Regulations
If you say why not bomb them tomorrow, I say why not today? If you say today at five o' clock, I say why not one o' clock?
-John Von Neumann
GDPR was the largest regulation passed to increase privacy and extend data rights throughout the EU.
Politicians talked about how GDPR was going to stop big tech companies from taking advantage of EU citizens and their data. GDPR hurt small companies and helped Google and other large tech companies. This is the typical effect of regulations. Regulations are passed with the intent of helping small businesses but in practice, help big businesses and hurt small ones. Large companies have the legal and operational resources necessary to adapt to new regulations.
As we scale, the more regulations added in property management, the more our competitors will go out of business. Unless the regulations are targeted directly at us, it’ll be easier for us to comply with regulations compared to our competitors. This is due to the nature of our software and processes. We can more easily change things in our software than our competitors. Our architecture isn’t archaic and hard coded like the incumbents. Excess regulations are the reason 70% of rental properties in Australia are 3rd party managed vs 26% in the US. One of our investors even suggested we lobby to create additional regulations later on to put our competitors out of business.
In a perfect world, there’d be less regulations and more competition. I was a fan of how T.J. Rodgers fought against subsidies that would have partially gone to his own company. T.J. Rodgers was famous for doing things that were unpopular, but what he believed to be morally right. I think regulations are bad for the market overall.
I enjoyed this quote from an interview with T.J. Rodgers
Would you support a renewal of the solar tax credit?
Let me give you an anecdote first. I once bought a company, Silicon Light Machines, that had a contract with the government. It was peanuts.
The people on the other side found out about this and said, "T.J.'s a hypocrite." I called up Milton Friedman and said, "I have an ethical problem. The company has a contract with the government, and I'm against corporate welfare."
Friedman answered me in an analogy. He said, "Do you believe in a flat tax--the government not meddling with or incentivizing behavior?" I said yes. He said, "So this year, you're not going to take any deductions?" I said, "Of course I will." He said, "So why would you do any less for your shareholders than you would do for yourself?"
Most regulations are immoral, but my incentive would be to lobby to add regulations. We’re too small to make an impact right now, but it’s an odd incentive to have later on.
The counterpoint is doing the right thing and fighting regulations. Doing the right thing may attract the best talent or at least the most loyal employees. It will motivate the team to know we’re moral. I’m a believer that you can be good and still be a winner.
Tesla gives away all their patents for free. Would Tesla be worth more if they were suing all their competitors? Apple and Samsung were in lawsuits for seven years trying to take each other down. Were consumers benefited by dragging senior management into depositions and paying tens of millions in legal fees? No way. Did Apple benefit? Given the cost of their time, I don’t think so. Alternatively, Tesla gains a loyal fanbase and happier employees from giving away their valuable patents for free… it’s unprecedented to give away patents. It was also intelligently marketed and made known.
Patents and regulations create barriers to entry for newcomers. In a perfect world, they’d both be extremely limited. There are healthier barriers to entry like scale of operations, data, network effects, and intuitive software should be more than enough to protect your kingdom. Let’s spend less time messing with regulations and patents and spend more time building.