What founders, investors and authors say works — summarised in plain words, linked to
the source, and tried on the businesses we run. When enough of them have tried it, we say whether it worked.
121 classics · all free0 being tested0 with a verdict5 businesses before a verdict
Elizabeth Pollman: University of Pennsylvania law professor who studies startups and corporate law.
Jordan M. Barry: University of Southern California law professor who studies tax and business law.
“entering a line of business in which changing the law is a significant part of the business plan”
Some companies (the authors study Airbnb, Uber, Tesla and DraftKings) build businesses in legal grey areas and make changing the law part of the plan. Besides ordinary lobbying, they launch fast so that banning them becomes politically hard, and when regulators push back they rally their own users to pressure lawmakers.
When it applies: Existing rules were written before the product existed, demand is strong, and many users would object loudly if the service were shut down.
Contested. Fines, bans, injunctions and personal liability for executives; lasting distrust from regulators; the bet fails if authorities act before the company is too established to stop. The authors note the practice has both good and bad effects on how laws get made.
Can't test here
Only works at a scale where a business has masses of users to mobilise and can pay for lawyers and lobbyists; operating in a legal grey zone is not an experiment we would run.
George J. Stigler: Nobel-winning University of Chicago economist who argued that industries tend to capture their regulators.
“as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.”
Regulation is often sought by the industry it governs rather than forced on it. Organised producers use the state's power to restrict new entrants, set prices or win subsidies, because a small group with a lot at stake out-organises a large public with only a little at stake each.
When it applies: An industry is concentrated and well organised, while the people who bear the cost (customers, would-be entrants) are scattered.
Contested. Open lobbying is legal, but capture invites antitrust scrutiny and public backlash, can be reversed when politics shift, and harms customers and newcomers; corrupt versions (bribery, undisclosed payments) are crimes.
The Guardian: British newspaper whose Uber Files investigation drew on 124,000 leaked documents.
Launch before regulators approve, grow until customers depend on the service, then negotiate the rules from a position of strength. Uber pushed into cities worldwide this way in 2013-2017, and much of Airbnb's early New York supply consisted of rentals the state attorney general found broke local housing law.
When it applies: Rules for a new kind of service are outdated or unclear, and demand is strong enough to create political pressure to keep it.
Contested. Fines, raids, bans, criminal investigations and personal liability for executives; the leaked Uber files showed staff privately calling the company illegal, and executives later said they regretted some tactics. Uber's own response was that ride-sharing rules did not exist anywhere when it started. Operating where the law is genuinely silent is a different and lower-risk thing.
Can't test here
Deliberately breaking or skirting the law is not something we would run as an experiment, and the payoff only arrives at a scale where users can be mobilised.
Steven C. Salop: Longtime Georgetown law and economics professor known for his antitrust research.
“product standards and other government regulations can raise rivals' relative compliance costs.”
A dominant firm does not have to undercut competitors to push them out; it can make their costs rise faster than its own. Backing rules or standards that a large firm can absorb but small rivals and newcomers struggle to meet is one way, which helps explain why incumbents sometimes welcome regulation of their own industry.
When it applies: Compliance carries large fixed costs that weigh far more heavily on a small firm than on a big one.
Contested. Can be challenged as anticompetitive; draws accusations of capture and hypocrisy; the rules bind the incumbent too and may outlast the advantage. For a small business the practical lesson runs the other way: budget for compliance costs that big rivals have already absorbed.
Amy J. Hillman: Management professor and former business-school dean at Arizona State; studies firms and politics.
Influencing government can be planned like any other strategy. A firm chooses whether to engage issue by issue or build long-term relationships, whether to act alone or through trade groups, and which lever to pull: supplying information and research, offering financial support such as campaign contributions, or mobilising employees, customers and other supporters.
When it applies: A company is large enough that specific laws or rules materially change its costs or market, and it can sustain the effort over years.
Contested. Legal only within lobbying-disclosure and campaign-finance rules; secret lobbying becomes a scandal when exposed (the Guardian's Uber Files reported Uber's discreet courting of heads of government); public backlash; rules won by lobbying can be reversed when power changes hands.