for one of their competitors, They are never going to talk about that…”
Kidde built the carbon monoxide detector market via pediatric health partnerships
“They ended up partnering with a lot of the pediatric nursing and pediatric groups and said, in fact, kids all across the country are dying from carbon monoxide poisoning, and this is a public health issue, and they used that to ultimately get mandates in place…”
Every Elon Musk business is fundamentally based on regulatory hacking
“Every one of his businesses is based on a regulatory hack.”
Burfield: Energy and water startups require regulatory hacking for market entry
“In a lot of sectors like energy or water, you're not going to get market entry without some form of regulatory hacking.”
Burfield: Ignorance of regulatory power dynamics puts startups at a strategic disadvantage
“If you are operating in one of these sectors, and you don't know that there's a chessboard and a game of chess being played, you are at a very significant strategic disadvantage.”
Mayors offer startups the ideal mix of authority and citizen responsiveness
“Because actually, mayors, in our entire political system, in the U.S. Context, in our political system, mayors are pretty much the perfect blend of very, very powerful, and yet incredibly responsive, the very immediate citizen, yes.”
Burfield: Municipal civic infrastructure is entering a 20-year radical reinvention
“I mean, all of that, that sort of civic infrastructure that, that is just in the early phases of going through a radical twenty-year reinvention.”
Washington D.C. and Silicon Valley are inevitably smashing together
“And so we think very, very much about the fact that DC and Silicon Valley are inevitably smashing together. In a whole bunch of different ways, but one of them is actually methodologically.”
Lobbying is exceptionally rarely a necessary part of startup regulatory hacking
“Part of your regulatory hacking strategy is maybe you need to go lobby, but that is exceptionally rare.”
Burfield: Silicon Valley and D.C. are both fundamentally relationship businesses
“As wonderfully collaborative as the Valley is, it still matters who you have a relationship with. And people still have, like, they're just, they're both relationship businesses. They're just different networks, and they're different languages.”