Regulation, the Internet way

Today at USV, we are hosting our 4th semiannual Trust, Safety and Security Summit.  Brittany, who manages the USV portfolio network, runs about 60 events per year — each one a peer-driven, peer-learning experience, like a mini-unconference on topics like engineering, people, design, etc. The USV network is really incredible and the summits are a big part of it.

I always attend the Trust, Safety and Security summits as part of my policy-focused work.  Pretty much every network we are investors in has a “trust and safety” team which deals with issues ranging from content policies (spam, harassment, etc) to physical safety (on networks with a real-world component), to dealing with law enforcement.  We also include security here (data security, physical security) here — often managed by a different team but with many overlapping issues as T&S.

What’s amazing to witness when working with Trust, Safety and Security teams is that they are rapidly innovating on policy.  We’ve long described web services as akin to governments, and it’s within this area where this is most apparent.  Each community is developing its own practices and norms and rapidly iterating on the design of its policies based on lots and lots and lots of real-time data.

What’s notable is that across the wide variety in platforms (from messaging apps like Kik, to marketplaces like Etsy and Kickstarter, to real-world networks like Kitchensurfing and Sidecar, to security services like Cloudflare and Sift Science), the common element in terms of policy is the ability to handle the onboarding of millions of new years per day thanks to data-driven, peer-produced policy devices — which you could largely classify as “reputation systems”.

Note that this approach works for “centralized” networks like the ones listed above, as well as for decentralized systems (like email and bitcoin) and that governing in decentralized systems has its own set of challenges.

This is a fundamentally different regulatory model than what we have in the real world.  On the internet, the model is “go ahead and do — but we’ll track it and your reputation will be affected if you’re a bad actor”, whereas with real-world government, the model is more “get our permission first, then go do”.  I’ve described this before as “regulation 1.0” vs. “regulation 2.0”:


I recently wrote a white paper for the Data-Smart City Solutions program at the Harvard Kennedy School on this topic, which I have neglected to blog about here so far.  It’s quite long, but the above is basically the TL;DR version.

I mention it today because we continue to be faced with the challenge of applying regulation 1.0 models to a regulation 2.0 world.

Here are two examples:

First, the NYC Taxi and Limousine commission’s recently proposed rules for regulating on-demand ride applications.  At least two aspects of the proposed rules are really problematic:

  1. TLC wants to require their sign off on any new on-demand ride apps, including all updates to existing apps.
  2. TLC will limit any driver to having only one active device in their car

On #1: apps ship updates nearly every day.  Imagine adding a layer of regulatory approval to that step. And imagine that that approval needs to come from a government agency without deep expertise in application development.  It’s bad enough that developers need Apple’s approval to ship iOS apps — we simply cannot allow for this kind of friction when bringing products to market.

On #2: the last thing we want to do is introduce artificial scarcity into the system.  The beauty of regulation 2.0 is that we can welcome new entrants, welcome innovations, and welcome competition.  We don’t need to impose barriers and limits.  And we certainly don’t want new regulations to entrench incumbents (whether that’s the existing taxi/livery system or new incumbents like Uber)

Second, the NYS Dept of Financial Services this week released their final BitLicense, which will regulate bitcoin service providers.  Coin Center has a detailed response to the BitLicense framework, which points out the following major flaws:

  • Anti money laundering requirements are improved but vague.
  • A requirement that new products be pre-approved by the NYDFS superintendent.
  • Custody or control of consumer funds is not defined in a way that takes full account of the technology’s capabilities.
  • Language which could prevent businesses from lawfully protecting customers from publicly revealing their transaction histories.
  • The lack of a defined onramp for startups.


Without getting to all the details, I’ll note two big ones, which are DFS preapproval for all app updates (same as with TLC) and the “lack of a defined on-ramp for startups”.

This idea of an “on-ramp” is critical, and is the key thing that all the web platforms referenced at the top of this post get right, and is the core idea behind regulation 2.0.  Because we collect so much data in real-time, we can vastly open up the “on-ramps” whether those are for new customers/users (in the case of web platforms) or for new startups (in the case of government regulations).

The challenge, here, is that we ultimately need to decide to make a pretty profound trade:  trading up-front, permission-based systems, for open systems made accountable through data.

Screen Shot 2015-06-04 at 8.34.06 AM

The challenge here is exacerbated by the fact that it will be resisted on both sides: governments will not want to relinquish the ability to grant permissions, and platforms will not want to relinquish data.  So perhaps we will remain at a standoff, or perhaps we can find an opportunity to consciously make that trade — dropping permission requirements in exchange for opening up more data.  This is the core idea behind my Regulation 2.0 white paper, and I suspect we’ll see the opportunity to do this play out again and again in the coming months and years.

Where do web standards come from?

