Read an Excerpt
1
Turns Out You Can Fight City Hall
Dallas– Fort Worth airport is a fairly miserable place to be on a good day. When it’s raining cats and dogs and flights to LaGuardia are being wiped off the board, DFW is a solid contender for the ninth circle of hell. I was sitting at a United gate, hoping for a standby seat on the one flight to New York not yet canceled. My phone lit up. Travis.
Travis Kalanick, at the time, was the cofounder and CEO of Uber. We had been working together since 2011, fighting off attempts by the taxi industry to prevent ridesharing from existing— Travis in his role as CEO and me as the founder and CEO of Tusk Strategies, a political consulting firm based in New York. We’d managed, so far, to keep taxis at bay and break into every market in the United States. But all of a sudden, in the summer of 2015, we found ourselves facing a new front in the war.
“You see what de Blasio just did?”
“No. I’m stuck at DFW. What’d he do this time?”
“Announced he wants to cap our growth at one percent a year. Basically kills the business. Go check it out online and call me back.”
I did some quick research. Politico, the Daily News, and the Times all had stories. Travis was right. (I’d been hoping he was exaggerating.) Bill de Blasio, New York City’s mayor, had just proposed legislation that would kill Uber’s growth and operations. De Blasio had been in office for around eighteen months and, at that point, exerted full and complete control over the fifty- member city council who’d be voting on Uber’s future. He hated technology, hated business, hated the private sector, and was as responsive to the whims and needs of his campaign donors (in this case, the taxi medallion owners) as the city council was to his. Not a good dynamic.
Two minutes later, Travis and I talked again.
“This is bad,” I told him.
“No shit. If it happens in New York, the whole world is going to see it. Which means it could happen anywhere. We can’t let that happen.”
“Travis, a close city council vote is 49– 48 is considered a nail- biter. We need twenty-six votes to beat this. There’s a reason they say you can’t fight city hall.”
“Then figure out how to get us twenty-six votes.”
“Okay.” I paused, thinking. “Two questions: How much can I spend and is there any argument I can’t use?”
“Whatever you need.”
My mind started spinning with possibilities. The flight, miraculously, started boarding and, even more miraculously, I got off the standby list and onto the plane. Middle seat in the row right next to the bathroom, but at least I was heading home— with a pretty big problem to figure out before I got there.
It may seem hard to imagine today, when “to Uber somewhere” has become a verb, but Uber wasn’t always inevitable. As a fledgling startup attempting to disrupt the taxi industry, it faced challenges from regulators left and right. Labor hated it because it was impossible to control, much less organize, thousands of freelance contractors. The taxi industry hated it because it took only one on‑demand, seamlessly transacted Uber ride for customers to switch their loyalty forever. Politicians across the country hated it because Uber’s success just meant being screamed at by their donors in the taxi industry.
The stakes were high. If Uber was unable to operate freely in America’s most important financial and cultural center, it was almost a precedent for legislators all over the world to shut us down. We were fucked without New York— here was no way to justify Uber’s high valuation, its investors’ lofty expectations, and its promises of changing the way people get around if we couldn’t freely operate in the world’s most visible city.
As I sat there on the tarmac waiting for takeoff, I thought hard about the man standing between us and Uber’s future. Bill de Blasio became mayor of New York City in 2013 by portraying himself as a champion of the left, as the antagonist of income inequality, as the hero of people of color. He structured every fight, every policy, every issue as “de Blasio, champion of the oppressed versus big, bad corporation.” The politics worked well for him, since it forced virtually every union, newspaper, pundit, political influencer, and everyone else in the system to take his side or risk being thrown out of the progressive mafia. His play was clearly going to be “de Blasio defending poor taxi drivers against the big, bad, multibillion- dollar Uber.” And that play had a very good chance of success.
We had to come up with a different story.
I thought hard about de Blasio’s pain points. He wasn’t acting from an honest place of belief or ideology— just cold, hard, pay‑to‑play politics. But that was true of virtually every mayor in every city. Voters were used to it.
Somewhere over the Ozarks, the answer hit me. De Blasio had a weakness— ne he was dangerously unaware of. No one had tried pressing that weakness before, but if it worked, it could upend all of the conventional wisdom, including that centuries- ld adage about not being able to fight city hall. Sure, it would be an uphill political battle— risky and possibly costing Uber an embarrassing loss on a global stage. But it was our only shot.
Confession: Uphill political fights are kind of my thing. I learned how to handle them by working in government and politics for more than two decades for the good, the bad, and the ugly. I ran Mike Bloomberg’s New York mayoral campaign in 2009 and worked for him at city hall during his first term. I spent two years on Capitol Hill as Chuck Schumer’s communications director, learning how to move the media at the feet of the most press-hungry and media-savvy politician in America. I spent four insane years as deputy governor of Illinois. The upside was that I got to run the fifth-biggest state in the nation— run its $60 billion budget, all state operations, oversee all seventy thousand state employees, all policy decisions, all legislation, and all communications— at the ripe age of twenty-nine. The downside was my boss was Rod Blagojevich. And along the way, I worked for local political legends like Henry Stern, New York City’s longtime zany and brilliant parks commissioner, and Ed Rendell, during his tenure as mayor of Philadelphia, and had a front- ow seat to the heroic efforts of people like Rudy Giuliani, Chuck Schumer, Hillary Clinton, and Mike Bloomberg to rebuild New York City in the aftermath of 9/ 11.
