The Political Economy of Little Tech

Policymakers often say they want to support startups. Republicans say it. And Democrats say it.

But despite repeatedly saying they support startups, policymakers often propose rules that make it harder for those startups to build and compete.

In this episode, Collin McCune, head of government affairs, joins Matt Perault, head of AI policy at a16z, to discuss the political economy of Little Tech: the structural dynamics that produce a policy process that so consistently rewards the companies with the most time, money, and access. In sum, it favors Big over Little.

They also talk about the impact of the political economy of Little Tech on consumers. When regulation locks in incumbents, people end up with fewer choices, products that are lower quality and less innovative, and higher costs.

Topics covered:

01:00 The paradox of policymaker support for startups

03:30 Why startups are underrepresented in the policy process

05:40 How feedback on bills works in practice

07:30 Why “industry” feedback often misses Little Tech

09:45 The costs of showing up late to policy debates

12:00 Audits, impact assessments, and invisible compliance costs

15:30 How large policy teams create incumbent advantage

18:30 Why audits can be harder than they look

21:15 Policy ideas to better account for startup costs

23:45 Why startup competition matters for everyday people

25:45 Bright spots for Little Tech in Washington

27:30 Lessons from Dodd-Frank and the risk of repeating them in tech

Resources:

Subscribe to the a16z AI Policy Brief: https://a16zpolicy.substack.com/

Follow Matt Perault: https://x.com/MattPerault

Follow Collin McCune: https://x.com/Collin_McCune

Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit a16zpolicy.substack.com