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I’ve spent the better part of the last six years thinking about where web standards come from.  Before joining USV, I was at the (now retired) urban tech incubator OpenPlans, where, among other things, we worked to further “open” technology solutions, including open data formats and web protocols. The two biggest standards we worked on were GTFS,… Read more »

Wanted: email apology bot

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Maybe we all live in the email anti-Lake Wobegon, where we’re all “worse than average” at email, in our own minds. One problem with email is the giant guilt pile it creates — the psychological consisting of the number of emails you know are in there that you have forgotten about, ignored, or missed. My guess is… Read more »

Venture capital vs. community capital

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Photo: Rudy (Loïs) Pignot I am in Paris this week for OuiShareFest, and spoke yesterday morning during the opening session.  OuiShareFest is in its third year as a large international gathering of folks interested in the peer/collaborative/sharing/networked society, put on by the community organization OuiShare. The topic of this year’s fest is “lost in transition”, and… Read more »

Anti-workflow: to-dos

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A while back, I wrote about Anti-Workflow Apps — apps that solve problems for you without forcing you to adopt a workflow that you may never fully be able to adopt.  Workflow apps (CRMs, to-do lists, project management tools) are super hard to drive adoption towards, as everyone works differently and really resists this kind… Read more »

Dick Pics and Cable Company Fuckery

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John Oliver has become the most important voice in tech policy (and maybe policy in general). His gift, his talent, his skill: turning wonky policy language that makes people glaze over into messages that people connect to and care about it. Last fall, he did took what may be the most boring, confusing term ever,… Read more »

Failure is the tuition you pay for success

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I couldn’t sleep last night, and was up around 4am lurking on Twitter.  I came across an old friend, Elizabeth Green, who is an accomplished and awesome education writer — you’ve probably read some of her recent NYT mag cover stories, and it turns out she has a new book out, Building a Better Teacher…. Read more »

Financial Planning for the 90%

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A few weeks ago as I was walking down Beacon Street in Brookline, I happened upon something amazing: The Society of Grownups. The Society of Grownups is a self-proclaimed “grad school for adulthood”, the idea is to give people the tools they need to manage their grown up lives.  The primary focus is on financial… Read more »

The Light Inside, The Fire Inside

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Last week, a friend passed away after a relatively brief but intense battle with lung cancer.  I didn’t know Paul well, but he was very close with a few of my very close friends, and I had spent enough time with him to understand that he was special: he had a light inside of him.   A… Read more »

Increasing trust, safety and security using a Regulation 2.0 approach

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This is the latest post in a series on Regulation 2.0 that I’m developing into a white paper for the Program on Municipal Innovation at the Harvard Kennedy School of Government. Yesterday, the Boston Globe reported that an Uber driver kidnapped and raped a passenger.  First, my heart go out to the passenger, her friends… Read more »

Regulation and the peer economy: a 2.0 framework

As part of my series on Regulation 2.0, which I’m putting together for the Project on Municipal Innovation at the Harvard Kennedy School, today I am going to employ a bit of a cop-out tactic and rather than publish my next section (which I haven’t finished yet, largely because my whole family has the flu… Read more »

Web platforms as regulatory systems

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This is part 3 in a series of posts I’m developing into a white paper on “Regulation 2.0” for the Program on Municipal Innovation Harvard Kennedy School of Government.  For many tech industry readers of this blog, these ideas may seem obvious, but they are not intended for you!  They are meant to help bring… Read more »

Technological revolutions and the search for trust

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For the past several years, I have been an advisor to the Data-Smart City Solutions initiative at the Harvard Kennedy School of Government.  This is a group tasked with helping cities consider how to govern in new ways using the volumes of new data that are now available.  An adjacent group at HKS is the… Read more »

The magic of making hard things easy

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I wrote earlier this week about how life is, generally, hard.  There’s no question about that. One of my favorite things about the Internet, and probably the most exciting thing about working in venture capital, is being around people who are working to re-architect the world to make hard things easier.  And by easier, I… Read more »

Everyone is broken and life is hard

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That’s a pretty depressing and fatalistic post title, but I actually mean it in a positive and encouraging way.  Let me explain. It’s easy to go about your life, every day, feeling like everyone else has their shit together and that the things you struggle with are unique to you. But then, when you get… Read more »

Anti-workflow apps

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“Workflow” apps hold so much promise.  Whether it’s a CRM, project management tool, to-do list, or some other tool, the promise in each case is to clean up our messy lives and help us be more organized and effective. The problem, though, is that getting people to adopt a workflow is really really hard.  That’s… Read more »

Finding Flow: writing vs. coding

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When I first started to learn programming, about 15 years ago, I remember being surprised at how easy it was for me to get focused and stay focused.  I loved (and still love) the feeling of getting lost in a project, and could easily spend hours upon hours “in the zone”. No procrastination, no resistance, only focus… Read more »

Crowdsourcing patent examinations

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Yesterday I spent part of the afternoon at a US Patent & Trademark Office roundtable discussion on using crowdsourcing to improve the patent examination process.  Thanks to Chris Wong for looping me in and helping to organize the event.  If you’re interested, you can watch the whole video here. I was there not as an… Read more »

Support services for the Indie Economy

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Over the course of the past year, I’ve been interviewed a bunch of times about the “peer economy” or the “sharing economy” (Fastco, Wired, NY Times, PBS Newshour), with most of the focus on the public policy considerations of all this, specifically public safety regulations and the impact on labor. A question that comes up every… Read more »

The Professional Amateur

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One way I have described myself is as a “professional amateur”.  I am both deeply proud and deeply ashamed of that.  Let me explain. For basically my whole career, I’ve been learning new fields and professions from the outside-in.  While I have an undergrad degree in Urban Studies, which ostensibly prepared me for interdisciplinary work regarding… Read more »