I’ve had the chance to pioneer some truly meaningful and innovative policies— like universal preschool, universal health care for kids, a cashless tollway system, importing prescription drugs from Europe and Canada, modernizing the nation’s voting systems, and offering radical transparency at city hall—and I also found myself viciously knocking Anthony Weiner out of a mayoral race, being asked to extort Rahm Emanuel, and testifying in three corruption trials and two grand juries.
I fell into tech by accident. After starting a consulting firm, I was sitting in a meeting one afternoon about Walmart’s zoning issues. The phone rang and a friend of mine said, “Hey. There’s a guy with a small transportation startup. He’s having some regulatory problems. Would you mind talking to him?” I became Uber’s first political adviser that same day and spent much of the next five years kicking the shit out of the taxi industry all over the United States to make ridesharing legal everywhere. I also made a bet that paid off pretty well, taking half my fee from Uber in equity when the startup was still in its infancy, a bet that ultimately produced a 250-fold return.
After the fight with de Blasio in 2015, I made another bet and turned my experience with Uber into a venture capital business. Now, at Tusk Ventures, we work with dozens of startups in regulated industries to protect them from politics. We also raised a fund and now invest in some of those startups too.
Startups disrupt industries through their ideas. Industries fight back through their connections. Just like a good startup’s job is to blow up an industry, our job is to blow up the attempts to keep startups out of the market in the first place— o use the same techniques you see in campaigns and apply them to political and regulatory battles between startups and entrenched interests.
If you’re in the system, you usually just live by the rules of engagement, and after a while, our dysfunctional brand of politics all seems perfectly normal to you. And if you’re a typical business and you’re regulated by the system (almost every industry is regulated, either directly or indirectly, by government at some level), you’ve learned the rules of engagement and you live with them.
But if you’re a startup and politics is a completely foreign concept to you, none of this makes much sense. You just want to bring your product to market. You want to compete, you want to innovate, you want to disrupt. You don’t want to be told by some bureaucrat what you can and can’t do. And you really don’t want to be told you can’t compete just because the politics don’t work in your favor.
If you’re trying to disrupt almost any traditional industry— transportation, energy, health care, education, insurance, finance, hospitality, alcohol, beauty, gaming, housekeeping— hey typically don’t thank you for the disruption. They punch back, and they punch hard.
If you want a different outcome for your startup than death by regulators, you have to make it happen. The political and regulatory ecosystem has evolved over time to perpetuate itself, and the money that fuels it comes in the form of donations from the people you’re disrupting. And those people—whether it’s the taxi industry, hotel owners, casino owners, labor unions, insurance companies, you name it— re going to use whatever leverage they have to keep you at bay. Your competitive advantage is intellectual— our ideas, your technology, your approach to doing something differently, something better. Their competitive advantage is political—the campaign donations they’ve been doling out for years and the army of lobbyists on their payroll whose only job is to stop you.
The point of this book is to help startups think intelligently about politics so they can counterpunch or, ideally, avoid getting hit in the first place. The more you understand why politicians and regulators don’t want you to launch a new hotel system, a new transportation network, or a new peer‑to‑peer insurance pool without their consent, the easier it is to figure out how to change the political equation and convince them to go along.
Just so we’re clear, startup culture has a lot of growing up to do. The lack of diversity is not only unfair, it hurts the startups and venture capital funds trying to figure out how to sell their product or service to as many consumers as possible (white men are not the entirety of the market). The lack of maturity has created harmful workplaces. A lot needs to change. But none of that means that startups should stop standing up for themselves when it comes to politics. Entrenched interests are going to do everything they can to stifle competition and innovation. Failure to fight back is fatal.
I’ve organized this book into five sections. Section I and II tell the story of my political education, starting with Ed Rendell and ending with the Bloomberg mayoral campaign of 2009. Section III covers my first foray into tech with Uber, fighting city halls across the United States. Section IV shares the stories and lessons of helping startups avoid death by politics, like legalizing online daily fantasy sports (FanDuel and DraftKings), disrupting Big Insurance (Lemonade), and making it safe to get on‑demand marijuana (Eaze).
Not every battle can be won, as I learned the hard way with a kitchen- haring platform called MyTable. And some battles become so prolonged and complex that they involve throwing ourselves into the mess known as Trump and Washington, D.C. (Like I learned with Handy.) The last section offers a solution for all of this—mobile voting. Exponentially increasing participation by making it much easier to vote seems fairly obvious to you and me, but it also scares the shit out of just about every politician in power from both parties who have no interest in making it easier to unseat them. It’ll make fighting city hall look like a Sunday-afternoon nap.
At the end of the book, there’s a point‑by‑point guide for startups navigating particular scenarios, like trying to decide whether to ask for permission or beg for forgiveness, or how to mobilize your customers to help you fight political battles, or how to decide which market to break into next.
Sure, war stories about helping Tesla, taking out Anthony Weiner, reelecting Mike Bloomberg, navigating corrupt politics in Chicago, figuring out how to make weed delivery legal, taking on casinos and creating an uprising among fantasy sports nuts, and helping Uber get off the ground, among many others, are fun. (Hopefully you’ll enjoy reading them as much as I enjoyed writing them.) But it’s a lot more than that. Disrupting your industry doesn’t just come with a better idea or a better platform. It means disrupting the political status quo too. Your employees, investors, and customers are counting on it. Your startup’s future may depend on it. Long term, so does our economy. And in many ways, whether it’s the chance technology offers to create new jobs, to make people’s lives easier and better, or to develop a new approach to elections that can actually represent the people as a whole, our collective future does too.
